Vulcan Lifts Building Materials Stocks After Earnings Beat

Vulcan Materials Company (VMC) shares tacked on 6.42% in Thursday's trading session after the nation's largest producer of construction aggregates topped analysts' fourth quarter earnings and revenue estimates. Earning per share (EPS) came in at 99 cents, well above the Zacks Investment Research consensus estimate of 87 cents per share, while revenue reached $1.09 billion, surpassing the Zacks projection of $1.08 billion. The company sees full-year 2019 EPS of between $4.55 and $5.05 and earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $1.250 billion to $1.330 billion.

Vulcan, which has a market capitalization of $14.88 billion, pointed to aggregates shipments as a 2018 highlight, reporting that they advanced 10% (6% on a same-store basis) from a year ago, driven by double-digit growth in Alabama, Arizona, Florida, Illinois, Tennessee and Texas. The company accredited the strong performance to increased levels of public as well as private construction demand. Vulcan Materials stock offers a 1.16% dividend yield and is up 14.06% on the year as of Feb. 15, 2019, after Thursday's sizable gains.

Vulcan's share price gapped above a key resistance area at the $107.50 level on above-average volume to close comfortably above the 200-day simple moving average (SMA). Aggressive traders who want to play the breakout should look for a move up toward the June swing high at $132.89 with a stop-loss order positioned below yesterday's low. More conservative traders may wait for a retracement to the initial breakout area before entering. Those taking this approach should use a similar profit target but place a stop below the February swing low.

Chart depicting the share price of Vulcan Materials Company (VMC)

Vulcan's strong quarterly results saw buyers step up to the plate in leading names across the sector. Let's look at possible swing trading opportunities in two other leading building materials stocks.

Martin Marietta Materials, Inc. (MLM)

Martin Marietta Materials, Inc. (MLM) supplies aggregates and heavy building materials such as crushed stone, sand, gravel and concrete to the construction industry in the United States and globally. Although the company's fourth quarter EPS of $1.66 missed analysts' expectations by 2.9%, revenue increased 5.1% year over year. Martin Marietta expects total revenues in 2019 to be in the range of $4.48 billion to $4.68 billion. Trading at $187.49 with a market cap of $11.72 billion and offering a 1.04% dividend yield, the stock is up over 14% year to date as of Feb. 15, 2019.

Martin Marietta shares have tracked steadily higher since printing a December low at $160.60. The stock rallied nearly 4% from an uptrend line on heavy volume in Thursday's trading session. Traders who open a long position here should target the 2018 June and July swing highs as a take-profit area. Stop-loss orders could sit below the 50-day SMA. Think about moving stop orders to the breakeven point at the $195 level, where the price may find resistance from several trendlines and the 200-day SMA.

Depicting the share price of Martin Marietta Materials, Inc. (MLM) 

Masco Corporation (MAS)

Masco Corporation (MAS), with a market cap of $10.97 billion, is a global manufacturer and seller of home improvement and building products. The Michigan-based company operates through four business segments: Plumbing, Decorative Architectural, Cabinet and Windows. Traders who take a position in the stock should monitor CEO John Sznewajs' presentation at the Raymond James 40th Annual Institutional Investors Conference in Orlando on Monday, March 4, for further updates about the company's strategic direction. Masco stock trades at 15.7 times earnings, below the industry average price-to-earnings ratio (P/E ratio) of 18.2, and is up an impressive 27.80% as of Feb. 15, 2019. Investors receive a 1.31% dividend.

The stock started 2019 on a positive footing, rising over 11% in January, and it accelerated above the 200-day SMA in early February after the home building products company beat the Street's top- and bottom-line projections. Masco's share price appears overbought in the short term, with the relative strength index (RSI) above 70.0 and declining volume over the past week. Traders should seek an entry point close to $35, where the price finds support from the 200-day SMA and a trendline extending back to late December. Consider booking profits on a move to the $40 level, where the August 2018 swing high may present overhead resistance. A stop could sit just below the Feb. 7 earning gap.

Chart depicting the share price of Masco Corporation (MAS)
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