StreetSweeper: U.S. Concrete 'Ready To Crack'

US Concrete Inc USCR is a producer of ready-mixed concrete in several markets across the United States. Despite the near 20 percent return since the start of 2016 and a more than 80 percent return over the past year, The Street Sweeper's Sonya Colberg argued in a scathing report that shares are "set to go down, down, down." Image Credit: Public Domain

Colberg's main bearish thesis surrounds US Concrete's valuation. Specifically, shares are trading at an "incredible" price-to-earnings ratio of 544. This implies "people are paying 22 times for US Concrete than the average 24 P/E seen within the industry overall."

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"A P/E of 55 is just as outlandish as the nearly $1 billion market valuation placed on a company that is not curing cancer or selling the fountain of youth," Colberg continued. "And it sells cement primarily in just three regions of the country."

Colberg also highlighted the fact that "insiders have taken shares on a brisk walk to the auction block time and again over the last three months." Through March 14 to March 17, various insiders sold blocks of shares at a price of $54.01 to $55 – a perhaps concerning event since the sale took place at around $8 cheaper than its current all-time high of around $63 per share.

"Selling at that point suggests insiders may consider the stock overvalued at around $55 per share," Colberg argued.

Finally, Colberg highlighted the fact that US Concrete's "lifeblood" is "vulnerable to economic coolness." The company also faces external threats from rising interest rates and low oil prices.