Market Insight: Kirby Corporation Showing Big Profits
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May 15, 2008
Kirby Corporation (KEX) provides marine transportation and diesel engine services to the marine and power generation markets in the United States. The company operates through two segments, Marine Transportation and Diesel Engine Services. The Marine Transportation segment engages in the inland transportation of petrochemicals, black oil products, refined petroleum products, and agricultural chemicals by tank barges; and offshore transportation of dry-bulk cargoes by barges, as well as provides transportation services for inland and offshore barge operators, oil service companies, and offshore fishing companies.
The Diesel Engine Services segment involves in the overhaul and repair of medium-speed and high-speed diesel engines and reduction gears, and related parts sales in the marine market. This segment also provides aftermarket services for vessels powered by diesel engines used in various inland and offshore marine industries; aftermarket services for diesel engines that provide standby, peak, and base load power generation to the users of industrial reduction gears, as well as for standby generation components of the nuclear industry in the power generation market; and aftermarket services and parts for shortline, industrial, and Class II and transit railroads in the railroad market. The company was founded in 1969. It was formerly known as Kirby Exploration Company, Incorporated and changed its name to Kirby Corporation in 1990. Kirby Corporation is based in Houston, Texas.
Kirby has very good fundamentals with strong sales growth, expanding operating margins and terrific return on equity. The latest earnings showed net income of $36.6 million versus $24.4 million for the same quarter in the previous year. In addition, revenues were a record $330.6 million, which represents an increase of 21 percent over the $274.2 million for the same quarter in the prior year.
Technically, the stock has a good profile, projecting a possible move up to the $68 per share area by the July timeframe. Kirby does have an options market but they do not offer LEAPS. The cycle currently extends out to December of 2008, which allows the options strategist more than enough time to trade this opportunity. Note however that Kirby’s options market can be thinly traded at times so the trader needs to employ limit orders.
Figure 1: Elliott Wave-4 Buy Pattern for Kirby Corporation
(Source: Profit Source)
Happy Trading.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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