Joe the analyst finally downgrades FWLT, when it's cut by more than two-thirds, when it has the best balance sheet it's ever had as a public company, including $1.3 billion of cash... when it has a monster buyback, with $412 left that's shrinking the float... At this point, FWLT is verging on to be the absolute bargain that I have seen in the engineering and construction case, falling from $84 to $23, trading at just 6x vastly-reduced earnings, and what happens?... Joe the analyst downgrades it from a buy to a hold, saying, "Book to bills difficult to ignore"... That's the title of the note.

Now I am not saying... emphatically not saying... that this stock has bottomed... as it traded four points lower last week... and it can take out that low, because this is an awful market.

I am saying that, sometimes, it's just too late to sell...

And this is one of those times for FWLT... It's too late to sell, because the stock is now getting near its cash and receivables level, which is one of the exceptions to the bear market that we use to buy stocks... just like the accidentally high-yielders...

So, it would have been a better-than-never-late scenario, as I doubt Joe the analyst will be able to upgrade the stock as it gets to the mid-teens... which frankly isn't that far from here.

The problem is that this guy, Joe the analyst, isn't the exception. He's the rule. All the way down, he was telling people to buy FWLT. You just have to look at the headlines of his miserable... I mean, somewhat adequate... research... to see how Wall Street analysts lead you astray...

Why wasn't this guy telling you to sell the stock at $80, and telling you to buy at $23?...

Oh no wait, because he was telling you to buy there...

On February 26th, with the stock at $68.31, he says, "Reiterate buy, Middle East outlook remains robust"... On March 5th, with the stock at $55.62, his note was entitled, "Industrial conference suggests more projects, more win yields, equals more attractive"... On May 7th, with the stock at $66, he writes, "Strong first quarter merits aggressive posture. FWLT is still favorite name." On August 7th, with the stock being taken down to $54.79, the title of the report... "Strong second quarter, but outlook has softened somewhat. Price still attractive."

If the stock price is still attractive at $54 and change... at $23?... No.

At $23, the same analyst decides to downgrade it...

I don't know... personally, I think stocks get more attractive as they become cheaper. But maybe that's because I'm a liberal arts kind of guy...

This whole process which, had you listened to it, would have had you buying FWLT at $80 and selling at $23.86, needs to be put in the Sell Block. Frankly, this exercise is the ultimate buy high, sell low that you and I know is just plain wrong. That's why nothing is as harmful to individual investors as how some Wall Street research is put together.

As for FWLT, this is one infrastructure company that I think is in a much better place than the others of its ilk... including McDermott International (MDR), with a terrible quarter... And now that McCain lost, nuke builder, Shaw Group (SGR)...

FWLT reported after the bell yesterday and the quarter was fine. Really, no worse than expected. Revenues were up 32%, the backlog grew 16% to $7.3 billion... Here's a company trading at less its backlog. That has always been our barometer of when to buy... and FWLT's bought back 45% of its existing buyback program that was announced on this show, in Cramerica... which, in total, is big enough to purchase 19% of the company.

The company is now putting its money where its mouth is, after waiting for the stock to come down 60 points. The company did the exact opposite of Joe the analyst... It didn't buy any stock back at $80. It's buying it back here. It isn't one of those buybacks where management imprudently and impudently bought all the way down.

Foster Wheeler (FWLT*), I think, is kind of really slowly taking itself private... and now Wall Street downgrades.

This is when you buy.

Plus, here's a huge positive... Ray Milkovich, the company's terrific CEO, and friend of Cramerica... he was going to retire... has decided to stay on for another three years. The stock got killed when he decided to retire, but it got killed when he decided to stay... Something wrong there.

As for the business, FWLT's engineering and construction division, 75% of sales... where they make liquefied natural gas plants, petro-chemical plants and refineries... is doing very, very well... although the division's operating profits were down in the quarter, due to timing issues.

But, as far timing goes, the company hinted that it has eight potential mega deals that are about to be announced... eight! Nothing official, but eight!...

Don't forget... while clean coal is a myth, there is such a thing as cleaner coal. That's an Obama priority. Only FWLT has the really good technology to deliver it, and others will dispute that. I don't care. Let them get their own show, and then they can dispute it...

FWLT's global power group, which makes up the other 25% of the business, did well. It did guide lower for the fourth quarter, but he told us they would do that. 2009 regulatory uncertainties and their customers delaying capacity expansion plans... This is all about the economic slowdown, but it's not company-specific, and I think, with FWLT at $23 bucks... there, it's priced into the stock, okay...

The earnings estimates have been cut here, and now the numbers are really low. The bar has been set low.

Foster Wheeler (FWLT*)'s backlog is solid... It's got that huge buyback, all that cash... No one should be downgrading it now but, because of the way Wall Street works, this analyst, who loved it all the way down, decides to throw it under the bus when it starts to get really attractive.
 

Here's the bottom line...

The Bottom Line!:     I don't want to single out Joe the analyst or his son, Nabulus Bank... The problem is with how almost all Wall Street analysts work. The whole system is rotten. How can you trust analysts who recommend a stock all the way down, who say buy at $80, and sell at $23? The whole complex belongs in the Sell Block.

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