It's hard to believe: We've just experienced back-to-back days in which the equities markets surged nicely. And after getting beaten down by Mr. Market like a rented mule, one sector now appears to be giving investors good reasons to hope for a rebound -- for at least a little while.
The industry? Construction.
No, I'm not talking about housing, despite the homebuilders' attempts to tap into government bailout money. Rather, I'm talking about the public works folks, such as Fluor (NYSE: FLR). The company is involved in all manner of big projects, ranging from energy-related building to crucial infrastructure work on roads, highways, bridges, rail facilities, and airports.
Probably because the administration-in-waiting has been talking up infrastructure work as an elixir for our sputtering economy, Fluor's share price has tacked on more than 25% in the past two trading days. Ditto for Granite Construction (NYSE: GVA), a California-based public-works company that has seen a 20% rise.
And then there are the cement producers, about half of whose output ultimately ends up in roads, bridges, and other public-works projects. Dallas-based Texas Industries (NYSE: TXI), for instance, operates cement and ready-mix facilities in California and Texas. It has seen its share price execute a two-day 17% improvement -- that after plunging 75% from its 52-week high in May.
And then there's another "Big D" operative, Eagle Materials (NYSE: EXP), which operates four U.S. cement plants and has enjoyed a 13% two-day bump. Eagle will be somewhat slower to respond to a public-works recovery, since it also operates gypsum wallboard plants that serve the homebuilding industry.
Yet despite having substantial U.S. assets, big Mexican cement manufacturer Cemex (NYSE: CX) hasn't quite joined its upwardly mobile peers. It gained just 7% on Friday and Monday. Clearly, in the face of a U.S. infrastructure push, Cemex's response will be slowed by drag from its assets elsewhere across the world.
The building of new roads and the reconstituting of bridges won't start overnight. Nevertheless, the companies operating in the heavy-construction sector have surrendered so much value recently that even the slightest glimmer of hope could push them back toward a recovery.
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