Ford Motor Company (F), Caterpillar Inc. (CAT), Cemex SAB de CV (ADR) (CX): Three Cyclical Stocks to Consider as Monetary Expansion Ends

The cement champion

Cemex SAB de CV (ADR) (NYSE:CX), the Mexican cement maker that currently makes 29% of its EBITDA from its US operations, is poised to keep outperforming the market. Cemex SAB de CV (ADR) (NYSE:CX) plans to increase capacity at its Odessa plant by 62% on the back of a positive outlook in the US. A few weeks ago the company announced its plans to expand production capacity in Texas to keep up with the region’s increasing demand.

Not only is Cemex SAB de CV (ADR) (NYSE:CX) expected to grow sales in the US with a recovering housing market, but the company is also becoming an active player in oil and gas exploration. The company is growing fast in its sales of specialty cement for the construction of oil wells and in the sale of materials for the growing fracking industry.

With cement volumes gaining momentum, I believe Cemex SAB de CV (ADR) (NYSE:CX) could grow its year-over-year EBITDA in the US as much as 100% thanks to better pricing and booming volumes. Even if the stock is up by 21% year to date, I think its upside potential is still huge. The company has cut debt by selling non-core assets and floating other assets such as its Latin American operations and now trades at 9.5 EV/EBITDA and at a 1.2 price-to-book ratio.

Bottom line

The three companies named above hold long term value and could be part of any long term portfolio. That said, they should perform much better than the rest of the market in scenarios where GDP rises. The US economy has started its growth phase and with unemployment down, consumption and construction should boom in the coming years.  Even if all the companies above should perform well, among this group, I would make a bet on Cemex SAB de CV (ADR) (NYSE:CX). Its US focus and its leverage on the construction business makes it a great long play. It’s always easier to grow fast when you are starting from a lower base.

The article 3 Cyclical Stocks to Consider as Monetary Expansion Ends originally appeared on Fool.com and is written by Federico Zaldua.

Federico Zaldua has no position in any stocks mentioned. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Federico is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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