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The shares of Vulcan Materials (VMC), first discussed on June 3, 2009 at a price of $46.28, have re-trenched after accelerating out of a trough to $60 this spring but I still like the shares. Here's why: Look for 2010 revenue for Vulcan, a major producer of construction aggregates, asphalt and concrete, to increase 2-4%, as construction aggregate demand slowly recovers. Spending for public infrastructure projects also will provide a modest tailwind. Commercial construction, however, will require a longer recovery timetable.
Institutional investors have been cautious with Vulcan, given the uneven and mild start to the U.S. recovery.
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.
The First Call FY2010/FY2011 EPS estimates for VMC are 33 cents to $1.25. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, Vulcan's shares have pulled-back for a second time in 2010, but the calculation here is that VMC will hold support at/near $41. The sell/stop loss is close by at $37.
2010 Outlook: I view Vulcan as a long-term play, but if investors are looking to sell VMC within the year, it's probably best to take your profits after it rises to $38-39, if it fails to clear $40.
Stock Analysis: I consider Vulcan Materials to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd 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, I wouldn't buy more than 50% of my VMC position before September 2010 and I'd put a sell/stop loss at: $37.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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.
The First Call FY2010/FY2011 EPS estimates for VMC are 33 cents to $1.25. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, Vulcan's shares have pulled-back for a second time in 2010, but the calculation here is that VMC will hold support at/near $41. The sell/stop loss is close by at $37.
2010 Outlook: I view Vulcan as a long-term play, but if investors are looking to sell VMC within the year, it's probably best to take your profits after it rises to $38-39, if it fails to clear $40.
Stock Analysis: I consider Vulcan Materials to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd 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, I wouldn't buy more than 50% of my VMC position before September 2010 and I'd put a sell/stop loss at: $37.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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