Joy Global (JOYG) has blown through my target price for June 2010 in just two months. Try as I might, I can’t juggle the fundamental numbers to come up a reason to raise that target now, so I’m going to sell these shares out of Jubak’s Picks.
Joy Global did indeed raise its earnings guidance for fiscal year 2009 (which ends in October 2009) when it reported third quarter earnings, but the company also cautioned that fiscal 2010 would be challenging and that 2010 revenue and earnings will be lower than in fiscal 2009.
Right now Wall Street projects earnings of $4.19 a share for fiscal 2009 and just $2.50 a share for fiscal 2010. I think it’s likely that Joy Global will report a drop in orders in both the fourth quarter of 2009 and the first quarter fiscal 2010. That should give me a chance to get back into the stock before the turn in orders that I project for the second or third quarter of fiscal 2010.
To repeat I like the long-term story for this mining equipment maker–it’s one of the few equipment makers that survived the collapse of its market and can now look forward to decades of growth in the mining industry. It remains a pick in my long-term Jubak Picks 50 portfolio. But in the short-term I think most of the turn in fiscal 2010 is priced into the stock.
I’m selling with a 34.6% gain since I added the shares to Jubak’s Picks on July 21. (Full disclosure: I will sell my shares of Joy Global out of my personal portfolio three days after this post goes up.)