Morgan Stanley Projects 'Super Cycle' That Will Boost These Holdings

*Morgan Stanley sees a cement super-cycle ahead

*We see that supporting our shares of Vulcan Materials, United Rentals and Waste Management

*Upcoming construction spending reports will encounter tough comparisons

Morgan Stanley MS is out with some bullish comments for Summit Materials SUM and Martin Marietta MLM because of the U.S. cement “super cycle” it sees between 2025 and 2030.

The firm sees that translating into annual low-single-digit volume growth over that period, which should also translate into a favorable pricing environment. The seeds for that outlook are ones that we’ve been talking about with members for some time now: continued infrastructure spending programs and nonresidential construction as well as a rebound in the housing market as Fed rate cuts take hold.

What Morgan Stanley didn’t do, however, was include the shares of Vulcan Materials VMC in that call, which we think is a massive error on their part, given that Vulcan is the largest producer of construction aggregates, including gravel, crushed stone and sand. Connecting the dots, that demand for cement bodes well for our shares of United Rentals URI and the non-residential business at Waste Management WM.

While Morgan Stanley’s call is a multi-year one, the next catalyst we will be watching for in all of this will be next week’s July Construction Spending report. The confluence of summer weather and infrastructure spending dollars should yield a favorable report.

In recent weeks, we cautioned members that, because we will soon lap infrastructure spending programs, before too long we will start to see more difficult year-over-year comparisons in the data. That’s a potential headwind for those infrastructure-related names, like United Rentals, that have soared over the last two years and have been a powerful contributor to the Portfolio.

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At the time of publication, TheStreet Pro Portfolio was long MS, VMC, URI and WM.