Mining For Profits: Is Joy Global Inc. (JOY) The Best Bet?

Komatsu appears to be even more expensive, trading at 16 times TTM earnings, which are projected to drop this year, just like the rest of the group.  While Komatsu does have a slightly stronger balance sheet than the others, with less debt relative to the size of the company, it is not to the extent where it warrants a premium valuation.  Additionally, Komatsu is the only one so far that does not pay a dividend, which is a big deal to most long-term investors.

Finally, Terex looks to be the most expensive of all on the surface, at 27 times earnings.  However, and this is very significant, Terex is the only one of these companies that is not projecting a decline in earnings.  In fact, when Terex reports this week, they are expected to have earned $2.03 in 2012, which is projected to rise to $2.66 and $3.32 in 2013 and 2014, respectively, for an average forward growth rate of 27.9%, more than justifying its lofty valuation.  Additionally, Terex has possibly the best balance sheet of the three, with almost as much cash on hand as it has debt.

As far as which one is the best investment, I’m still going with Joy Global.  While Terex and that growth rate certainly looks interesting, Joy Global’s valuation combined with its market-leading status is too cheap to ignore, especially if you believe (as I do) that natural gas has bottomed and demand for coal will rise going forward.

The article Mining For Profits: Is This Leading Manufacturer The Best Bet? originally appeared on Fool.com and is written by Matthew Frankel.

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