Summary
- Firm is just off the back of some pretty solid Q3 numbers.
- Earnings and cash/flow are growing significantly.
- We will put long deltas to work above the $15 level.
- Looking for a portfolio of ideas like this one? Members of Elevation Code get exclusive access to our model portfolio. Get started today »
Tutor Perini (TPC) would normally not be a typical long-term play for us. The reasons are multiple. First, if we look at the long-term chart of the stock below, we can see that the performance of the share-price for example over the past two decades has not been convincing. Furthermore, Tutor Perini is not a dividend paying stock so the opportunity cost of being invested in this name over the past two decades would have been very high indeed.
However, whereas TPC may not have interested dividend growth investors for example, this does not mean this stock is without opportunity. As we can see from the chart, the MACD indicator which has been pretty dependable in the past has just crossed over (thus, giving a buying signal). Furthermore, we like the bullish divergence on the RSI momentum indicator which again may be pointing to higher prices over the near term. The poor share-price performance over the past couple of decades (and especially the most previous one) means that shares are currently trading with a book multiple of 0.5, a sales multiple of 0.1 and a cash/flow multiple of 4.7. Although Tutor may not be profitable over a trailing twelve-month average, the above valuation multiples definitely bring opportunity to the table if the company is doing well from an operational perspective.
When we move into to a more near-term chart, we see further bullishness. Shares at presents seem to be forming an ascending triangle (Flat upper trendline along with higher lows). If we could get a convincing breakout above $15 a share, it would confirm the bullish pattern. Furthermore, given the height of the pattern ($10+), shares at present have significant upside potential.
