In Clive Cussler’s adventure novel Treasure, the United States government builds a gravel pit over the site where series protagonist Dirk Pitt triggers a massive explosion that kills the villains during the story’s climax. “It’s already turning a profit,” one official notes.

Getting investment ideas from fiction may sound strange, but it’s a strategy I’ve successfully used many times.

Reading Treasure sparked my interest in gravel pits and “construction aggregates,” a surprisingly wide-moat sector that Peter Lynch highlighted in his 1989 classic One Up On Wall Street.

The gravel pit industry has created many family fortunes.

In 1919, entrepreneur Henry Crown borrowed $10,000 to start Material Service Corporation, a business that sold gravel, sand, and lime to construction companies. By 1951, the company was so successful that Crown purchased the Empire State Building.

Even today, the Crown family remains one of the wealthiest in America.

There are several publicly traded aggregate businesses, but Vulcan Materials Company (VMC) is one of the largest players in the sector. This report examines what the company does and why it could be a great long-term investment, despite its premium valuation and low starting yield.

Vulcan Materials dates back to 1909, when it was founded as the Birmingham Slag Company.

Sand, stone, and gravel are always in demand due to their foundational role in construction, particularly for roads. Vulcan was successful almost from the start and even performed relatively well during the Great Depression, thanks to contracts supplying aggregate to the Tennessee Valley Authority.

The company has been publicly traded since 1957 and has paid dividends for over 30 consecutive years, though it hasn’t consistently increased them.

Vulcan’s website contains a “fact sheet” which outlines the core strengths of the aggregate business. The industry has high barriers to entry due to zoning restrictions and regulatory hurdles, along with significant logistical challenges when it comes to transporting sand and stone.

As Peter Lynch put it, “The nearest rival from two towns over isn’t going to haul his rocks into your territory because the trucking costs would wipe out his profit.”

The wide moat and timeless nature of this business, roads and highways always need maintenance, make Vulcan a wide moat investment. And unfortunately, the stock’s valuation reflects this.

Vulcan Materials Company currently trades at a price to earnings ratio of 30.11. The stock also has a low starting yield of just 0.74%, though this is backed by an inflation-beating 5-year compound annual dividend growth rate of 7.44% and a conservative payout ratio of 24.53%.

The company has also lagged the general market over the past decade, with Vulcan delivering a 10-year average annual total return of 11.19%.

While the low yield and high valuation make me hesitant about this stock, Vulcan Materials Company operates in an extremely wide-moat sector where its products are always in demand.

For comparison, Apple trades at a similar price to earnings ratio of 30.08 while offering a 0.41% yield and a 5-year dividend growth rate of 4.87%.

If forced to choose between the two, and fortunately investing doesn’t require this, I’d pick Vulcan. Its business model is more timeless, geographically insulated, and far less vulnerable to technological disruption.

If you’re looking for a long-term buy-and-hold investment in a sector that’s nearly impossible to disrupt, consider Vulcan Materials Company.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.