In this article, we will discuss the 10 Best Construction Stocks to Buy Now
As per Cumming Group, which provides project and cost-management services, the construction industry kicked off 2025 with a healthy momentum, thanks to the robust fundamentals from 2024. The firm also mentioned that the Dodge Momentum Index (DMI), which helps measure non-residential building spending, demonstrated steady growth as it wrapped up 2024 with a healthy 10% increase, implying confidence in owners and developers. Overall, the commercial real estate sector continues to witness a significant evolution, mainly in office spaces, where work-from-home and hybrid work arrangements transformed occupancy trends.
Outlook for the Construction Sector
Amidst increased interest rates, uncertainty related to various tariffs, and price inflation impacting residential and commercial segments, Cumming Group opines that positive indicators are also emerging. The construction investment, mainly fueled by government spending, has been providing much-needed stability to the broader sector. Moving forward, the sector’s ongoing resilience and adaptability place it well for the year 2025, despite uncertainty regarding tariffs. Apart from this uncertainty, healthy employment numbers, and consistent government investment, together with potential interest rate relief, create a strong foundation for sustained growth.
As per PHCPPros, which covers aspects of the plumbing, heating, cooling, and piping industry, ConstructConnect’s 2025 forecast for a total construction spending increase of 8.5% is broad-based, with residential and non-residential building construction projected to expand by 12% and 8%, respectively.
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Key Drivers Likely to Boost the Construction Sector
PHCPPros opines that the declining interest rates due to the US Fed’s focus on reducing Fed Funds Rate, an instrument indirectly influencing the private sector borrowing rates, is likely to be the primary driver of the growth. The reduced rates are expected to help reinvigorate non-residential construction activity and residential housing market activity. Notably, lower rates and the ensuing improvement in housing affordability can ease the gridlock in sales due to the combination of increased home prices and elevated interest rates.
Furthermore, the electrification of the economy is expected to fuel strong demand for power generation and power infrastructure projects. The growth of AI, higher EV adoption, and the increased dependency on electric appliances and devices are expected to stimulate the need for electric generation and infrastructure construction moving forward. These measures are expected to fuel the demand for megaprojects.
Amidst these favorable trends, we will now have a look at the 10 Best Construction Stocks to Buy Now.
A busy construction site with workers hard at work, illustrating the industrials division.
Our Methodology
To list the 10 Best Construction Stocks to Buy Now, we used a screener to shortlist companies catering to the broader construction sector. Next, we filtered out the ones that were popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Construction Stocks to Buy Now
10. James Hardie Industries plc (NYSE:JHX)
Number of Hedge Fund Holders: 5
James Hardie Industries plc (NYSE:JHX) manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products for interior and exterior building construction applications. Jefferies analysts remain optimistic about the company’s growth prospects, thanks to its ability to use operational strengths moving forward. In James Hardie Industries plc (NYSE:JHX)’s North American business, its results to date (third quarter ending December 31, 2024) demonstrated a double-digit 5-year sales CAGR resulting in over +400 basis points of adjusted EBITDA margin expansion.
The supportive housing fundamentals and significant material conversion opportunity continue to help James Hardie Industries plc (NYSE:JHX) prepare the North American manufacturing footprint for broad-based market recovery. It continues to invest throughout its value chain and grow its contractor base to capture the repair & remodel opportunity. During the 9 months of FY25, James Hardie Industries plc (NYSE:JHX) invested $134 million related to capacity expansion. In new construction, James Hardie Industries plc (NYSE:JHX)’s efforts to deepen exclusivity and increase trim attachment rates are helping growth and share gain with large homebuilders. The company signed 2 national, multi-year exclusive hard siding and trim agreements with M/I Homes and David Weekley Homes.
9. Tecnoglass Inc. (NYSE:TGLS)
Number of Hedge Fund Holders: 17
Tecnoglass Inc. (NYSE:TGLS) is engaged in manufacturing, supplying, and installing architectural glass, windows, and associated aluminum and vinyl products for commercial and residential construction markets. The company’s vertically integrated model remains a critical differentiator, allowing it to control costs and swiftly adapt to market dynamics. The investments in automation and advanced manufacturing have been yielding significant returns, improving Tecnoglass Inc. (NYSE:TGLS)’s operational efficiency and capacity to address the growing demand for innovative products. These factors aided strong gross profit and Adjusted EBITDA growth in Q3 2024.
The company reported gross margin of 45.8%, reflecting a rise of 290 bps YoY, while adjusted EBITDA came in at $81.4 Million, up 14.2% YoY. Tecnoglass Inc. (NYSE:TGLS) remains well-placed to capitalize on long-term growth opportunities in both residential and commercial markets, courtesy of its strong balance sheet and cash generation capabilities. Moving forward, Tecnoglass Inc. (NYSE:TGLS) is focused on leveraging its core strengths, vertically integrated operations, strategic geographic positioning, and innovative product portfolio.
It will continue to pursue multiple avenues for growth, such as expansion of its vinyl window business, strengthening its presence in key markets via a growing network of showrooms, and capitalizing on the robust demand seen in its residential and commercial end markets.
8. CEMEX, S.A.B. de C.V. (NYSE:CX)
Number of Hedge Fund Holders: 20
CEMEX, S.A.B. de C.V. (NYSE:CX) is engaged in producing, marketing, distributing, and selling cement, ready-mix concrete, aggregates, urbanization solutions, and other construction materials and services. Given the recovery of its investment grade ratings, improvement in FCF generation, and the execution of US$2.2 billion in asset divestments, CEMEX, S.A.B. de C.V. (NYSE:CX) remains focused on pursuing more aggressively its capital allocation priorities of growth via small to medium-sized acquisitions, mainly in the US and additional deleveraging.
CEMEX, S.A.B. de C.V. (NYSE:CX) has rolled out “Project Cutting Edge,” a 3-year, US$350 million saving initiative focused on streamlining operations and improving efficiency, significantly leveraging digital technology across the company. This program can deliver US$150 million in incremental EBITDA in 2025, expecting to reach a run rate of US$350 million by 2027. The global building materials sector is expected to witness favorable conditions in 2025, offering opportunities for CEMEX, S.A.B. de C.V. (NYSE:CX) to capitalize on the broad-based industry growth.
The expected decline in interest rates can stimulate construction activity, fueling sales across the company’s markets. Regarding the US, CEMEX, S.A.B. de C.V. (NYSE:CX)’s margins continue to be aided by cost optimization efforts, reduced fuel prices, and lower imports, together with increased prices of its products. It expects 2025 volume growth to be aided by a ramp-up in IIJA projects, industrial projects, and data centers.