Our Stock of the Week is CECO Environmental (CECO). CECO is an industrial company serving the industrial air, water, and energy transition markets. CECO offers improved air and water quality, optimized emissions management, and increased energy efficiency for highly-engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, EV production, polysilicon fabrication, among others.
On January 10, the company completed the acquisition of Wakefield Acoustics which manufactures systems for noise cancellation in oil and gas production, power generation, and waste systems.
CECO has already announced that it expects fourth-quarter earnings to exceed $145 million, which is an increase of 60% over the same quarter last year and an increase of 42% on a sequential basis. Its year-end backlog is at record levels. Current eps expectations for 2023 are $0.80, which is a forward PE of around 18x. The company is expected to grow eps by 143% in the calendar year 2023 once fourth-quarter earnings are announced in March.
Last week, Craig-Hallum set a $19 target on the stock and commented that the company has “nice visibility into 2023 numbers”.
Technically, the stock broke out of a long base on the positive forward guidance and is now forming a new high-level basis. We are looking for an opportunity to build positions either on pullbacks or a breakout. As always, we will not chase the stock on Monday morning but will aggressively trade it as conditions develop.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in CECO. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
