The efforts of the U.S. administration to invest in infrastructure reconstruction, including roads, bridges, and other public projects, are benefiting Vulcan Materials Company (VMC).
The Building Products – Concrete and Aggregates industry, which VMC operates in, has seen a rise in demand for public construction. Over the past six months, the industry has outperformed the Construction sector and the S&P 500 index, with VMC’s shares also seeing a notable increase.
Earnings estimates for 2023 have been revised upwards, indicating anticipated year-over-year growth. Analysts’ bullish sentiments are fueled by positive trends and strong fundamentals.
Factors Driving VMC’s Success
Vulcan has experienced strong pricing due to increased public demand and operational efficiency. The recent infrastructure bill signed by President Biden provides a substantial amount of funding for various infrastructure sectors, including roads and bridges. Publicly-funded construction projects have been one of VMC’s main sources of revenue.
VMC has also implemented strategic initiatives to enhance price growth and operating efficiencies, resulting in improved unit profitability. The company has made acquisitions to expand its reach in growing markets and divested non-core assets to reduce risk.
Despite challenges such as energy and labor constraints and soft demand in the residential construction market, VMC expects the strength in non-residential construction and increased public funding to offset these factors.
Outlook and Key Picks
Although the industry faces potential challenges such as supply constraints and price fluctuations due to reliance on petroleum-based resources, VMC’s strategic initiatives and positive market trends position the company for future growth.
Other top-ranked stocks in the sector include Boise Cascade Company (BCC), EMCOR Group, Inc. (EME), and TopBuild Corp. (BLD). These companies have demonstrated strong performance and growth potential.
In conclusion, VMC is well-positioned to benefit from increased public sector demand in the second half of 2023, thanks to infrastructure investments and its strategic initiatives.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. The author’s views and opinions may not necessarily reflect those of Nasdaq, Inc.
About Vulcan Materials Company (VMC): For a free stock analysis report on VMC, click here.
About Boise Cascade Company (BCC): For a free stock analysis report on BCC, click here.
About EMCOR Group, Inc. (EME): For a free stock analysis report on EME, click here.
About TopBuild Corp. (BLD): For a free stock analysis report on BLD, click here.
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