Market Overview

Small Cap Play On The New Infrastructure Plan (GVA)

Granite Construction Inc. (NYSE: GVA) is a company not many have heard, given the fact its market cap is just over $900 million. But this small-cap growth company could be your ticket to big profits, if President Obama's proposed $50 billion infrastructure spending plan comes to fruition.

Granite Construction Incorporated, together with its subsidiaries, operates as a heavy civil construction contractor and a construction materials producer for public and private sector clients in the United States.

The company's operations put it directly in line to receive some contracts from the government for infrastructure spending, should the bill pass.

The company pays a dividend, yielding 2.2%, out of the norm for a small cap growth stock.

The company has more cash on its books than debt, always a good sign for any company.

The company has quite a few negatives against it, namely a negative return on equity, no discernible revenue growth to speak of, and razor thin operating margins. Perhaps it is time for management to go, as these key metrics need to improve significantly.

Things have started to turn around a bit for Granite, having been awarded parts of more than $200 million worth of contracts in the past month.

Granite may very well be in line to reap some more bids from the upcoming stimulus bill, and if that happens shares should start to ramp up higher on increased revenue growth.

Granite closed the down down 27 cents, to trade at $23.65.

Posted-In: Long Ideas Trading Ideas

 

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