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MDU Resources (MDU) Arm & Blue Planet to Develop Clean Concrete

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Zacks Equity Research
·3 min read
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Knife River Corporation, the construction materials unit of MDU Resources Group, Inc. MDU, announced plans to invest in Blue Planet Systems Corporation to develop construction-grade rock and ultimately concrete for a no-carbon footprint without compromising on the strength of concrete.

The companies will also combine their expertise and knowledge to explore ways to produce and market synthetic limestone. The limestone will be produced using sequestered carbon dioxide. The method of capturing CO2 from existing sources to create synthetic limestone will prevent the trapped gas from entering into the atmosphere and its use will extend the lifetime of natural aggregate sources.

Proper industrial-level crushing, screening, filtering and placement processes will be carried out for the aggregate products, which is Knife River’s specialization. Blue Planet's identification lies in its carbon-sequestration technology, through which it produces aggregates. The combined entity will help both companies analyze the difference between new aggregates and traditional geological materials at an industrial level.

Capital Investment Plans

Last week, MDU Resources’ same unit acquired assets of Casper, Wyoming-based aggregates and concrete supplier McMurry Ready-Mix Co. The deal is expected to expand the subsidiary’s footprint in the Intermountain Region. Also, after investing $413.8 million in the first nine months of 2020, the utility on Nov 20, announced a $3-billion capital budget plan for the 2021-2025 time frame, which is properly distributed among the two platforms, namely the regulated energy delivery, and the construction materials and services. The company will invest $2,112 million and $919 million, respectively, in these platforms during the above-mentioned period.

These investments are likely to enhance the company’s service reliability and enable it to serve an increasing customer base, effectively. This electric and natural gas utility anticipates seeing a CAGR of 5%. Also, the utility expects its customer base to expand 1.5% annually. For the construction materials and services platform, the company sets organic growth goals and will make opportunistic acquisitions, which will bolster its existing operations and boost earnings.

Other gas distribution utilities including National Fuel Gas Company NFG and Atmos Energy Corporation ATO are also growing businesses on the back of their strategic capital investment plans.

National Fuel Gas Company increased its consolidated capital expenditure projection for fiscal 2021 to $720-$830 million from the prior guidance of $660-$770 million.

Atmos Energy is planning to invest in the $11-$12 billion range from fiscal 2021 to 2025, of which 80% will be allocated to enhance the safety of its ongoing operations. These planned investments will lead to 6-8% annual earnings growth over the same time frame.

Zacks Rank & Key Pick

MDU Resources currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the same sector is Southwest Gas Corporation SWX, which is carrying a Zacks Rank #2 (Buy), currently. The company delivered a trailing four-quarter earnings surprise of 39.38%, on average. Also, it has a long-term (three-five years) earnings growth rate of 5%.

Price Performance

In the past six months, shares of the utility have gained 19.7%, outperforming the industry’s 5% growth.

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Southwest Gas Corporation (SWX) : Free Stock Analysis Report
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