Takeover Rumors
Joy Global Inc. (NYSE:JOY) has been a hot topic in takeover rumors. The most popular rumor had to do with General Electric Company (NYSE:GE) buying Joy in order to build their mining equipment business. General Electric Company (NYSE:GE) currently offers a wide range of mining products and services, including motors, power generation, transportation, water treatment, dust control, and financing. This is all housed under their General Electric Company (NYSE:GE) Transportation unit.
General Electric Company (NYSE:GE) Transportation
Reported fourth quarter profits of $252 million, up from $226 million in the fourth quarter of 2011
Full year profits rose to $1 billion, up 32.1% from 2011
General Electric Company (NYSE:GE) stated that their acquisitions and investments in technology “have positioned us well to continue to deliver value to our customers and for strong operating performance in 2013.” I believe General Electric Company (NYSE:GE) will make an offer to buy Joy Global in 2013 and will eventually take them over, unless someone else beats them to it.
Current Price
As of the market close on March 8, Joy Global is trading at $63.13. With earnings per share of $7.24, this means they are trading at a multiple of just 8.72. They are currently 23% below their 52 week high of $82.02, and industry growth could easily push them back towards this mark. Also, they pay an annual dividend of $0.70, or 1.11%.
Caterpillar
The largest manufacturer of construction and mining equipment in the world is Caterpillar Inc. (NYSE:CAT). They too offer maintenance, servicing, and training to the industry. Despite the slowed economy in 2012, Caterpillar Inc. (NYSE:CAT) reported record sales, revenue, and profit.
Revenues rose 10% to $65.875 billion
Profit per share rose 15% to $8.48
Maintained quarterly dividend of $0.52 per share
This company, like Joy Global, will experience further growth with the expected gains in the mining industry. Caterpillar Inc. (NYSE:CAT) has a healthy yield of 2.30% and is currently trading 20.8% below their 52 week high. As you can see from the chart below, these two stocks have very similar chart patterns.
The Foolish Bottom Line
The mining industry is recovering steadily from the lows in 2012 and should continue to rise over the next several years. As the global economy recovers, Joy Global Inc. (NYSE:JOY) and Caterpillar Inc. (NYSE:CAT) will experience substantial gains from their current levels. I currently own shares of Joy Global and will be adding to this position on any weakness in the market. Both Joy Global and Caterpillar Inc. (NYSE:CAT) are great long term investments.
The article Jump for Joy Global originally appeared on Fool.com and is written by Joseph Solitro.
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