According to several news outlets, from local television stations in Florida to the venerable Wall Street Journal in NYC, America is in the midst of a shortage in an essential commodity -- cement. Apparently, the world has plenty of the stuff, but China has lassoed all the ships that used to haul cement to the U.S. and is using them to haul other goods needed to supply China's booming economy.
So, yes, this article is about cement. Not the most exciting subject, I grant you. But remember the words of Fool idol Peter Lynch, who once opined: "A company that does boring things... keeps the oxymorons away until finally the good news compels them to buy in, thus sending the stock price even higher." Fool co-founder Tom Gardner also likes boring companies, especially when they focus on doing that one, boring thing very well indeed. (As he explains in this fourth of several articles laying out the principles of Motley Fool Hidden Gems investing.)
All the more so when the company's boring business is producing stuff essential to a country in the middle of a housing boom -- at the exact time when a deficit in that stuff appears. Industry analysts are saying that the U.S. could be in for several months, indeed, up to half a year, of cement shortages. That should grab the interest of investors willing to buy companies in such boring fields as mining or mixing rocks and rock dust.
Think rock-digger extraordinaire Vulcan Materials (NYSE:VMC) on the first count, or Mexican cement mixer and Stocks 2003 pick Cemex (NYSE:CX) on the second. Or even fellow Fool James Early's recent find, Headwaters (NASDAQ:HDWR), whose sphere of business -- collecting coal dust -- is not only boring but "disagreeable." The disagreeability of a business is also inversely proportional to its popularity, according to Lynch. Thus, it also helps to keep a stock cheap for you and me until the institutional investors can no longer ignore the stock's earnings growth. And as Early pointed out in his piece, the coal dust that Headwaters collects makes an even stronger cement than the stuff that Vulcan and Cemex produce.
Something to ponder the next time you are eyeing the building products displays at Home Depot (NYSE:HD) or Lowe's (NYSE:LOW), wondering just who the heck this French guy Lafarge (NYSE:LAF) thinks he is, charging such high prices for his cement. Will you be grumbling and fumbling for your wallet then? Or will you be smiling because you saw the trend when it began and are benefiting from the markup?
Fool contributor Rich Smith does not own shares of any of the companies mentioned in this article.
