Why You Should Add Vulcan (VMC) Stock To Your Portfolio Now

The housing/homebuilding market has been performing well in recent times, courtesy of the resilient job growth and gradual economic recovery. The positive momentum is evident from the robust Zacks Industry Rank (Top 14% out of 265 industries) of the Zacks Building Products - Concrete and Aggregates industry. In fact, the industry has outperformed the broader market (S&P 500) in the last one year, as you can see below.

One such company cashing in on the positive momentum is Vulcan Materials Company (NYSE:VMC) — country's largest producer of construction aggregates, a major asphalt mix and concrete producer, and a leading cement producer in Florida. Let us delve deeper into the other factors which makes this Zacks Rank #2 (Buy) stock a lucrative pick.

Stock Price Movement: Vulcan’s shares have gained 10.6% in the last three months compared with the industry’s growth of 6.9%. That said, we have noticed that Vulcan has outperformed the industry in the 1-week, 4-week and 12-week frame. Sustained growth in the housing market in private construction activity has been driving demand for both the aggregates as well as non-aggregates businesses of Vulcan Materials.

Earnings & Revenue Growth: Vulcan makes a great pick in terms of growth investment. Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of bullish prospects.

Vulcan’s historical EPS growth rate (average trailing 12-month EPS growth rate over the last 3–5 years of actual earnings) is 36.8% compared with the industry average of 30.4%. The company’s projected EPS growth rate (estimated growth rate for 2017) is 44%, while the industry’s earnings are expected to increase 37.3%.

Meanwhile, sales growth is projected at 13.2% for 2017 compared with the industry’s expected growth rate of just 0.6%.

Estimate Revisions: In the last 60 days, the Zacks Consensus Estimate for Vulcan’s EPS moved north by 3.5% to $4.12 and 2.8% to $5.55 for 2017 and 2018, respectively. The positive earnings estimate revisions suggest that analysts are getting a shade more bullish on the company’s prospects in both the short and long term.

Benefitting from Acquisitions: Acquisitions is an important part of Vulcan’s growth strategy. Since it became a public company in 1956, Vulcan has followed a systematic inorganic strategy for expansion and has wrapped up various bolt-on acquisitions that have been contributing significantly to its growth. In 2016, Vulcan expanded its aggregates distribution capabilities in Georgia and completed two strategic bolt-on acquisitions in New Mexico and Texas. These buyouts expanded its ability to serve customers well and bring in operational and commercial synergies.

Last month, the company signed an agreement with SPO Partners to buy the latter’s aggregates business, Aggregates USA LLC. This addition will help Vulcan to get hold of Aggregates USA LLC’s 31 facilities that serve high-growth markets throughout the southeastern U.S. comprising Georgia, Florida, Tennessee, South Carolina and Virginia.

Other Stocks to Consider

You can consider a few other top-ranked stocks from the same space.

Summit Materials, Inc. (NYSE:SUM) sports a Zack Rank #1 (Strong Buy). Its earnings are expected to grow 43% this year. You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Concrete, Inc. (NASDAQ:USCR) carries a Zacks Rank #2. Its earnings beat estimates in two of the trailing four quarters, delivering an average positive surprise of 72.26%. Its earnings are expected to grow 51.2% this year.

CEMEX, S.A.B. de C.V. (NYSE:CX) also carries a Zacks Rank #2. Its earnings are expected to increase 37.3% this year.

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