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3/1/2017 1:00:09 PM Eastern Time

Trump Rally Shifts to Rocket Stage  
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

Well for those that didn’t believe this was the Trump Rally, today points to an exclamation point on the main driver.  While there’s no doubt there’s excitement about potentially unleashing American greatness, much of this session is about the potential for unity, too.

There is a bunch of economic data out today, including the ISM Purchasing Managers Index, the nationwide report card on the state of manufacturing.   At 57.7, the index has reached its highest point since August 2014.

Drilling Down

Most of the respondents had great comments on the key trends in their industry:

“Business [is] improving and lead times are extending by two or more weeks.” (Chemical Products)

“Very positive outlook for this quarter. Production goals have been adjusted multiple times and increased each time due to demand.” (Computer & Electronic Products)

“Product demand continues to be solid.” (Plastics & Rubber Products)

“Bookings are heavy early in the season. Expect robust first half of the year.” (Primary Metals)

“Demand still outstrips capacity. Competitors have announced heavy capital investments to increase capacity.” (Food, Beverage & Tobacco Products)

“Sales and business continue to be strong and increasing.” (Machinery)

“Business holding steady in Q1.” (Transportation Equipment)

“Medical device manufacturing is still strong.” (Miscellaneous Manufacturing)

“Even though oil and gas prices are on the upswing, we still face a tough 2017 and will continue to save on costs.” (Petroleum & Coal Products)

“Major focus on commodities and potential [for] further inflation.” (Electrical Equipment, Appliances & Components)

Every aspect of the report was impressive, save for one that remains ominous – employment.   This continues to lag, but it’s the last piece of the puzzle that is otherwise coming together nicely.

Manufacturing at a Glance

February 2017

Series Index

Feb

Series Index

Jan

%

Change

PMI®

57.7

56.0

+1.7

New Orders

65.1

60.4

+4.7

Production

62.9

61.4

+1.5

Employment

54.2

56.1

-1.9

Supplier Deliveries

54.8

53.6

+1.2

Inventories

51.5

48.5

+3.0

Customers’ Inventories

47.5

48.5

-1.0

Prices

68.0

69.0

-1.0

Backlog of Orders

57.0

49.5

+7.5

New Export Orders

55.0

54.5

+0.5

Imports

54.0

50.0

+4.0

 

Incomes are picking up faster than expected, but gains have been so limited and inconsistent in recent years, consumers toggled back on their spending.   In a way, this should give many more confidence that consumers are going to need a wealth effect beyond a higher stock market before they spend too much money.

Personal Income & Spending

Dec

Jan

Income

0.3

0.4

Outlays

0.5

0.2

PCE

0.5

0.2

PCE (2009) Dollar

0.3

-0.3

 

Long Idea: Vulcan Materials Company (VMC) @ $124.60
Industry: Materials; Construction Materials
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$124.60
Entry Limitsee comments
Stop LossN/A
Target$150.00


Options Trade Parameters
Status Closed
Type Call
Option Symbol VMC170818C00120000
Entry Price $12.20
Strike Price $120.00
Expiration Date 8/18/2017
  Add to Position Tracker

BACKGROUND: Vulcan Materials Company is a producer of construction aggregates (primarily crushed stone, sand and gravel) and a producer of asphalt mix and ready-mixed concrete. The Company has four segments organized around its principal product lines: Aggregates, Asphalt Mix, Concrete and Calcium. The Company operates approximately 344 aggregates facilities. The Aggregates segment produces and sells aggregates (crushed stone, sand and gravel, sand, and other aggregates) and related products and services (transportation and other). The Company has approximately 15.7 billion tons of permitted and proven or probable aggregates reserves. The Company produces and sells asphalt mix in Arizona, California, New Mexico and Texas. The Company produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington D.C. and the Bahamas. The Calcium segment consists of a Florida facility that mines, produces and sells calcium products.

SKINNY: Vulcan Materials Company (VMC) is trading up on huge volume. We’re looking for a move to $150.00; longer term.


Key Fundamentals
PEG  1.39
Book Value  34.49
Institutional Holdings  90.20
Price/Sales  4.6
Average Daily Volume  1.3M
Shares Outstanding  132.36M
Market Value  16.51B
Insider Activity  1 Buy 7 Sells
52-week High  138.18
52-week Low  100.3
Annual Earnings Estimate  4.01

Analyst Coverage
 BofA/Merrill – Downgraded to  BUY
 SunTrust – Upgraded to  BUY
 RBC Capital Mkts – Reiterated  OUTPERFORM



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