Smith-Midland (SMID) is one of the few infrastructure plays that have managed to fly under the radar of most investors yet at current prices it seems to be one of the better trade opportunities out there on an increase in infrastructure spending in the coming months.
SMID makes concrete barriers used primarily in highway construction as well as sound barriers and utility vaults. The company has been seeing improving results and backlog even before there has been a significant impact from federal stimulus spending.
The company also has a very solid balance sheet trading just under book value of 1.61, a current ratio of 2.3 and .31/share in cash.
I expect the June quarter to prove that at least in the interim the company can sustain very solid earnings and a low forward PE ratio. As a result I think SMID is an excellent candidate for appreciation over the next 3-6 months as investors recognize that this is one of the cheapest plays in an industry that should be growing thanks to our tax dollars at work.
Disclosure: Long SMID.