Stock Talk - Elizabeth Collins, Morningstar

Well it's time to make some money our guest is Elizabeth Collins from Morningstar she's an analyst and she's got three stocks that she's gonna share -- -- -- Elizabeth welcome to the show good morning. It. Elizabeth let's talk about Vulcan materials company VMC. Is the is the symbol for this one it's a 33 dollar stock -- it would kind of business and -- Booking materials. Operates -- and they pretty daunting gravel which are using construction materials. -- bridge is concrete building things of that nature. So this could be a good play if the Goldman Sachs report from yesterday is accurate and maybe it was on Monday when they said that there's going to be a 40% increase in commodity prices. Well actually commodity prices like -- -- ill. Gold -- like that that doesn't necessarily translate into higher prices for producers of stone sand and gravel because. Aggregates construction aggregates it is very local business and demand has been weak recently. But we expect that long term it will improve but bottom line what I'm trying to say is that. US producers of aggregate haven't benefited. To the same extent as commodity producers. Other materials that are more globally fungible and have been able to benefit from China's booming commodity demand. Now I've noticed their earnings they're they're losing 53 cents a share do you expect that to turnaround anytime soon. I think you'll feel of it Morningstar we take a long term view and I think that it they could take awhile for earnings to improved at Vulcan materials but I think that. Given the strength of their business model. I think that ultimately once. Demand for construction materials improves they will have a very strong earnings profile. All right so you look at this is a buy and hold my take. All right that's Vulcan materials. The MC the next of stock. Has a symbol of and L and that's Martin Marietta Materials. 66 dollars a share with a 2.4 percent dividend why do you like Martin Marietta. Same idea as Vulcan materials there in the same -- -- Martin Marietta is this is a slightly smaller company. But it has so much stronger balance sheet. So both both companies are plays on improving demand for construction materials but Martin Marietta is a little bit less risky. Because of their stronger balance sheet. Now what do -- does Martin Marietta do most of their business domestically here in the United States -- do they do a lot of overseas. Yet both of these businesses are very much focused in the United States. They might have some assets in outside but it it a within North America but those would be ships that quarries that they ship their product the United States so this is a very US North American focused business. So did they need an uptick in housing in order to get healthier. Housing highway construction commercial activity some of them some of these block other regions have been getting out because of the uptake and drilling for natural gas. Is it like -- -- to varying local business but overall in the United States for these companies to get better we need to see an uptick in housing in an uptick in -- construction activity. Well based on the state of our highways at least appear New England I'd say that the likelihood of highway construction is gonna do it continues pretty good I mean -- Our roads up -- route 128 is it is an abomination -- with a Mass Pike. Yet and -- history here in Chicago. Now hey how about compass materials or Compass Minerals I should say it is Ciampi is this the symbol here. This has a two point 8% dividend and they are making three dollars and 95 cents a share. -- they've produced -- -- insults you would probably familiar with the in Boston. We utilized here in Chicago as well that keeps -- faced during the winter. And they have the largest rock salt mine in the world which allows them to produce this solved very cost effectively. And and they serve customers throughout the Great Lakes region. -- in Canada and in the United States. Where's that at worst the salt mine are -- -- -- -- -- the and IE the you you like it it's 69. Yes they do they're thinking that last less went to very weak in terms of snowfall and so they're facing a period of weak demand as customers. Shut down their inventories but I think that ultimately will via reversion average weather on average and the company should seen improvement in earnings longer term. They also produced sulfate of potash specialty fertilizer from the Great Salt Lake in Utah yeah. And that solar evaporation facility also allows them to produce sulfate of potash specialty fertilizer very cost effectively. And that's fertilizer goes into specialty crops which is potatoes and fruit and vegetables. The -- are they doing any international business and they sell to China. About 25% of their potash volumes plus or minus each year goes outside the United States but they have pretty decent business in the west. And -- western United States because you know take for example California's very fruit and vegetable intensive. So -- so a lot of their product about 75% of product statement in the United States. But unlike the aggregate companies which we talked about earlier where that's very vocal commodity yeah. Potash fertilizer sulfate of potash fertilizer very globally fungible -- high -- to -- make their way around the world. All right well Elizabeth thanks a lot for your time sure appreciate it. That's Elizabeth called for morning star her three symbols stock symbols -- gonna look these up and do your own research. BMC. MLM. And CMP in his last one compass materials or Compass Minerals I should say international. Symbol CMP 69 dollars and fifty cents a share with a two point 8%. Current dividend yield. Interest in these stocks June. Our role in what I would consider to be a depressed mode because they're dependent on construction so. -- if you don't anticipate. That homebuilding in highly developments gonna pick up for few years. They -- by these are they with a longer timer -- not a trade these are an investment OK that's just long term.