As we do each month, we asked a handful of our top analysts across sectors for one stock that looks especially compelling right now. Here are the companies they singled out.
Dan Caplinger: My stock for the month is Greenbrier Companies Inc (NYSE:GBX), a small company that focuses on sellingand leasing various types of railcars for the railroad industry. Railroads have done exceedingly well in the past several years, as high fuel costs made it much more efficient to transport commodities over long distances by rail. The rise in commodity demand that we saw in the mid-2000s also bolstered the industry, and when railroads needed more railcars to meet their customers’ demand, they turned to Greenbrier Companies Inc (NYSE:GBX).
More recently, a slowdown in demand for many commodities, especially coal, has hurt railroad shipping volume. But in order to replace lost coal volume, several railroads have turned to transporting crude oil by rail, helping to serve hard-to-reach areas for which pipeline capacity is insufficient. That in turn has forced railroad companies to obtain tank cars for oil transport, and Greenbrier Companies Inc (NYSE:GBX) has been able to meet those needs as well. Given the high price of oil, the rising production from unconventional energy plays in locations that railroads are best enabled to serve, and the relative lack of strong competition, Greenbrier Companies Inc (NYSE:GBX) should have plenty of room to grow in helping the railroad industry address its own customers’ shipping requirements.
Justin Loiseau: Utility NextEra Energy, Inc. (NYSE:NEE) beat earnings expectations again this month — and it’s not a fluke. Although NextEra Energy, Inc. (NYSE:NEE) is the nation’s largest producer of renewable energies, its operations run like a well-oiled machine. The company’s Florida-regulated utility keeps pulling in cash, while its generation division continues to expand and diversify. The company has capitalized on production tax credits to boost its wind capacity past 10,000 net MW, but it’s also modernizing nuclear projects and adding on to natural gas. In July, NextEra Energy, Inc. (NYSE:NEE) announced a $3 billion joint venture with Spectra Energy Corp. (NYSE:SE) to bring Florida its third major natural gas pipeline. The company’s stock is priced at a premium to competitors (up 21% over the last 12 months), and its relatively low 3.1% dividend yield has many income investors unenthused. But with formidable fundamentals and 5% to 7% annual EPS growth estimated for the foreseeable future, NextEra Energy, Inc. (NYSE:NEE)’s still got room to rise.
Maxx Chatsko: Monsanto Company (NYSE:MON) is surely a controversial company, but the recent slide below $100 per share could be a buying opportunity for long-term investors. Full-year earnings are expected to grow more than 20% in 2013 and by double digits in 2014, demonstrating that the company still has future growth opportunities ahead of it. In fact, the company expects to sell a record volume of corn seeds in its 2013 fiscal year, which would be the third consecutive record year.
While seed sales are down a bit year over year so far, recent expansion into quickly growing — and incredibly fertile — South American countries has been accelerating. A recent decision should also boost sales of Roundup in the United States, which grew 24% for the first nine months of the current fiscal year. Monsanto may receive an unfair amount of criticism for its business (ever hear anyone lament Syngenta, DuPont, or Bayer GMO products?), but the fundamentals from an investing point of view remain enticing.
