Time to Sell Maverick

Article Excerpt

MAVERICK TUBE CORP. $46 (New York symbol MVK; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) makes steel tubes that energy exploration companies use to drill wells and transport oil. In 2000, U.S.-based Maverick Tube acquired one of our long-time Canadian recommendations, Prudential Steel Ltd., for stock. We advised Prudential investors to accept the offer at that time. Since then we have recommended buying Maverick, because we felt it stood to benefit from an upcoming oil and resources boom. Maverick’s earnings have jumped up and the stock has risen from around $10 a few years ago. The company should earn $6.67 U.S. a share in 2006, and the stock trades at just 6.9 times that figure. But these earnings are highly cyclical. As a major user of steel, Maverick is vulnerable to rising steel prices. We feel the U.S. market offers better opportunities, and now is a good time for Maverick holders to take profits. Maverick Tube is a sell. sell…

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