US share tips: Bucyrus will find more profits to mine

By Author Charlie Gibson Jan 25, 2006

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If you use the price to earnings growth ratio to search for stocks with “bargain growth” characteristics in the US, you get one particularly interesting result, says Jack Hough on SmartMoney.com – Bucyrus (BUCY, $54.47).

Founded in 1880, Bucyrus specialises in making heavy mining tools, such as draglines, electric shovels and blasthole drills, and proves that “profits in the metals sector haven’t nearly been fully mined”. Its shares may have more than doubled since their debut in July 2004, but earnings are forecast to be up even more: 107% to December 2005.

What’s more, says Robert Aronen on TheMotleyFool.com, 25 years of minimal investment in mining means that this boom is going to last a long time, that more “dormant” mines are going to have to be opened and that the mining firms are going to have to buy more and more equipment.
Despite trading on a multiple of 24.7 time earnings to end-2005, analysts’ expectations of compound earnings growth of 35% over the next five years still put it on a PEG of only 0.7.

Published in Tips & advice | More articles by Charlie Gibson

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