The Great Recession has hit some industries harder than others. The construction industry was hit badly, especially due to its close relationship with the housing market. Additionally, many homes remained empty, fuel-efficiency policies reduced construction funds in the USA, and the European economy continues to struggle. Here are some companies from the troubled industry with great prospects: CRH PLC (ADR) (NYSE:CRH), Martin Marietta Materials, Inc. (NYSE:MLM) and Cemex SAB de CV (ADR) (NYSE:CX).
Will exploit any economic recovery
The largest Irish company, CRH PLC (ADR) (NYSE:CRH), is a well-diversified business model in the construction industry. I traded this stock in the past with great success following a recommendation by Idea Tree Report. On July 3, the firm acquired Cemex SAB de CV (ADR) (NYSE:CX)’s ready-mix, aggregates and block operations in Ireland. This is the 17th acquisition for the firm, totaling 370 million Euro. So, are acquisitions indicative for the business’ future perspectives?
For the moment, CRH PLC (ADR) (NYSE:CRH) will face difficulties in Europe while the American operations seems to be recovering faster. The situation, however, does not affect the company’s size and business model. Market diversification, manufacturing complex, and allocation hubs have somewhat insulated the firm from economic headwinds. At the same time, the model is well prepared to take advantage of any economic recovery.
Like many of its competitors, the biggest drop has been seen on cash flow. In this case, part was lost to market woes and part was invested on acquisitions. In opposition to competitors, since 2009, CRH PLC (ADR) (NYSE:CRH) has seen revenue and net income increments, while debt has been on a downtrend. As a matter of fact, the company holds one of the lowest debt levels in the industry, and operating margin has almost doubled in the same time.
Currently, the stock price is in the middle of the 52-week range. Additionally, the dividend yield stands at 3.50% making the stock attractive. So, it is recommended to buy because CRH PLC (ADR) (NYSE:CRH) is the best positioned to reap benefits from the recovery. The size and diversity of the business model have granted a hard-to-match economic moat and market positioning.
Will exploit US economic recovery
Based out of Raleigh, North Carolina, Martin Marietta Materials, Inc. (NYSE:MLM) is an aggregate, chemical, and composite material company. Recently the firm made news when signing a deal with UniPrint to improve printing, compatibility, workflow, and reduce costs. Now, is the deal with UniPrint a sign for a brighter future?
Upcoming, Martin Marietta Materials, Inc. (NYSE:MLM) will focus on reverting its first quarter results and cashing in on the relative advantage taken against its peers during the Great Recession. Additionally, a recovering U.S. economy is steadily improving financial indicators. Looking further ahead, fuel-efficiency policies may hurt revenues. But as government partnerships with private companies become acceptable in the USA, and the company deepens current affiliations, highway construction may increase together with revenues.
When looking at the balance sheet, revenues, net income, and debt have remained steady in the last five years. In the same period, the loss of cash flow is alarming but in line with industry’s performance. It is worth noting that operating margin fell 12 points, while remaining 4 points above the industry average (4%). Also, ROC and ROE is one the highest in the industry.
Finally, trading at a 58% discount to industry consensus and a 1.65% dividend yield, the stock is somewhat tempting. Taking into account the creation of a wide economic moat thanks to manufacture techniques and market characteristics, Martin Marietta Materials, Inc. (NYSE:MLM) is positioned to reap benefits from economic recovery. It is recommended to buy for a long term investment before its price reaches $100.