With China intensifying its crackdown on cryptocurrencies, and several other countries planning to restrict the use of cryptocurrencies, Dogecoin’s prospects look bleak. However, considering the increasing economic activities globally, and President Biden’s infrastructure plan, we think that investing in infrastructure-related companies CEMEX (CX), Owens (OC), and L.B. Foster (FSTR) could generate significant returns in the near term. So, let’s take a closer look at these names.
Cryptocurrency Dogecoin has had a skyrocketing rally since the beginning of this year and hit its all-time high of $0.74 in early May, driven primarily by social media hype--with even Elon Musk using his "Saturday Night Live" performance to pump the token. However, Dogecoin has plunged close to 60% since its high in May. China’s crackdown on cryptocurrencies, given its alleged connection to money laundering activities and concerns over high energy consumption, is believed to have primarily driven this plunge. With China intensifying its crackdown and several countries planning to restrict the use of cryptocurrencies, Dogecoin is expected to witness further declines.
But while Dogecoin's prospects look bleak, the infrastructure sector is witnessing a solid revival with the reopening of economic activities. Moreover, a bipartisan agreement on a $973 billion infrastructure spending bill should bode well for infrastructure companies. Investors’ interest in the infrastructure space is evident in iShares U.S. Infrastructure ETF’s (IFRA) 20% returns over the past six months versus SPDR S&P 500 Trust ETF’s (SPY) 15.6% gains.
So, we think it could be wise to bet on fundamentally-strong infrastructure companies CEMEX, S.A.B. de C.V. (CX), Owens Corning (OC), and L.B. Foster Company (FSTR) that look well positioned to benefit from the industry tailwinds.
CEMEX, S.A.B. de C.V. (CX)
Headquartered in San Pedro Garza Garcia, Mexico, CX, together with its subsidiaries, produces, markets, distributes, and sells cement, ready-mix concrete, aggregates and clinker worldwide. The company offers various complementary construction products, including asphalt products, concrete blocks, roof tiles and concrete pipes. In addition, it provides building solutions for housing projects.
In April, CX acquired a new floating bucket chain dredger for its Rogätz quarry, which is about 100 kilometers southwest of Berlin. The investment is in line with the company's strategy to enhance its vertically integrated positions near growing metropolises. The move could further strengthen its operations in Germany.
The company’s net sales increased 10.9% year-over-year to $3.41 billion for the first quarter, ended March 31, 2021. Its operating EBITDA grew 28.3% year-over-year to $684 million, while its net income increased 1324% year-over-year to $672.39 million. CX’s EPS increased 5,534% year-over-year to $0.42.
Analysts expect CX’s EPS and revenue to increase 1,600% and 21.7%, respectively, year-over-year to $0.17 and $3.60 billion for the current quarter, ending June 30, 2021. The stock has soared 200.7% over the past year to close Friday’s trading session at $8.66.
CX’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Sentiment, and a B grade for Quality, Value, Growth, and Momentum. For the rest of CX’s grades (Stability), click here. CX is ranked #1 of 53 stocks in the A-rated Industrial - Building Materials industry.
Owens Corning (OC)
OC is a leading Fortune 500 company in the building and industrial materials space. Operating across 33 countries, the Toledo, Ohio company manufactures and advances a range of insulation, roofing, and fiberglass composite materials. It operates mainly operates through three segments—composites, insulation, and roofing.
In December 2020, OC approved a share repurchase of up to 10 million shares of the company’s common stock in addition to a previously announced share buyback program. These actions reaffirm the company’s capital allocation strategy and reflect its ability to operate, execute, and deliver in a challenging environment.
OC’s net sales surged 19.6% year-over-year to $1.91 billion for its fiscal first quarter, ended March 31, 2021. Its adjusted EBIT grew 143.1% year-over-year to $282 million. Its adjusted earnings came in at $183 million, which represents a 173.1% year-over-year increase. The company’s adjusted EPS was $1.73, up 179% year-over-year.
For the current quarter, ending June 30, 2021, analysts expect OC’s EPS and revenue to increase 140.9% and 30.9%, respectively, year-over-year to $2.12 and $2 billion., It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 77.5% over the past year to close Friday’s trading session at $96.65.
OC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. It has a B grade for Growth, Momentum, Value, and Quality.
L.B. Foster Company (FSTR)
FSTR provides products and services to the railway industry, and solutions to support critical infrastructure projects worldwide. The Pittsburgh, Penn., company operates in two segments: Rail Technologies and Services, and Infrastructure Solutions. Its Infrastructure Solutions segment produces precast concrete buildings and various specialty precast concrete products, and fabricated steel and aluminum products.
The company announced in May that it is providing new roadway decking and other supplies in a $14 million rehabilitation contract for the north span of New York State Bridge Authority’s Newburgh-Beacon Bridge. This contract is expected to have a positive effect on FSTR’s revenues.
FSTR’s net debt decreased 45% year-over-year to $31.78 million for the first quarter ended March 31, 2021. Its sales grew 4.3% year-over-year to $100.55 million, while its net loss decreased 32.6% year-over-year to $1.26 million. The company’s loss per share decreased 33.3% year-over-year to $0.12.
The company’s EPS is expected to come in at $0.31 for the quarter ending June 30, 2021, which represents a 520% year-over-year increase. It surpassed consensus EPS estimates in three of the trailing four quarters. FSTR’s annual revenue is expected to increase 8% year-over-year to $572.38 million in l 2022. The stock gained 57% over the past year to close Friday’s trading session at $18.17.
FSTR’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The stock has an A grade for Value, and a B grade for Quality, Growth, and Sentiment.
CX shares were trading at $8.55 per share on Monday morning, down $0.11 (-1.27%). Year-to-date, CX has gained 65.38%, versus a 14.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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