However, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) followed an annual loss last year of $2.7 million, down from a profit of $16.5 million in 2011, with a year-over-year decrease in net income in its first quarter, down from just over $1 million to $433,000.
I expect a stronger remainder of 2013 due to a $361 million dredging backlog, the Miami Harbor project, a $30 million New Jersey shore protection project, as well as 15 to 20 potential coastal projects in the wake of Hurricane Sandy.
But the most exciting potential growth catalyst is the $340 million in Gulf restoration projects funded by the first BP plc (ADR) (NYSE:BP) Deepwater Horizon spill settlement. In addition, the company is focusing on improving execution and internal controls to help improve its demolition division’s bottom line.
Technically speaking, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) has fallen back to the 50- and 200-day simple moving averages after hitting upside resistance at $8.75. Consolidation support also exists in the $8 range.
Risks to Consider: The company has recently been downgraded by BB&T Capital from a “buy” to a “hold.” Although I don’t put much faith in upgrades or downgrades, this company is taking heat from investors due to an annual loss. However, Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) could be in line for a portion of the BP plc (ADR) (NYSE:BP) oil spill settlement work, which would help its bottom line tremendously. Always use stops and position size properly when investing.
Action to Take –> Despite the annual loss, I think this company is on an upswing due to the pending workload and its willingness to make positive changes in its money-losing demolition division. The price is sitting on support right now, setting up a solid technical buy opportunity. Buying now with stops at $7.75 and a six-month target price of $10 makes good technical sense.
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This article was originally written by David Goodboy and posted on StreetAuthority.