I believe the reason so many people recommended this stock as a buy (and why I continued to add to my position, though I wish I had timed it better) is because, quite simply, the stock appeared oversold.
In my view, the market miscalculated the impact of the CAT work. As I’ve mentioned in other threads, there was further detail provided around the reported drop and the difficulty in quantifying potential contract wins until they were formally secured.
That said, despite the reported decrease, BAU work has actually increased in FY25, and the CAT work is likely to come in higher than what was estimated during the last results meeting. I’ll admit—I don’t know by how much. It could be slightly higher or significantly higher we just don’t know yet and perhaps only very little of this potential work will land in FY25, and perhaps will only benefit FY26 and FY27
What we do know is that the volume of insurance-related work in both the US and Australia has surged in recent months. There are reports of billions of dollars in claims activity. Of course, it’s hard to know exactly how much of that work will flow to JLG, but it clearly represents upside rather than downside risk.With that in mind, it’s not surprising that private equity is showing interest.
I just hope JLG’s books are in good order and being managed to a standard that supports a clean buyout process. That said, the timing of this interest has come faster than many expected—likely due to the scale of recent CAT events in both the US and Australia.
JLG Price at posting:
$2.86 Sentiment: Buy Disclosure: Held
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