Vulcan Materials: Capitalize on the infrastructure boom

Vulcan's sin: being a leading producer of cement in Florida -- a market that tanked big-time, when the housing boom ended. What Wall Street 'forgot,' was that VMC is also a major producer of asphalt and concrete, and that it shipped aggregates to 23 states, as well as to Mexico, the Bahamas, Canada and Chile.

Further, add just a modest recovery in the U.S. housing sector, combined with expected, increased infrastructure spending by the U.S. government, and the risk/return scale is tipped in favor of the buy.

The First Call FY2009/FY2010 EPS estimates for VMC are 29 cents to 85 cents. That 85-cent FY2010 EPS estimate will likely prove to be low.

Technically, as noted, Vulcan's stock chart has been inconclusive: a spike to $62 was recorded in September, then was wiped out by an in-line Q2 earnings report. Also, several violations of the key, 50-day moving average have occurred -- which indicates II uncertainty.

Stock Analysis: Vulcan Materials is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in VMC now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your VMC position before February 2010. Sell/Stop Loss if you were to buy shares in this company: $22.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.