Cemex Looking At A Pretty Attractive Setup While Investors Seem Worried About The Cycle

 

On the whole, I wasn’t that bullish on infrastructure-leveraged names back in March of this year, as I thought a lot of good news was already getting priced into the stocks. Since my last article on the company, Cemex (CX) has done better than most, with a roughly 15% return versus a 12% gain at Martin Marietta (MLM), an 8% gain at Vulcan Materials (VMC), and an 8% decline at Holcim (OTCPK:HCMLY), not to mention low double-digit gains for Commercial Metals (CMC) and Insteel (IIIN), but Cemex has still lagged the S&P 500 over that time, with the shares mostly chopping around between $7.50 and $9 since first quarter earnings.

Given developments since then, I’m more bullish on Cemex, particularly as I think the outlook for pricing is pretty attractive on a multiyear basis. I do think the shares should trade above $10, but I do have some concerns that the market is overly concerned with recent peaks in non-residential construction indicators and may need to be “re-convinced” that the cycle isn’t over yet.

 

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Cemex Looking At A Pretty Attractive Setup While Investors Seem Worried About The Cycle