Fluor Corporation FLR has signed a contract with Royal Dutch Shell plc (ADR) RDS for the engineering, procurement and fabrication of its Penguins floating production storage and offloading vessel in the North Sea.
The engineering an construction sector has significantly underperformed the industrials and the market, but with the improvement in fundamentals, it is becoming more attractive and investors will gravitate back, Cook said. (See the analyst's track record here.)
"We believe FLR will be the go-to name, viewed as a higher-quality bellwether with a diverse end market offering, and more importantly a more cyclical growth bias," the analyst said.
Fluor is already benefiting from improvement in commodity CapEx, as it is competitively best-positioned in the sector, Cook said.
Credit Suisse expects that the energy CapEx from integrated and national oil companies will further boost Fluor's backlog.
In 2018, EPS will improve due to the absence of problem projects and lower taxes, the analyst said.
"Furthermore, backlog appears near [the] bottom and is inflecting positively in the [second half of 2018], which is the biggest driver of stock performance," Cook said.
The Price Action
Fluor Corporation gained around 17 percent in 2018 and was up 3.58 percent late in Thursday's trading session.
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