AECOM (NYSE:ACM) Technology is a Solid Buy

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By Jacob Maslow

AECOM Technology LogoOne of the most interesting about picking stocks is to find value when others don’t see it or other investment options look much better. It’s kind of like the great-looking girl who shows up to a ball filled with supermodels. In the proper context, this woman is an amazing, great-looking woman. However, in the context of high school dance filled with supermodel-caliber females, an otherwise attractive young woman looks very plain indeed.

This is what’s happening with AECOM (NYSE:ACM). AECOM is a company that evolved from Ashland Oil and Refining Company several years back. It went public in 2007, and it’s worth north of $4.5 billion.

It’s very easy to see why many investors tend to overlook this stock. First, its earnings isn’t growing that well. As a transportation design, construction, and government assistance company, it provides a wide range of institutional services, and its earnings momentum isn’t worth writing home about. The saving grace for this company is that its sales growth is doing quite well. In fact, it is a standout when it comes to sales growth, which has a very positive impact on its cash flow.

Putting these factors together as well as the fact that many hedge funds are invested in this stock gives this stock a better than even chance of decent appreciation in the future. Its 52-week range is between slightly below $25 and slightly north of $38. Currently, it’s hovering around the $28 to $30 range. It still has quite a bit of upward movement to go based on this range. If there are some positive earnings surprises in the future, don’t be surprised to see this stock bust through its 52-week high. With that said, you need to do due diligence for this stock. Make sure that you are more than comfortable with its industry positioning and both its sales and earnings growth.

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