Investing in cement stocks

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I’m very interested in cement stocks after reading Lou Whiteman’s article Investing in Cement Stocks October 22, 2022 in Motley Fools. I feel cement can really take off considering the infrastructure bill was signed, the northern pine weevil is decimating pine forests in The United States and Canada causing the price of lumber to soar and 3-D printed concrete houses are being built. Cement is dependent on fossil fuels but Heliogen is working on a process to use concentrated sunlight to fuel the cement making process.

Vulcan Materials Company is experimenting with a process called carbon cure. It injects carbon into concrete to make it stronger while capturing the carbon to keep it out of the atmosphere. Any thoughts on Heliogen, Vulcan, James Hardie Industries, Cemex or other companies mentioned in Mr. Whiteman’s article?

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Materials stock might be ok as long term holdings. I don’t see them as growth stocks. They will be lucky to keep up with inflation and grow with the population. Translation, like most commodity stocks they are cyclicals. Great to buy them when they are down to accumulate. But spotting the bottom is always tricky. Better to wait until you see signs of recovery. Otherwise, you can be in for a long wait. Remember the biblical seven years of feast followed by seven years of famine. Fourteen years can be a long time to wait.

Lumber got very expensive a few years ago during Covid and recently has come down to earth. Slowing home sales from higher interest rates is likely to send it lower. Has it bottomed? I don’t know. The home builder stocks are an indicator. Some seem to have an earnings bounce. Builders can do much to cut costs in slow times. Earnings can be ok. But tough times don’t make it easy.

And what is the impact of recession. I say wait for the bottom. Then buy. Or they can be ok to sell options while you wait for recovery.

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“Any thoughts on Heliogen, Vulcan, James Hardie Industries, Cemex or other companies mentioned…?”

lulu,

HLGN merits a ‘Pass’. (Currently unprofitable and not forecast to become profitable over the next three years.)

JHX merits a ‘Pass’. (High level of debt. Div not well covered. Forecasted earnings growth is a lowly 1.4%.)

CX merits a ‘Consider’. (Strong financial health. Earnings forecasted to grow 7.11% per year. Pays a reliable 3.2% div.)

But if it’s an infrastructure play you’re looking for, rather than just a bet on materials, look at GVA, whose balance sheet is decent and whose forecasted earnings growth is 49%. Also, some of the companies in the industry/sector issue bonds that are worth considering. (E.g., I’ve done well with VMC’s debt.)

But, in general, I’d say this about any of TMF’s “hot stock tips”. Their “analysts” suck majorly, because their “research” is superficial. It’s OK as a starting point. But it should never, ever be treated as actionable advice.

Arindam

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There are a few very large industrial buildings being built around our neck of the woods and it seems that they are being built using HUGE concrete wall structures. I would say they are 15-20 feet wide and 30-40 feet tall. It looks like the two structures are destined to become warehouses / distribution centers. It also looks like these panels have “knock out” sections for windows, doors and truck delivery bays.

I found a web site of a company that produces what I’m talking about → Precast Concrete Wall Panels - Architectural Wall Panels

Pretty amazing.
'38Packard

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Thank you for the advice.

But, in general, I’d say this about any of TMF’s “hot stock tips”. Their “analysts” suck majorly, because their “research” is superficial. It’s OK as a starting point. But it should never, ever be treated as actionable advice.

This is my last year with MF’s. I won’t resubscribe. For over 10 years I found their information helpful and then they jumped the shark when they recommended stocks like Lemonade and Match. Would you feel comfortable recommending a website or stock analysis subscription?

Thank you for your thought. I appreciate it.

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lulupop,

Let me grab some breakfast, and then I’ll get back to you with an answer you probably aren’t going to like, but is what you need to do, namely, become your own stock tipster.

Arindam

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lulupop,

You’ve gotta answer for yourself why you felt comfortable with TMF’s past stock picks and why you’re now losing money with them. The answer is simple.

" Never confuse brains with an bull market."

When the bulls are running, especially when they are being fed an endless stream of nearly free money, stocks get bid up, and darts do as good as a job of picking winners as any thing, because everything is bubbling up. But when markets get tough, then it becomes obvious who has a sound investing method or not. Or as Buffet has said on many occasions, “When the tide goes out, you can see who’s been swimming naked.” Cathy Woods is a prime example of such nakedness. The GBoyZ are another. So, what to do?

I’d suggest that you go back to basics. Get a copy of Ben Graham’s, The Intelligent Investor, and work your way through it, pencil in hand, underlining and making notes. Next, get a copy of Justin Mamis’, The Nature of Risk, and do the same study. A third book is Edwin Lefevre’s, Reminiscences of a Stock Operator. A fourth is Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets.

Between the four, you should come away with the idea that investing consists in making decisions under conditions of uncertainty, but that there generally is enough evidence in a company’s financial statements and/or in how the market is trading the stock to make an informed decision such that, more often than not, you keep yourself out of trouble, as well as make a decent return.

As for websites that offer stock tips, there are hundreds of them. But none of them will do you any good if you don’t know how to evaluate their recommendations. In time and with practice, you should be able to gather in under two minutes as much info as you need to make a decision, yea or nay, whether you want to size a position and try to execute.

In short, this stock investing stuff ain’t rocket science. It’s more like bass plugging or small creek trout fishing. You read the water, make a cast or two, and then move on. Some days, you limit out. Some times, the catch for the day was just time on the water.

Arindam

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Arindam,

LOL. I think I do a pretty good job but I’m looking for a source of information that can distill 1000 companies to maybe 100 and I’ll take it from there. I researched GVM and like what I saw. Thank you for that.

lulu

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lulu,

If quick filtering is what you need, you might poke around at StockCharts. They’ve got prebuilt scans, and a subscription allows you to script your own, which brings up a whole 'nother possibility, TD AmeriTrade’s Think or Swim platform for which there are plenty of tutorials on how to write scripts and to scan for stocks.

Also, poke around FinViz. Their scanner isn’t bad, though it’s stronger on fundamentals than technicals, as are those offered by every broker. It all depends on putting in the hours to learn how to use those resources effectively.

If it’s breakout situations you’re looking for, try to find a copy of a legacy charting program called CandlePower Ultra. With it, I can slam though 100 stocks (or ETFs or mutual funds) per second to find the few that might be worth digging into further.

If instead of filtering hundreds/thousands of stocks, what you’re looking for is second opinions, then take a look at Simply Wall Street, a fundie website I trust. Not cheap, but worth every penny to me for the time it saves me and the trouble it keeps me out of. Another site --free-- is Wall Street Zen. Not as easy to use, but it offers the same sort of filtering focused on fundamentals.

Lastly, if you’re looking for a website that scans 18,000 stocks daily and combines fundamentals with technicals, then demo VectorVest.

Arindam

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Arindam,

I’m astonished that you took so much time to share so much information. I have relatives who won’t share their precious zucchini bread recipe and you’ve freely shared your extensive knowledge regarding stocks. Sincere thank you.

I’ve have a copy of Intelligent Investor and I do study TD’S Think or Swim. I’ve come across a few of the sites you mentioned but never studied them closely. I’ll give them another look and check out FinViz. That’s a new one.

You should teach an investing class. I like the way you get straight to the point, answer the question and it’s obvious you know what your talking about. I think I may have given the impression that I bought Lemonade or Match. I didn’t. That was an example that Motley Fools advice is far from what it used to be.

Thank you again. Take good care.

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lulu,

You shouldn’t be surprised that I tried to answer your questions, for this reason. I’m the one who learns the most from the exchange, because thinking about an answer forces me to review my methods and to question my assumptions, which is always A Good Thing.

Hugely glad to hear you didn’t buy LMND or MTCH. Others did, and when they later whined on the FAQ board that they were now losing money, it was very obvious why. Though the balance sheets for the companies seemed to look good --for having recently raised cash from IPOing-- neither was profitable nor forecasted to becomes so over the next three years, AND by the time the G BoyZ had begun to pitch those stocks to their subscribers, they had already made substantial moves up, so much so, they were now better ‘shorts’ than ‘longs’.

As for screening for stocks, here’s a book (I own, have used, and like) that you might want your library to borrow for you, Harry Domash’s, Fire Your Stock Analyst, or just pick up a used copy from Amazon.

Here’s a snippet from a review:

"I teach a software engineering course in Quantitative Investment Modeling. My main course texts are Kirkpatrick & Dahlquist’s Technical Analysis and Domash’s Fire Your Stock Analyst. I also rely on Damodaran’s Investment Fables, Hirsh & Hirsch’s Stock Trader’s Almanac, Tracy’s How to Read a Financial Report, Shadish, Cook & Campbell’s Experimental & Quasi-Experimental Designs, and Pardo’s Evaluation & Optimization of Trading Strategies. My typical students are graduate students or seniors in software engineering, computer science, business, or psychology. Some of them have trading experience, most have programming experience, all of them are interested in applying research methods to trading models. We do a lot of data mining in the course (it IS a software engineering course), we use a lot of tools, but we also look carefully at the characteristics of individual stocks. My bias as a reasonably successful investor is that technical analysis helps me identify interesting stocks, and fundamental analysis helps me decide (from that pool) which ones to actually invest in or trade.