This infrastructure construction company beat Wall Street’s estimates by $0.14 last quarter, and analysts expect the company to grow by 15.71% annually over the next five years.
MasTec Inc. (MTZ)
From Money Options
When I first wrote about MasTec (MTZ) in late December 2017, the stock was trading at $51, and the closing price on July 3, 2018 was $51.33. The trading range has been between $44 and $54. My original thesis was that MasTec, a diversified commercial construction company with a widely diversified set of divisions which service just about any type of construction—including the energy sector and telecommunications—would benefit from a Trump infrastructure plan.
Given the fact that there is little talk about a Trump infrastructure plan at the moment, I’m not surprised MasTec is trading flat for the year. Still, the story remains viable, and the company continues to beat earnings expectations, as it has done for the past four quarters. The next earnings report is due in August, and if the stock follows its usual trading pattern, the share price will move in the month before and the few weeks after the earnings report. The general trend of the move often depends on the guidance given by management during the earnings call.
Thus, it makes sense to consider holding MasTec in two separate share lots. One lot can be considered the core holding, while the second lot would be one used in trading the stock around its earnings report. For the trading lot, it’s useful to gauge key support and resistance levels—especially the 200 day moving average—where the stock often forms a base before rallying. Given the way the shares move, it may be a great candidate for a traditional swing trading approach.
Fundamentally speaking, the story remains intact. MasTec is a reliably profitable wel- run cyclical commercial construction company which is well positioned for sustainable earnings in a growing economy. If and when there is a Trump infrastructure plan which gathers momentum, MasTec will likely be a big beneficiary. Otherwise it’s a stock which can be partially used as a core holding, as well as a trading stock.
Finally, if the stock gathers enough momentum to move decisively above $55, it has the potential to move to the $70-$75 range.
Joe Duarte, Money Options, www.joeduarteinthemoneyoptions.com, July 5, 2018