In this article, we will take a look at the 10 best construction materials stocks to buy now.
The New Administration: Implications for the Building Materials and Construction Sector
Donald Trump’s policy agenda including deregulation, tariffs, and tax cuts, has different implications for different investment sectors, according to market experts. As reported by CNBC, the housing and related sectors will be negatively impacted if Trump’s policies of tariffs, tax cuts, and mass deportations drive inflation since the Fed would have to keep the interest rates higher for longer than anticipated which would likely drive mortgage rates up. At the same time, deregulation could be a boosting factor for the industry if it lowers costs for developers and accelerates building timelines. Although Trump plans to open up federal land for building and create tax incentives for homebuyers, there is not much clarity on the front as of now.
It is important to consider that U.S. homebuilder sentiment rose to a seven-month high in November. The National Association of Home Builders/Wells Fargo Housing Market Index rose to 46 in November from 43 in October. Meanwhile, expectations for sales in the next 6 months climbed to the highest since April 2022 after Trump’s win in the election. This was backed up by the optimism regarding more residential construction under the new government. Commenting on the situation, NAHB Chairman Carl Harris, stated:
“With the elections now in the rear view mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments”
Although the sentiment around construction has improved, the market continues to be subject to various challenges including elevated materials costs, a limited supply of building lots, and labor shortages. A negative consequence of Trump’s administration could also be the planned deportation of immigrants, considering the fact that the construction market is one of the biggest employers of immigrant workers.
With that being said, let’s move to the 10 best construction materials stocks to buy now.
Our Methodology:
In order to compile a list of the 10 best construction materials stocks to buy now, we first use a stock screener to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best construction materials stocks to buy now have been arranged in ascending order of their hedge fund holders, as of Q3.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Construction Materials Stocks To Buy Now
10. Tecnoglass Inc. (NYSE:TGLS)
Number of Hedge Fund Holders: 10
Tecnoglass Inc. (NYSE:TGLS) is a manufacturer of architectural glass and associated aluminum and vinyl products for the global commercial and residential construction industries. The company was created as the best alternative for the production of tempered, laminated, silk-screened, insulating, curved and digitally printed glass in 1994.
Tecnoglass Inc. (NYSE:TGLS) is one of the largest glass fabricators serving the US and a top architectural glass transformation company in Latin America. It is strategically positioned in the northern end of South America, along the Colombian Caribbean coast. The firm’s vertically integrated model is a key differentiator that enables it to control costs and adapt to market dynamics. Currently, the firm leverages the demand for its best-in-class product offerings, record backlog, established customer relationships, and the benefits of its vertically integrated operations.
The third quarter reflected the strength of the firm’s business in challenging market conditions. The results were commendable with record revenue of $238.3 million, up 13.1% year-over-year, driven entirely by organic growth. Single-family residential revenues rose 25% year-over-year to record levels while multi-family/commercial revenues rose 4.6% year-over-year to near record levels. Demand for the firm’s innovative, high-performance products remained strong across key end markets. The robust quoting and bidding activity for commercial projects supported the firm’s record backlog of $1.04 billion at quarter-end.
Tecnoglass Inc. (NYSE:TGLS) has invested 25 years in redefining glass boundaries. The firm’s vertically integrated operations, innovative product portfolio, and strategic geographic positioning have driven its exceptional track record of growth and profitability.
9. United States Lime & Minerals, Inc. (NASDAQ:USLM)
Number of Hedge Fund Holders: 15
United States Lime & Minerals, Inc. (NASDAQ:USLM) manufactures lime and limestone products, supplying primarily the construction, metals, environmental, oil and gas services, industrial, roof shingle, and agriculture industries. It operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Oklahoma, and Texas through its wholly owned subsidiaries.
United States Lime & Minerals has been competitive in its markets through modernization and expansion as well as development projects in Texas, Arkansas, Oklahoma, and Missouri, Texas slurry operations as well as acquisitions. These projects have also driven fuel-efficient plant facilities with enhanced operating efficiencies and lower production costs. The firm’s customers remain diversified by industry concentration and within its geographic region.
For the third quarter, United States Lime & Minerals, Inc. (NASDAQ:USLM) recorded $89.4 million in revenues, compared to $74.9 million in the prior year period. Lime and limestone revenues were up 19.6% year-over-year. The rise in revenues over the year was driven by an increase in average selling prices for the USLM’s lime and limestone products and more sales volumes principally to the firm’s construction and roof shingle customers.
Although the overall construction demand has been down, USLM witnessed improved demand from its construction customers in the recent quarter since weather conditions in the South-Central US returned to a more normal pattern. United States Lime & Minerals, Inc. (NASDAQ:USLM) ranks among the best construction materials stocks to invest in.