This company will be cementing the future of America’s infrastructure

This research was produced by the Valens Research analyst team, Chief Investment Officer Joel Litman, and Director of Research Rob Spivey.

The U.S. is moving forward with major plans to rebuild and modernize its infrastructure, covering everything from roads to bridges and public buildings.

Concrete Pumping Holdings (BBCP) is a leading provider of specialized concrete pumping and cleanup services, benefiting from high barriers to entry due to its large fleet and skilled operators.?

Despite market fears of a construction slowdown, government infrastructure projects in the U.S. and the U.K. point to continued demand for concrete.?

The company’s broad service offerings and international presence position it well for ongoing industry growth.

Stock and Macro Insights by Valens Research

The United States is moving forward with major plans to rebuild and modernize its infrastructure, covering everything from roads to bridges and public buildings.

All these projects have one need in common: Concrete.

Concrete is the backbone of infrastructure projects. Its durability, versatility, and strength make it the ideal material choice for building.

It is not an easy material to handle and its applications are far from straightforward. It requires precise, efficient, and specialized services to meet the extensive demands of large-scale construction projects.

This is where Concrete Pumping Holdings (BBCP) comes in.

As the leading player in the concrete business, Concrete Pumping offers a comprehensive suite of services that address the multifaceted challenges of working with concrete.

The company’s main business is concrete pumping, an essential process that ensures concrete is delivered and placed precisely where needed, whatever the complexity or scale of the project.

This service not only enhances efficiency but also significantly reduces labor costs and construction time, making it a critical component in the execution of infrastructure projects.

Concrete may look simple when we see it on sidewalks, highways, and buildings, but the process of placing and managing it requires skill and the right tools.

It involves pumping concrete through large hoses, sometimes at tall heights or deep in foundations, all while keeping the worksite safe and clean.

Concrete Pumping has built its business around these tasks. By focusing on the pumping process and the related cleanup, they’ve carved out a niche in a highly specialized industry.

In the U.S., the company provides local builders, contractors, and large construction firms with a fleet of over a thousand pumping units.

They also offer waste management solutions through Eco-Pan, which helps construction crews contain and remove excess concrete and wash out water.

The ability to handle both pumping and cleanup makes Concrete Pumping a convenient one-stop shop, and this has helped them become a leader in their sector.

Their presence isn’t just limited to the U.S. They also operate in the U.K. through a subsidiary called Camfaud, which is known as the largest concrete pumping business in that region.

This gives Concrete Pumping another avenue for growth because the U.K. is also investing in new infrastructure and large public transit projects.

One key reason for the company’s strong standing is how challenging concrete pumping can be.

It’s not enough to have trucks and hoses. Operators need thorough training and must follow safety measures to manage the pressure and weight of wet concrete.

This creates a barrier for potential competitors since the cost to acquire specialized machines and train skilled staff is high.

Along with pumping, the firm also leases and rents out equipment, pans, and containers, providing builders with flexible options.

Leasing can be attractive for smaller construction teams that only need concrete pumps for limited parts of a job.

By offering multiple services, the company reaches a broader range of clients and project types, from small local builds to large-scale commercial developments.

Because of this business model, the company managed to improve its profitability significantly over the years.

Its Uniform return on assets “ROA” jumped from 7% in 2017 to 18% in 2023.

In the last few years, the company struggled to maintain the peak ROA it reached in 2020, and the market is expecting this trend the continue.

We can see what the market thinks through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market expects the company’s ROA to fall to 9%, similar to the 2017 levels.

The market’s pessimistic view is caused by the fear of construction spending slowing down because of the economy, decreasing the demand for concrete.

Looking ahead, the U.S. government’s infrastructure initiatives point to ongoing demand for concrete.

Roads, tunnels, bridges, and large public facilities will need to be refurbished or built from scratch.

Many analysts also expect continued spending on housing and urban development, despite concerns about market slowdowns.

With concrete as a vital component in almost every building or roadway, it’s likely Concrete Pumping Holdings will see increasing demand and steady work.

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist & Director of Research at Valens Research

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As always, thanks for letting me share the quality research done by Joel, Rob, and our expert team.