Better Than Expected Construction Spending Helps Related Stocks

NEW YORK (TheStreet) -- On July 24 I wrote, Downgrades Point to Weak Construction Spending Ahead and on Tuesday we learned that construction spending rose a better than expected 0.6% in July. This information prompted me to provide an update on the profiles for the 11 construction-related companies I covered on July 24. All 11 stocks had sell ratings according to www.ValuEngine.com, and today they all have hold ratings.

Between July 23 and Aug. 30 all 11 stocks profiled then and now have traded lower; four by less than 2%, and seven by 5.9% to 11.7%. On July 23 nine of the 11 were above their 200-day simple moving averages and today there are six as the risk of reversion to the mean was a factor.

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

General Cable ( BGC) ($30.24) beat EPS estimates by 13 cents earning 69 cents a share on July 31. The provider of cooper and fiber optic wiring traded up to $33.36 on Aug. 1 and has been below its 200-day simple moving average at $32.32 since Aug. 15. My semiannual value level at $23.89 a weekly pivot at $32.28 and a monthly risky level at $35.45.

Cemex ( CX) ($11.26) matched EPS estimates on July 26 losing 4 cents a share. The cement company set a post-earnings high at $12.53 on Aug. 14 and remains above its 200-day SMA at $10.74. My semiannual value level is $9.32 with a monthly risky level at $12.60.

Dover ( DOV) ($85.64) beat its earnings estimate by 7 cents on July 18 earning $1.36 a share and set a multi-year high at $88.70 on Aug. 14. My semiannual value level is $77.70 with a semiannual risky level at $87.43.

Ingersoll-Rand ( IR) ($60.53) beat its earnings estimate by 6 cents on July 19 earning $1.14 a share, and the reaction high was $63.35 on July 22. My annual value level is $43.36 with a semiannual pivot at $62.60 and a semiannual risky level at $66.74.

Masco ( MAS) ($19.08) beat EPS estimates by 4 cents earning 23 cents a share on July 29 and the reaction high was $21.64 on Aug. 2 and today the stock is trading just below its 200-day SMA at $19.23. My quarterly value level is $18.14 with a semiannual pivot at $19.14 and monthly risky level at $22.50.

Mueller Industries ( MLI) ($53.74) reported quarterly results of 90 cents a share on July 23 and traded to a new multi-year high at $58.15 on July 24 then fell below its 50-day SMA at $54.34. My semiannual value level is $46.55 with a quarterly pivot at $54.25 and monthly risky level at $56.29.

MeadWestvaco ( MWV) ($36.35) beat EPS estimates by 10 cents earning 37 cents a share on July 30 and the reaction high was $37.73 on Aug. 1. My quarterly value level is $29.32 with a monthly risky level at $38.26.

Potlatch ( PCH) ($38.00) beat its earnings estimate by 19 cents earning 50 cents a share on July 24 and the reaction high was $44.93 on Aug. 1. The stock has been below its 200-day SMA at $43.18 since Aug. 14. My quarterly value level is $37.88 with a semiannual pivot at $41.18 and annual risky level at $43.13.

Plum Creek Timber ( PCL) ($43.72) beat EPS estimates by 5 cents earning 28 cents a share on July 29. The stock set a reaction high at $49.62 on July 30 and has been below its 200-day SMA at $47.82 since Aug. 12. My semiannual value level is $42.45 with a quarterly pivot at $45.30 and annual risky level at $47.60.

Texas Industries ( TXI) ($58.92) beat its earnings estimate by 29 cents on July 11 earning 54 cents a share. The stock traded sideways to down since then and has been below its 200-day SMA at $60.25 wince Aug. 27. My quarterly value level is $52.05 with a semiannual pivot at $58.20 with an annual risky level is $61.58.

USG ( USG) ($23.85) beat EPS estimates by 6 cents earning 23 cents a share on July 25 and the stock set a reaction high at $27.16 on Aug. 5 which was a failed test of the 200-day SMA at $26.78 at that time. My annual value level is $17.69 with a monthly pivot at $23.54 and semiannual risky level at $25.64.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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