Vulcan Materials is America’s largest producer of concrete aggregate. It is also a major producer of asphalt, ready-mix concrete, and other construction materials. The company sold 215 million tonnes of aggregates in 2019. It is far ahead of any nearest competitor and among the best-known construction materials companies in the US. Vulcan has almost equal exposure to private construction as well as public construction.
Election year expected to boost infrastructure spending
The year 2020 is an election year. The US Presidential elections are scheduled to take place in November. Therefore, there are high chances of the government bringing in an infrastructure bill or simply boosting spending in that sector, especially in areas with high population growth. There have been reports that President Trump is planning a $1 trillion infrastructure bill. Any increased spending is poised to work in favor of Vulcan Company.
The effect of COVID may be temporary
While there has been plenty of turmoil due to the pandemic, Vulcan Materials does not seem to be phased by the progression of the illness. In an earnings call, company CEO J. Thomas Hill said, “it’s important to keep in mind that unlike The Great Recession of 2008, private construction going into the pandemic was not overbuilt, both residential and non-residential demand were below long-term averages. This suggests that the slowdown from the pandemic could be shorter in duration, assuming that the trajectory is not significantly interrupted by additional ways of new COVID cases.”
The performance of Vulcan’s stock
VMC stock has been up 3.97% for the past month compared with the S&P500’s -0.97% return. The price has been above the 50-day moving average and the 20-day moving average for about a week. The stock seems to have found resistance at the 135 level, with the most recent test of that level happening on 16th and 17th September 2020. The last traded price, as of September 17th, 2020 was $133.75.
