With weeks of churning action and complacent sentiment, the market was flirting with trouble for a while. Now, it has hit the intermediate-term tripwire, with the major indexes all sinking below their 50-day lines and most stocks doing the same. Thus, we mostly advise defense here, but still like Core & Main Inc. (CNM), advises Mike Cintolo, editor of Cabot Top Ten Trader.

CNM looks like a reliable grower in the infrastructure area that’s pulling back toward support. Core & Main isn’t going to wow you with revolutionary products or triple-digit growth. But the firm has a very solid, steady infrastructure-related story that should play out for many years to come.

That’s because of the numerous spending bills passed in Washington (and from individual states), as well as the sorry state of things like water infrastructure (the firm estimates water utilities suffer up to 16% loss of water thanks to old piping).

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Core & Main is one of two nationwide distributors of pipes, valves, and fittings (which make up about two-thirds of revenue), storm drainage and fire protection products, as well as water meters. About 80% of its revenue comes from non-commercial and municipal end markets.

Core has about 17% market share in total, with its closest peer about the same. That means two-thirds of the market is served by smaller regional or local outfits — which opens up further market share gains given Core’s stature, as well as through aggressive M&A. Indeed, the firm completed seven (mostly small) buyouts last year and four so far this year, with another couple pending.

While growth isn’t going to be rapid, sales and earnings growth are expected to begin accelerating in Q1. More importantly, the top brass believes the next few years will be very bullish, with revenues to grow 50% over the next five years while EBITDA lifts 65% and free cash flow soars.

Recommended Action: Buy CNM.

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