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Construction Materials Are For Later: Vulcan Materials Company (VMC), Martin Marietta Materials, Inc. (MLM)

Try Both, Each Company Has Their Focus

Martin Marietta Materials, Inc. (NYSE:MLM) produces aggregates, which would be cement, concrete, asphalt, or any component of these things. If you want to pour foundation or build a thick-walled bunker for the coming zombie apocalypse, then you might consider Martin Marietta’s products. Eagle Materials makes things like wall and floor boards, which are used in houses. Everyone remembers housing as the industry that almost castrated the global economy. Well the beast is rising again. It will be a slow recovery, which means you have some time to ponder an investment in Eagle, but the last few quarters have shown some good improvement.

Martin Marietta Materials, Inc. (NYSE:MLM) was upgraded/initiated by Goldman. Since I think the broad construction recovery will take some time to materialize and get into high gear, I am not going to hold the upgrade against the company. Normally, I would be unhappy with upgrades. Both Eagle and Martin Marietta have flown up recently, and I would wait for any push downward before contemplating a position. It happened so fast, and the stocks were far lower during my initial draft. Since I take a long view, I do not mind waiting for some decline. The goal for the companies keep selling their products, and stay afloat till things improve to the point that some real money can be made.

The Road Ahead

Do not let the political brinksmanship in Washington deter you from the industry. The impact of spending cuts will be felt, but America is crumbling. Soon it will not just be a hassle to have horrible roads, bridges, and rails. It will rapidly become an issue of strangling economic growth. If it still is not taken care of, then it will be an issue of public safety. All it will take is one bridge collapse, tunnel collapse, or elementary school kid tripping on a broken sidewalk to set the public on fire. With the right media coverage.

Spending cuts or not, infrastructure is one of the most fundamental duties of the government. Creation of public goods is the purpose of government. Infrastructure is a public good and during peacetime is more important than defense in some respects. Eventually something will rouse the nation to deal with the infrastructure problem. Martin Marietta will probably benefit in that case.

People will need houses though, and Eagle will eventually benefit from home-building and renovating. There is not a pressing need for homes right now, so going heavier in position size for Martin Marietta Materials, Inc. (NYSE:MLM) might be the better option.

The article Construction Materials Are For Later originally appeared on and is written by Nihar Patel.

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