Florida rock is one of those Cramer stocks that gets bought up in the after hours whenever he mentions it so I generally stay away but yesterday’s 10% jump to $50 at the same time that housing starts were announce to be slowing caught my attention.
After a very bad Wednesday, the stock snapped back to its 200 dma of $48 and finished 5% over that. I think it will hit a lot of resistance at $55 but this company is a very nice 20% grower and, real estate market or not, the city of New Orleans has to be built out of something.
Have you ever tried to build a whole city? You need a lot of stuff! Conversations go like this: “Hey, does anybody have 175,000 nails?” “No, but I have 75 tons of concrete, just enough to build a restaurant with!”
Building things will be very, very, very big for the next few years. One thing that may have been driving FRK down is the word Florida in their name coupled with the non-stop media assault on the housing industry. Another more real concern is that we may be lifting tarrifs on cheap Mexican concrete (CX) but they are only considering that because there is a severe shortage of concrete!
So the market sheep are selling off the best performing company in the industry because a shortage of the stuff they sell! Baaahh!
If you want to make a fairly safe play you can buy CX and FRK but I think FRK is about to have a really nice run while CX is up 20% in the last 30 days as investors lick their chops over the prospect of selling concrete at American prices. The guys at Cemex are no fools, there is only so much cement anyone can make and the US companies are running at full capacity so we are not looking at cheap imports here depressing the market.
I’m going to take advantage of the option exp. day to pick up December $46.63s (I have no idea where they got that price) for $3.30, virtually no premium (makes no sense but that’s the quote)! I think it will end up more – check comments for actual pricing.
