Trans Texas Corridor expected to generate business in crushed stone
Vulcan Materials Turns Stone to Profit
24 November, 2005
Herald News-Daily
Copyright 3005
NEW YORK - While oil and gold prices have dominated market talk, a less flashy commodity has also rewarded investors this year: stone.
The company‘s prospects are still good — it stands to benefit from even higher prices, highway spending, construction in the Gulf region and tight supplies. In the first nine months of 2005, prices of crushed stone and sand, or construction aggregates, rose 7 percent per ton.
The stock slipped 74 cents, or 1.1 percent, to close at $67.14 Wednesday on the New York Stock Exchange . On a 52-week basis, the low of $51.05 was last Nov. 23, with a high of $76.31 reached on Oct. 4.
"People freaked out over that," said RS Investments portfolio manager John Wallace, who has about $2 million of his $206 million RS MidCap Opportunities fund in Vulcan stock. Wallace stayed with Vulcan because he believes that the economy is strong and that the outlook for construction and state infrastructure spending is bright.
Vulcan had 2004 earnings from continuing operations of $2.52 a share.
Goldman Sachs & Co. analyst Jack Kelly, who doesn‘t own any Vulcan shares, said crushed-stone prices have risen steadily this year, partly because of the difficulty of opening new plants to meet increased demand, "given environmental concerns and the pushback from homeowners," particularly in coastal areas such as Florida.
"If there‘s a shortage of stone in North Carolina and a surplus in Illinois, you could certainly ship it, but it‘s going to be very expensive stone when it gets there," said Kelly.
One area where Vulcan has to ship stone is Louisiana and the Gulf Coast, where quarries are hard to find.
So Vulcan sends barges of rock downriver to the area from a Kentucky site and ships it up from a site in the Yucatan peninsula in Mexico. Goldman Sachs‘ Kelly, who rates the shares at in line because of valuation concerns, expects a significant increase in demand from the Gulf Coast, where he estimates about 5 percent of the company‘s overall annual crushed-stone sales originate.
Among the highway projects that James expects to generate business: the "Trans Texas Corridor," a highway-and-railroad channel proposed to stretch from the Mexico border to the northern reaches of Texas. State and federal budgets are also coinciding to bring a hefty increase in highway spending in California.
While it‘s the largest crushed-stone company in the nation, Vulcan still represents only about 10 percent of the market, leaving plenty of room for growth through consolidation.
© 2005 The Associated Press: www.heraldnewsdaily.com
24 November, 2005
Herald News-Daily
Copyright 3005
NEW YORK - While oil and gold prices have dominated market talk, a less flashy commodity has also rewarded investors this year: stone.
The company‘s prospects are still good — it stands to benefit from even higher prices, highway spending, construction in the Gulf region and tight supplies. In the first nine months of 2005, prices of crushed stone and sand, or construction aggregates, rose 7 percent per ton.
The stock slipped 74 cents, or 1.1 percent, to close at $67.14 Wednesday on the New York Stock Exchange . On a 52-week basis, the low of $51.05 was last Nov. 23, with a high of $76.31 reached on Oct. 4.
"People freaked out over that," said RS Investments portfolio manager John Wallace, who has about $2 million of his $206 million RS MidCap Opportunities fund in Vulcan stock. Wallace stayed with Vulcan because he believes that the economy is strong and that the outlook for construction and state infrastructure spending is bright.
Vulcan had 2004 earnings from continuing operations of $2.52 a share.
Goldman Sachs & Co. analyst Jack Kelly, who doesn‘t own any Vulcan shares, said crushed-stone prices have risen steadily this year, partly because of the difficulty of opening new plants to meet increased demand, "given environmental concerns and the pushback from homeowners," particularly in coastal areas such as Florida.
"If there‘s a shortage of stone in North Carolina and a surplus in Illinois, you could certainly ship it, but it‘s going to be very expensive stone when it gets there," said Kelly.
One area where Vulcan has to ship stone is Louisiana and the Gulf Coast, where quarries are hard to find.
So Vulcan sends barges of rock downriver to the area from a Kentucky site and ships it up from a site in the Yucatan peninsula in Mexico. Goldman Sachs‘ Kelly, who rates the shares at in line because of valuation concerns, expects a significant increase in demand from the Gulf Coast, where he estimates about 5 percent of the company‘s overall annual crushed-stone sales originate.
Among the highway projects that James expects to generate business: the "Trans Texas Corridor," a highway-and-railroad channel proposed to stretch from the Mexico border to the northern reaches of Texas. State and federal budgets are also coinciding to bring a hefty increase in highway spending in California.
While it‘s the largest crushed-stone company in the nation, Vulcan still represents only about 10 percent of the market, leaving plenty of room for growth through consolidation.
© 2005 The Associated Press:
posted by Porkus Maximus Tex: at Thursday, November 24, 2005
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