Vulcan Materials Company (VMC) — This is the largest producer of aggregates in the United States and a major supplier of asphalt and concrete used in road and building construction.
S&P Capital IQ Equity Research sees a rise in demand for Vulcan’s products due to the steady recovery in the housing market, including an estimated 15% rise in private construction spending this year, and a slow but steady rise in public construction spending for highways, bridges and other infrastructure projects. Its analysts also note that a long-term highway bill should contribute to future growth.
Capital IQ estimates earnings will more than double this year to $2.08 per share and increase another 63% in 2016 to $3.38.
In August, its analysts raised their opinion on VMC stock to “buy” from “sell” and increased their 12-month price target by $30 to $110.
After a small consolidation that extended from late last year, VMC stock broke from about $70 to the low $80s. A rebound from the August correction took shares to a closing high of $101.20 on Sept. 17.
Since then, VMC stock traded with support around $85 and resistance at its 50-day moving average at $94. That 50-day was solidly broken on Friday with a high-volume breakout, which supports the overall bullish right triangle and puts to rest any thoughts of a head-and-shoulders forming.
Traders should try to buy VMC stock at $96 or lower for a trade to $110 and a potential 15% return by year end. Investors should buy shares at the market as a cornerstone investment in the building materials industry.
