A few weeks ago on Minyanville, Ryan Kreuger noted that now was the time to buy the engineering firms as the best possible values in the energy space.
Since then, they've gone parabolic. I managed to get a half a position on in Jacobs Engineering (NYSE:JEC) which has since rocketed up 10%. One of his other recommendations, Washington Group (NYSE:WNG) has already been acquired at a significant premium. All the others are also up nicely.
I should have picked up more when I grabbed that first Jacobs position, but I'm OK with my first buy being my best buy, for a change. I'll be looking for any letup in the move as an opportunity to get deeper into this group.
The reason is that over the weekend, at my HOA meeting, I spent quite a bit of time with the guy who chairs our finance committee, who is in the energy engineering business. To hear him tell what's going on, Ryan is being rather conservative. He told of a complete inability to hire qualified engineers at any price. Of a junior engineer just a couple of years out of college who turned down an offer just shy of $100,000 because he already had multiple better offers. Of nat gas pipeline operators to the west coast being able to charge premiums of almost 100% above the wellhead price because the pipelines are overworked, the engineers needed to upgrade them aren't available, and the demand insatiable.
I don't like buying into parabolic moves, even when I think the fundamental case is good, thus I am holding off a bit for now. Of all the stocks Ryan noted, Chicago Bridge and Iron (NYSE:CBI) has shown the most signs of cooling off in recent weeks and is now flirting with its latest high. Fluor (NYSE:FLR) has also moved sideways a bit and has broken above the recent high but just barely and on mediocre volume. I'll be watching all for buying opportunities.
I still want a second "half" to my small Jacobs position.
Other news from the HOA finance committee meeting was also interesting, particularly as it is illustrative of what's going on in the economy overall. More on that tomorrow.
-btc
