ROAD's recent 20% decline is an overreaction; fundamentals are strong, interest rate risks are manageable (max 3-4% earnings impact), and the stock is cheap enough to justify continued buying below $100.

Now, let's move on to the fourth and final stock that we have to talk about very quickly. And this one is road or construction partners because the stock is down roughly 20% after posting what I thought was a very good earnings report.

So, the TLDDR is I think that everything is more than fine with Road's business. The thesis is still intact and the market is just freaking out because bond yields continue to rise and there are inflation worries.

I think that inflation is basically a non-factor for Road's business. But the one thing that could realistically impact Road's business is rising interest rates. And this is because the business has about $1.5 billion worth of floating rate debt on the balance sheet.

So for every 1% increase in interest rates, they have to pay $15 million more in interest payments.

But a 1% increase to interest rates is dramatic and I don't even think that will happen. So if we do get a 0.25% or a 25 basis point increase to interest rates, then Road would see another $4 millionish increase to its interest payments.

However, this is a business that is doing about $325 million in owners free cash flow per year. So if interest rates do go up by 1%, then at the business's current run rate, it could impact the earnings by what would that be?

like 3 to 4%ish. That is dramatic in my opinion because again a 1% increase to interest rates would cause a about 3% decline to earnings and the stock has sold off 20%. So I think this selloff is way more than overblown.

I think the thesis of this business is very much still intact. In fact, they recently announced that they're continuing to acquire businesses. They just closed on another acquisition.

And the thesis here is so simple, right? As long as roadways need to be maintained in the United States, especially in the southern United States, this business is going to continue seeing demand and they're going to continue having work and business.

In fact, inflation actually causes some of their contracts to increase in value because they have inflation indexation in their contracts with the government. So, I think that everything's going to be fine here.

And ultimately, I think that Road stock is continuing to get very cheap. And in my own what I believe are pretty conservative DCFs, I now get well over a 20% compounded annual growth rate to the share price over the next 5 years based on their own internal guidance, which they have a history of smashing.

So yeah, I am not worried about road at all. I think that this is a very durable business model that really just relies on people traveling and roads continuing to degrade. And I think that's going to continue happening.

So I'm going to continue buying. I actually have been nibbling on some more shares over the past couple of weeks. This is one of the stocks that I have been continuing to add to and if the share price remains under 100 bucks, then I will most definitely continue building out my position in Road Construction Partners.