McDermott's (MDR) Back in Barron's Limelight

Barron's thinks that McDermott (NYSE: MDR) is back on their Buy list. They note that they have recommended the stock in the past, thrice, and twice has it been a good idea, once a spectacular failure.

Barron's now believes that the stock could reach the low- to mid-30s within 52-weeks. They think that the combined value of the power-generation-systems business and core engineering-and-construction business could increase by 20% or more. The power-generation-systems business is to be spun off by the end of this year.

McDermott has seen growth in their government-related nuclear work, a bottoming of their power-generation systems business, and a strong E&C business in late-2008.

The company could also see a boost from President Obama's recent nod toward increasing nuclear power in the U.S. The company currently has a small, "plug-and-play" reactor available.

In 2009, McDermott earned $1.66/share on $6.2 billion of revs. 2007 saw them with an EPS of $2.66. Earnings are expected to be about $1.84/share for FY10, and $2.12 for FY11.

The company also has about $826 million in net cash.

The spin-off of their power-generation systems business, Babcock & Wilcox, will create two pure-play stocks. The company, trading at 14x Fy11 EPS estimates, could see a price of $31, or $35 with the addition of net cash.

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