CEMEX – Trump’s #1?

In Monday’s Goldman Guide we referenced the fact that it looks like there is an 88% chance Hillary Clinton will win the presidency as of this moment. We reviewed the big generic pharma, Teva Pharmaceutical (NASDAQ—TEVA). We thought we would examine a pick for a Donald victory in November.

One of the major promises or gaffes, depending on your political persuasion and opinion of Trump, are his comments that he would build a wall between Mexico and the United States and he would get the Mexican government to pay for it. No doubt this will take millions of yards of concrete!

CEMEX, S.A.B. de C.V. (NYSE – CX- $8.81) is an ADR from Mexico’s largest concrete and construction Company, which is also one of the world’s largest producers. No doubt this will be huge if Trump builds his wall! The chart below illustrates the stock is on an accumulation run and now trading well above its 100-day EMA.

CX 2-Year, 100 Day EMA

(Source: www.otcmarkets.com)

Anyone who is objective understands that more than likely this wall will never exist. Trump shoots from the hip and this was really just to fire up the base. However, we still believe the stock is worth buying for a few reasons.

First off, the Company has met or exceeded EPS expectations three consecutive quarters. These days, this is critical to get noticed and get some ‘pops’ from. Wall Street projections for revenue growth of 5.5% over the next two years take the price earnings trailing metric of 400x to a forward metric of 22x! This puts the 5-year PEG at 0.3. Finally, the operating margin of 12.3% is extremely impressive for any material company.

CX is a solid growth Company and should be set to boom again in 2017. Look for an accumulation run up to the $10 level sometime in Q4 2016.

Have a great day!

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