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.
7. United States Lime & Minerals, Inc. (NASDAQ:USLM)
Number of Hedge Fund Holders: 23
United States Lime & Minerals, Inc. (NASDAQ:USLM) plays a key role in the construction industry as it produces lime and limestone products that are used in various construction processes. Its revenues in Q4 2024 on the YoY basis were aided by higher average selling prices for its lime and limestone products and elevated sales volumes, mainly to its construction, environmental, and industrial customers. United States Lime & Minerals, Inc. (NASDAQ:USLM)’s revenues in Q4 2024 came in at $80.1 million as compared to $65.7 million in Q4 2023, an increase of 21.9%. Lime and limestone revenues were $79.8 million in Q4 2024 as compared to $65.4 million in Q4 2023, reflecting 22.0% growth.
In FY 2024, United States Lime & Minerals, Inc. (NASDAQ:USLM) saw higher revenues due to an increase in average selling prices for its lime and limestone products, partially offset by a decline in sales volumes resulting mainly from lower demand from its construction customers, offset in part by higher demand from its industrial, environmental, and roof shingle customers. Overall, the growth in the construction sector is expected to fuel demand for United States Lime & Minerals, Inc. (NASDAQ:USLM)’s products as lime is critical in the production of cement, concrete manufacturing, and soil stabilization of infrastructure projects.
Diamond Hill Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“On an individual holdings’ basis, among our top Q4 contributors were Allegiant Travel and United States Lime & Minerals, Inc. (NASDAQ:USLM). United States Lime & Minerals (USLM) manufactures and supplies lime and limestone products to various construction and industrial customers. During Q4, USLM benefited from a particularly beneficial confluence of factors: Higher average selling prices for lime and limestone products as well as increased sales volumes to construction and roof shingle customers have helped drive robust revenue growth. Further, USLM effectively managed its relatively fixed cost base, allowing increased prices to flow directly to higher margins and resulting in record margins in Q4. The company also benefited from lower natural gas prices and favorable direct labor, raw materials, energy, transportation and plant operating cost conditions — all of which supported profitability. Finally, USLM’s strategic position in Texas’s growing I-35 corridor as well as strong pricing power in key markets and effective variable cost management contributed to margin expansion in Q4.”
6. Knife River Corporation (NYSE:KNF)
Number of Hedge Fund Holders: 27
Knife River Corporation (NYSE:KNF) provides aggregates- led construction materials and contracting services. Oppenheimer analyst Ian Zaffino remains optimistic about the company’s growth prospects. As per the analyst, the demand environment remains strong and Infrastructure Investment and Jobs Act spending is a tailwind in Knife River Corporation (NYSE:KNF)’s markets. If the initiatives to upgrade and expand infrastructure materialize, the company can see a significant increase in demand for their products and services.
Furthermore, the trend towards sustainable and environmentally friendly construction practices can present new avenues for the company. Furthermore, strategic acquisitions can offer a pathway to growth. Knife River Corporation (NYSE:KNF) can expand its product offerings, enter new markets, or achieve economies of scale, resulting in an improved competitive position. Also, DA Davidson is positive on its Strata acquisition. Knife River Corporation (NYSE:KNF) expects Strata to be accretive to its adj. EBITDA margin within the first year. Strata’s high-quality assets enable the company to expand its service territory and the acquisition can add high-quality, complementary assets. Apart from Strata, Knife River Corporation (NYSE:KNF)’s deal pipeline remains strong, and its healthy capital position provides it with significant capacity to pursue strategic growth opportunities.
5. Boise Cascade Company (NYSE:BCC)
Number of Hedge Fund Holders: 32
Boise Cascade Company (NYSE:BCC) is engaged in the manufacturing of wood products and distribution of building materials. Since it provides both the raw materials and the distribution network for construction projects, the company remains a key player in the construction industry. Demand for the products Boise Cascade Company (NYSE:BCC) manufactures and the products it purchases and distributes is correlated with new residential construction, residential repair-and-remodeling activity, and light commercial construction.
Boise Cascade Company (NYSE:BCC), while quoting the U.S. Census Bureau numbers, stated that housing starts came in at 1.37 million in 2024. The current industry forecasts for US housing starts came in at ~1.35 million in 2025. The company added that single-family starts in 2024 exceeded 2023 levels by 7%, and are expected to remain ~1.0 million, despite the affordability challenges. Boise Cascade Company (NYSE:BCC) anticipates 2025 to demonstrate modest growth in home improvement spending, as the higher levels of homeowner equity, the age of U.S. housing stock, and recent improvement in existing home sales can offer a favorable backdrop for repair-and-remodel spending.
Looking forward to 2025, the company anticipates its capital spending to be between $220 million – $240 million. In BMD (Building Materials Distribution), Boise Cascade Company (NYSE:BCC) continues to make progress on its greenfield distribution center in Hondo, Texas. While the activity at the Walterboro, South Carolina greenfield has been slow, the company expects it to gain momentum in the back half of 2025.
4. Eagle Materials Inc. (NYSE:EXP)
Number of Hedge Fund Holders: 36
Eagle Materials Inc. (NYSE:EXP) is engaged in manufacturing and selling heavy construction materials and light building materials in the US. The company continued to advance its long-term growth and value-creation strategies. These include Eagle Materials Inc. (NYSE:EXP)’s announcement of the acquisition of Bullskin Stone and Lime, LLC, a pure-play aggregates business in Western Pennsylvania, and maintenance of its balance sheet strength, ending the quarter with a debt of $1.0 billion and a net leverage ratio of 1.2x.
Moving forward, steady employment, chronically short housing supply, and its cost-structure advantages continue to offer positive conditions for Eagle Materials Inc. (NYSE:EXP)’s Gypsum Wallboard business amidst this dynamic environment. On the cement side, spending from the Infrastructure Investment and Jobs Act (IIJA) remains in the beginning phases, which can support multiple years of robust cement demand. Furthermore, the acquisition of Bullskin Stone & Lime further advances Eagle Materials Inc. (NYSE:EXP)’s long-term growth strategy by adding a pure-play aggregates business complementing and extending its network of aggregates quarries and cement plants and terminals.
Bretton Capital Management, an investment management company, released Q4 2024 investor letter. Here is what the fund said:
“Our most recent addition, Eagle Materials Inc. (NYSE:EXP), saw strong demand in divisions. The cement industry in the US continues to be severely capacity-constrained, leading to cement being effectively “sold out” each year and cement prices rising 12%. Its wallboard business declined slightly from the slower real estate market. Overall, earnings per share increased 9%, and we are up 8% so far on the stock.”
3. Martin Marietta Materials, Inc. (NYSE:MLM)
Number of Hedge Fund Holders: 54
Martin Marietta Materials, Inc. (NYSE:MLM) is a natural resource-based building materials company, that is engaged in supplying aggregates and heavy-side building materials to the construction industry. Analyst Angel Castillo from Morgan Stanley maintained a “Buy” rating on the company’s stock, keeping the price target at $622.00. The analyst’s rating was backed by a combination of factors such as Martin Marietta Materials, Inc. (NYSE:MLM)’s encouraging 2025 guidance and its better-than-anticipated performance in key areas.
As per the analyst, the company’s overall 2025 outlook matched or exceeded expectations, mainly in terms of aggregates volume and pricing growth. Martin Marietta Materials, Inc. (NYSE:MLM)’s outlook for aggregates volume growth of 2.5% – 5.5% YoY remains slightly more optimistic than previous projections and the broader market consensus. Notably, potential policy changes can result in significant benefits to the company’s business. The renewed focus on infrastructure development can result in higher demand for construction materials.
Large-scale projects including road construction, bridge repairs, and public works can benefit Martin Marietta Materials, Inc. (NYSE:MLM) as a critical supplier of aggregates and cement. Also, policies focused on reducing regulatory burdens in the overall construction and mining industries can lower the compliance costs for the company, helping profit margins.
2. Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders: 57
Vulcan Materials Company (NYSE:VMC) is engaged in producing and supplying construction aggregates in the US. Jefferies analyst Philip Ng revised the company’s stock price to $335 from $325. The analyst lauded the company’s pricing strength, which remains a critical factor in its financial performance. Vulcan Materials Company (NYSE:VMC) has a significant opportunity to align the pricing of its recently acquired assets with the corporate average, says the analyst. The potential for pricing optimization, together with the company’s significant capacity for M&A, is expected to act as a growth driver.
Vulcan Materials Company (NYSE:VMC)’s recent acquisitions, mainly the purchase of Superior and Wake Stone, offer numerous opportunities for growth and value creation. By consolidating its position in current markets and entering new ones, the company is expected to potentially gain greater pricing power and enhance its competitive standing. Furthermore, a larger network of facilities can optimize Vulcan Materials Company (NYSE:VMC)’s supply chain, resulting in lower transportation costs and improvement in delivery times to customers.
As per the company’s management, a positive pricing environment, together with healthy operational execution, resulted in the consistent double-digit YoY improvement in aggregates cash gross profit per ton each quarter, helping it to exit 2024 with aggregates cash gross profit per ton at $11.50. For 2025, the pricing environment remains favorable, and Vulcan Materials Company (NYSE:VMC) remains focused on its operating disciplines to manage costs and improve efficiencies.
1. CRH plc (NYSE:CRH)
Number of Hedge Fund Holders: 90
CRH plc (NYSE:CRH) provides building materials solutions in Ireland and internationally. The company remains a critical player in the broader construction industry as it makes building materials such as cement, concrete, and aggregates which are utilized in construction projects. CRH plc (NYSE:CRH) demonstrated robust pricing discipline, mainly in the Americas segment, which places it well for future margin expansion. With the company continuing to strengthen its market position in North America, it might gain increased pricing power, enabling it to pass on cost increases to customers more effectively. The company has announced the acquisition of Dutra Materials.
Dutra Materials complements CRH plc (NYSE:CRH)’s Americas Materials Solutions business in the Western US, bringing additional strategic aggregate reserves and asphalt production capabilities to help northern California construction market. Furthermore, CRH plc (NYSE:CRH)’s emphasis on the potential for margin expansion is aided by its focus on high-value products and its strategic positioning in markets having favorable supply-demand dynamics. With the expectations of higher infrastructure spending in the US, the company remains well-placed to benefit from large-scale projects offering better margins.
L1 Capital, an investment management firm, released its Q3 2024 investor letter. Here is what the fund said:
“CRH plc (NYSE:CRH) (Long +24%) shares rallied over the quarter, supported by a constructive Q2 earnings result and an increase to FY24 EBITDA and EPS guidance. The June quarter was affected by adverse U.S. weather conditions and heavy rains which negatively impacted volumes. CRH was able to offset these impacts and continue to deliver double-digit earnings growth, (unlike several U.S. listed peers who were forced to cut guidance). We believe this illustrates the quality of the company’s vertically integrated business model and the strength of its management team in navigating more challenging market conditions. CRH remains exposed to the ‘golden age’ of infrastructure spending in the U.S., which will underpin many years of robust demand. The Infrastructure Investment and Jobs Act (‘IIJA’), the Inflation Reduction Act (‘IRA’) and the Chips and Science Act will together add roughly US$2 trillion of investment to ageing U.S. infrastructure.”
While we acknowledge the potential of CRH as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CRH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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