The Materials Select Sector SPDR Fund (XLB) is down more than 10% since last Tuesday, which, as per Rose Advisors’ Patrick Fruzzetti, is an opportunity to position your portfolio for long-term returns.
Fruzzetti likes Vulcan Materials Company
One name, in particular, that he likes within “materials” is the Birmingham-headquartered Vulcan Materials Company (NYSE: VMC). Explaining why on CNBC’s “Worldwide Exchange”, he said:
Vulcan Materials is in aggregates, which is an interesting business because it’s very localised. It’s heavy rock, you don’t want to ship it too far. Plus, VMC has variable cost structure that makes it ideal for an inflationary environment.
Last month, the construction company reported its financial results for the first quarter that handily topped Wall Street expectations. The stock currently trades at a PE multiple of 33.50.
VMC is attractive in terms of valuation
The Partner and Managing Director of Rose Advisors also attributes his constructive view on Vulcan Materials Company to attractive valuation. The stock is down nearly 30% versus the start of 2022.
It is certainly weaker this year, having gone down with the market. But they have a variable cost structure, they have pricing power. So, it makes VMC ideal for the current environment at a reasonable valuation.
According to Patrick Fruzzetti, the NYSE-listed company can perform well even without President Biden’s Build Back Better initiative. Wall Street, on average, sees a 45% upside in Vulcan Materials Company.
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