Tonight's sea change is all about infrastructure. From train tracks in Europe to high-rises in Dubai, a global building boom is well underway. Among the companies benefiting from this trend is Jacobs Engineering Group (JEC), a technical and construction services company that operates on three continents.
Guy Adami recommended Jacobs back in April when the stock was at $47. Now it's trading close to $60. The guys got Jacobs Engineering CEO Craig Martin on the fast line to hear more about his company's role in the global infrastructure build out.
Martin says his company participates in “almost all the markets that are out there.” This is one of the best markets in memory, Martin says, and Jacobs is running a high amount of projects to meet the demand.
There’s always the problem of the rising cost of materials as the costs of projects become difficult to predict and “higher than anyone would like,” Martin says. “But we are able to take advantage of those things through a global supply network that allows us to do the purchasing we need to do from sources around the globe.”
Over 90% of Jacobs’ business comes from repeat customers, Guy notes. But Martin doesn’t see any strategic value in expanding to service a new group of customers. “I think we’re going to stick to the model that got us we are,” he says. “Most of our customers spend enormous amounts of money – all we need is a significant share of their wallet to continue to grow for a very long time.”
All the guys would put Jacobs Engineering in the ‘buy’ column. Guy says people get nervous because of the company’s P/E, but it’s diversified enough that he would buy it. And this infrastructure sea change has legs that will continue to buoy engineering companies Jacobs, Eric Bolling says. He would add Posco (PKX) and Companhia Vale do Rio Doce (RIO) as the steel plays and Cemex (CX) and Lafarge SA (LF) as the cement plays to round out the global building boom.
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Trader disclosure: On June 5, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (EMC), (ATVI), (SWY), Bolling Owns (NMX), Sugar Natural Gas Futures; Bolling Is Short S&P Futures; Bolling Is Short Nasdaq Futures; Najarian Owns (RACK), (OCPS), (ALVR)
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