On Jul 6, 2013, we upgraded Orion Marine Group, Inc (ORN - Snapshot Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Most earnings estimates have been revised upwards for Orion in recent days. The company has been reporting positive surprises in all the last four quarters with an average estimate of 89.70%. In the last reported quarter the company reported strong earnings, beating the Zacks Consensus Estimate by more than 40%.
A healthy demand for the company's suite of marine infrastructure solutions has helped boost the revenue. Orion expects this demand to continue going forward, particularly from the private sector as exemplified with a contract award of around $20 million in the Gulf Coast region. The scope of the contract primarily involves constructing and dredging a new ship dock for a private client in the region.
Orion is believed to have one of the strongest lines of dredging equipments in the industry. Some of Orion’s main customers include the U.S. Marine Transportation System and the cruise industry. Orion is positive about its dredging activity in 2013, as the expected increases in cargo volume and future demands from larger ships transiting the Panama Canal will require the services of ports along the Gulf Coast and Atlantic seaboard. This requirement will lead to additional dredging services and expanded port infrastructure. Therefore, Orion is continuing to invest heavily in dredging and dredging equipment, which comprised 64.3% of the total property and equipment value in 2012.
Other Stocks to consider
Orion provides a broad range of marine construction and specialty services on, over and under the water along the Gulf Coast, the Atlantic seaboard and the Caribbean Basin. The company acts as a single source turnkey solution for its customers' marine contracting needs. With robust growth factors, we believe Orion has rightly been upgraded to Strong Buy. However there are also other stocks from the same sector that are worth a look. These include Dycom Industries Inc. (DY - Analyst Report) with a Zacks Rank #1 (Strong Buy), while Chicago Bridge & Iron Company N.V. (CBI - Analyst Report) and EMCOR Group Inc. (EME - Analyst Report) both have Zacks Rank #2 (Buy).