This week’s Stock of the Week stands to gain big as infrastructure projects ramp up.

Rebar and Beyond

Commercial Metals Company (CMC) is a major manufacturer and recycler of steel and metal products worldwide—and stands to be a big beneficiary of coming infrastructure improvements in the US.

The reason is that the company is the largest US maker of rebar—the steel bars that reinforce concrete—with about 25% of the domestic steel production capacity for rebar. And it has just made a deal to grow that part of its business by acquiring the North American rebar assets of Brazil-based Gerdau SA. That will roughly double Commercial Metals’ capacity for making rebar in North America.

The company also has gone through a transformation in the past year by getting out of a trading-and-distribution business to free up working capital so its funds can be allocated more efficiently. Revenue was $4.57 billion in fiscal 2017 and will likely be $5.13 billion in fiscal 2018 and $5.22 billion in fiscal 2019. The dividend of $0.48/share/yr. recently yielded 2.1% and appears secure.

Fiscal year: August. Earnings per share: 2019 est./$2.04…2018 est./$1.47…2017/$0.85.

Eric Marshall is co-manager of the $595 million Hodges Small Cap Fund, Dallas. HodgesFunds.com