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Aegion Corp. (AEGN)

Today’s Daily Alert recommendation comes from Roger Conrad’s Utility Forecaster, which consistently ranks among the top-performing newsletters tracked by Hulbert Financial Digest. It’s currently ranked first for risk-adjusted 10-year performance, and third for five-year performance.

Aegion Corp.'s (AEGN) longtime core business has been repairing water and wastewater pipelines, primarily for municipalities and other government...

Today’s Daily Alert recommendation comes from Roger Conrad’s Utility Forecaster, which consistently ranks among the top-performing newsletters tracked by Hulbert Financial Digest. It’s currently ranked first for risk-adjusted 10-year performance, and third for five-year performance.

Aegion Corp.'s (AEGN) longtime core business has been repairing water and wastewater pipelines, primarily for municipalities and other government entities. This business has been in a major slump for several years, though the company has been able to continue winning contracts, including a $6.3 million deal with Springfield, Missouri, and a $5 million deal with Aurora, Colorado, both locked up in June.

“The lion’s share of growth, however, is coming from pipeline protection and rehabilitation applications serving the energy and mining industries globally. Aegion expects a return on invested capital of 10% in 2012 and is working to raise that to 15% in subsequent years. That translates to earnings excluding one-time items of $1.40 to $1.60 for this year, putting the current share price at less than 10 times profits.

“Aegion isn’t a utility, and its business model is subject to the waxing and waning of its customers’ fortunes. Most of these, however, are quite reliable payers. This factor, along with low debt, means low risk for the company. Up about 20% from last year’s recommendation, Aegion is still a buy up to 20.”

- Roger S. Conrad, Utility Forecaster, July 2012