What do investor portfolios, houses and bridges all share in common? They all need strong foundations, and the cement market could provide investors with the necessary materials to bolster the performance of their portfolios. With all eyes on the dysfunctional state of the US banks in recent weeks, the rest of the stock market has been largely ignored, despite what is turning out to be a positive earnings season for many of the S&P500 and Nasdaq’s biggest companies.
At the core of this particular investment case is the structural demand for basic materials, as the US goes through a programme of updating its crumbling infrastructure over the next decade. According to official surveys, at least $2.6trn (£2trn) needs to be spent to replace unsafe bridges, old dams and mediocre roads if the country’s infrastructure is to be brought up to scratch. While that structural (infrastructural?) point lurks in the background, the interaction between the price of their products and the cost of their inputs is aligning to boost the profitability of cement companies in the US at just the right time.