Energy giant Fluor looks to reward long-term investors
Fluor (NYSE: FLR) offers engineering, procurement, construction, maintenance and project management services globally, serving the oil-and-gas, power, infrastructure and government markets, among others. Its recent growth has been sluggish, but its future seems bright.
Some have worried about the U.S. government’s sequester-caused budget cuts, which could hurt future orders for Fluor’s services from the Department of Energy or Defense. Despite that, Fluor’s ties to the private energy and independent oil-and-gas sector make it a very attractive bet over the long run.
President Obama has made it clear that he’d like to see America become more energy independent. This will likely result in the construction of new drilling rigs as well as more energy-efficient power plants, and also more pipeline and storage tanks capable of holding an increasing number of natural gas and oil finds. Fluor’s bread-and-butter business is these energy and oil-and-gas projects. In just the last quarter alone, Fluor received $6.5 billion in awards — with $3.1 billion coming from the oil-and-gas sector — and its total backlog rose 11 percent to $18.6 billion.
With a forward-looking price-to-earnings (P/E) ratio of about 13, Fluor’s stock seems fairly to attractively priced and should reward long-term investors. More risk-averse sorts might wait and hope for a pullback in price. (The Motley Fool owns shares of Fluor.)
Ask the Fool
Q: I’m invested in a mutual fund with a 5.5 percent front-end load. Should I sell it and switch to a no-load fund? — H.Z., Medford, Ore.
A: That’s a hefty fee, but you’ve already paid it, when you invested in the fund. So look forward, not backward. If you don’t like the fund’s performance, consider selling it. There are many terrific no-load funds out there. (Learn more at fool.com/mutualfunds/ mutualfunds.htm or morningstar.com.)
Also, check out the fund’s annual fees. If its expense ratio is much more than 1 percent, that’s not promising. Some index funds will charge you less than 0.10 percent.
Q: How does online stock trading work, and is it safe? — T.W., Goshen, Ind.
A: It’s not as scary as it may seem, and is even preferred by many investors. It’s generally inexpensive, with many brokerages charging less than $10 per trade. Also, you can examine orders carefully before placing them.
To get started investing online, visit the website of the brokerage you’re interested in. There, you’ll probably be able to download or print forms with which to open an account, or you’ll find a phone number to call for help and information. Fill out and submit the application form along with payment to fund the account. You’ll then receive an account number and can set up a password. Use those to log in at the website. From there you can check the status of your portfolio and account, or place an order whenever you want.
All reputable online brokerages have security measures in place. Before opening an account, read up on them at the website or call and ask about them. Learn more about good brokerages at broker.fool.com and mint.com/brokerages.
My dumbest investment
Years ago, I bought stock in a company that my girlfriend worked for. I had been watching it and thought it was undervalued at $34 per share. So I bought about $5,000 worth. As I had hoped, it soon made a modest gain. Then rumors arose that the company would not meet its third-quarter projections and that the stock was expected to fall. Well, I sold — and made a little profit. Two days later it was announced that the company was going to be acquired, and its stock rose to $60.
It goes to show that if you believe in a company, stick with it. Day-trading or short-term trading is no longer an option for me. I will focus on the long term when it comes to solid companies. — R.A., Tucson, Ariz.
The Fool responds: You’re right. Lots of great companies encounter occasional hiccups. It’s often best to hang on, as long as you retain long-term faith in their future — especially if you consider them undervalued. Rumors can be dangerous, too, as they won’t necessarily come to pass. Strong stocks tend to rise over time.