Here's 1 ridiculously cheap stock

Analysts continue to fret over China's economic growth, setting this mining-equipment company up for a huge 2011.

By Jim Cramer Sep 16, 2010 8:39AM

jim cramerBy Jim Cramer, TheStreet

 

Don't tell Bucyrus International (BUCY) that things are slowing. Don't bother to inform Tim Sullivan, the always-solid chief executive officer, that he should worry about the Baltic Freight Index or the Chinese export numbers or the multiple hikes in interest rates to slow the Indian economy.

 

He has bigger things to worry about, like fulfilling orders around the globe for the 66% of his business that is coal-mining equipment.

 

Bucyrus sells to the big miners, such as Xstrata, Vale (VALE) and BHP Billiton (BHP), and you can't get coal out of the ground without machines from either Bucyrus or Joy Global (JOYG). You can't transfer to the stuff to where it has to go without Caterpillar (CAT) or Bucyrus trucks, the latter a new part of the product line purchased, in a steal, from Terex (TEX).


Bucyrus is making the picks and shovels of the coal rush, something that is happening around the world even as this country tries desperately to wean its utilities off coal to cheaper, cleaner natural gas.

 

Doesn't matter. This $5 billion stock trades on every itty-bitty number coming out of China, and it goes down hard on every analyst's prediction that China's economy is one big bubble.

When I asked Tim Sullivan about this ridiculous correlation last night on "Mad Money," he laughed. He emphasized to me that every one of the five big miners is increasing capital expenditure spending to keep up with the demand, and that means more machines from Bucyrus and an even bigger year next year, especially when you consider that its Terex acquisition gives it a full line of products to sell to these five customers.

 

Bucyrus has visibility. And, as Tim said, he can beat Caterpillar.

 

What's been the biggest challenge for Bucyrus? In the past two years it's been credit, first from the private banks -- these are big, expensive machines -- and then from the U.S. Export-Import Bank, which is meant to help our companies (like this Milwaukee-based concern) compete against foreign companies for orders.

 

Recently, when Reliance Power wanted to buy coal equipment worth hundreds of billions of dollars, the Export-Import Bank balked because of environmental considerations that President Barack Obama insists upon. In other words, because Bucyrus extracts coal and coal is dirty, the bank was attempting to kibosh an order that would have put plenty of people to work.


After a full-scale lobbying effort with Congress, it looks like the bank has come around, but you can only imagine how foolish and reckless the bank looks, particularly given this administration's one-time embrace of coal over natural gas, holding out hope for a clean version one fine day in the future.

 

I say this stock is ridiculously cheap, given that estimates are too low, and I would not be surprised to see $5 a share in earnings next year. This seems to be the most buyable story on China fretting -- as opposed to actual weakness -- now that No. 1 competitor Joy Global has already hit its 52-week-high.

 

Random musings: I see that Barclays agrees with me on Ford (F) and is moving to overweight with a $16 target. Timely.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Click here to learn how to follow Jim Cramer’s trades for his Charitable Trust.

 

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