In this article, we will discuss the 11 best cement and construction materials stocks to buy now in detail.
Tailwinds for the Construction Materials Sector
The construction materials sector is expected to benefit from the residential construction activity while a chronic supply of homes penetrates the US. The extent of the shortage is concerning with some estimating it to range between 2 to 8 million housing units. This has sent home prices soaring over the past decade. As the mortgage rates fell in September with the Fed signaling rate cuts, the US home builder sentiment inclined after witnessing four months of continuous declines.
The Federal Reserve’s first 0.5 percentage point rate cut was welcomed by construction executives who regarded it as a move likely to foster real estate investment and construction activity. Analysts see a positive aspect on the supply side of the housing market as they believe that the rate cut will ease out financing conditions for homebuilders and get them building again. Taking into account the news that officials have pointed to another rate cut before the year’s end, the builder sentiment can highly improve which will favor the building materials sector by driving demand for input materials.
Furthermore, the Infrastructure Investment and Jobs Act (IIJA) which was signed into law in November 2021 is still in action. Considering the fact that significant funding to the asphalt and road paving industry comes from the US government, the beneficiaries in this scenario are construction materials companies. Three years into the 5-year $1.2 trillion act, only 40% of funds from the infrastructure law have been allocated to projects. White House data analyzed by CNBC unveiled that the biggest chunk of IIJA money was flowing to road and bridge construction. IIJA will be extending the support for construction projects beyond the initial five-year period since much of the funds will stay available until they’re used up. Therefore, federally funded projects supported by the IIJA are a positive sign for the construction materials businesses.
Without further ado, let’s move to the 11 best cement and construction materials stocks to buy now.
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Our Methodology:
In order to compile a list of the 11 best cement and construction materials stocks to buy now, we first use a stock screener to make an extended list of 20 relevant companies with the highest market caps. Moving on, we shortlisted the top 11 stocks from our list which had the highest number of hedge fund holders. The 11 best cement and construction materials stocks to buy now have been ranked in ascending order of the number of hedge fund holders, as of Q2 2024.
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).
11 Best Cement and Construction Materials Stocks to Buy Now
11. United States Lime & Minerals, Inc. (NASDAQ:USLM)
Number of Hedge Fund Holders: 11
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. The firm’s other operations relate to its natural gas interests.
United States Lime & Minerals, Inc. (NASDAQ:USLM) has been competitive in its markets through modernization, expansion, and 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 increased operating efficiencies and lower production costs. The firm’s customers remain diversified by industry concentration and within its geographic region.
For the second quarter, recorded revenues of $76.5 million, an increase of $2.6 million year-over-year. Lime and limestone revenues rose 3.5% as compared to the prior year period. The increase in revenues was driven by increases in average selling prices for the USLM’s lime and limestone products which was partially offset by reduced sales volumes. The demand from construction customers was weak as a result of the rainfall leading to the delay of construction projects in the south-central US. However, the low construction industry demand was offset by higher demand from its industrial and roof shingle customers.
In the coming future, United States Lime & Minerals, Inc. (NASDAQ:USLM) is expected to benefit from its favorable regional position along the I-35 corridor. The demotivating construction demand is also expected to revive with improved weather.
10. Tecnoglass Inc. (NYSE:TGLS)
Number of Hedge Fund Holders: 16
Tecnoglass Inc. (NYSE:TGLS) is a manufacturer of architectural glass and associated aluminium and vinyl products for the commercial and residential construction industries. The company was created as the best alternative for the production of tempered, laminated, silk-screened, insulating, curved, and digital printed glass in 1994.
Tecnoglass Inc. (NYSE:TGLS) currently remains motivated by the robust demand for its best-in-class product offerings, record backlog, strong customer relationships, and the benefits of its vertically integrated operations. The company is strategically positioned in the northern end of South America, along the Colombian Caribbean coast. The firm has invested 25 years redefining glass boundaries and has made it to the Russell 2000 index which reflects its robust performance and strong presence in North America.
The company drove a strong performance in the fiscal second quarter. It reported record single-family residential revenues of $95.7 million in the quarter by capitalizing on the demand observed at the first quarter’s end. Total revenues were $219.7 million marking the second-highest revenue quarter in the firm’s history. Management also proudly reported another record multi-year backlog of $1.02 billion which represents a strong multi-family and commercial project pipeline through 2025.
Tecnoglass Inc. (NYSE:TGLS) is well positioned to expand its market share based on the aforementioned favorable factors such as a sustained business momentum, an innovative product portfolio, backlog growth, and continued strong performance in all end markets. The company has a history of converting backlog to revenue while its backlog has shown consistent growth each quarter since 2021.
9. Boise Cascade Company (NYSE:BCC)
Number of Hedge Fund Holders: 22
Boise Cascade Company (NYSE:BCC) is a manufacturer and distributor of building materials. The company operates two divisions, Building Materials Distribution and Wood Products Manufacturing. It came into being by the merger of Cascade Lumber Company of Yakima, WA, and Boise Payette Lumber Company of Boise, ID. Boise Cascade serves diversified customer segments, ranging from independent dealers to large chains and home centers.
Boise Cascade has a leadership position in the building products industry throughout North America by being among the largest producers of engineered wood products and plywood. An industry-leading scale, strong relationships and distribution rights with leading brands, deep customer relationships, and nationwide distribution capacities are some of the competitive advantages setting Boise Cascade apart in the building materials industry. The firm’s complementary divisions have been strategically aligned and have demonstrated market share growth together.
Amidst elevated mortgage rates and economic uncertainties, Boise Cascade Company (NYSE:BCC) demonstrated steady execution in both businesses in Q2. It reported net income of $112.3 million on sales of $1.8 billion. Although the demand environment was challenging and remains uncertain, management is confident to deliver good results through the second half of the year.
The demographics are also turning out to be on the side of Boise Cascade Company (NYSE:BCC). These include a large cohort entering the homebuying age and an undersupply of homes due to decades of underbuilding. Furthermore, locked-in low-rate mortgages and record-high home equity levels are driving strength in repair and remodeling.
8. CEMEX, S.A.B. de C.V. (NYSE:CX)
Number of Hedge Fund Holders: 22
CEMEX, S.A.B. de C.V. (NYSE:CX) is a global building materials company that provides innovative and sustainable solutions for the construction industry. The firm has a vertically integrated approach to production and distribution. Its portfolio of products covers the whole construction value chain and focuses on cement, ready-mix concrete, aggregates, and urbanization solutions.
CEMEX serves as one of the world’s largest aggregates producers. The firm has a robust global footprint spanning over 50 countries, with a strong position in the Americas. It has a diversified and vertically integrated business alongside unmatched digital capabilities. By delivering the best customer experience empowered by digital, CEMEX, S.A.B. de C.V. (NYSE:CX) leads the industry in digital innovation. The firm also optimizes its portfolio towards developed markets with highly attractive medium-term growth prospects.
The construction materials company recorded a strong second quarter. CEMEX’s EBITDA margin grew to 21.5% thereby expanding to its highest level since 2016. The EBITDA growth was driven by the strong pricing and lower input cost inflation, the growth in the Urbanization Solutions business, and the bolt-on investments primarily in the United States.
Therefore, CEMEX, S.A.B. de C.V. (NYSE:CX) is a leading global supplier of construction materials that has a history of growth and innovation, a strong global presence, and a robust growth strategy. The firm ranks among the 11 best cement and construction material stocks to buy now.
7. Commercial Metals Company (NYSE:CMC)
Number of Hedge Fund Holders: 24
Commercial Metals Company (NYSE:CMC) is an innovative solutions provider that provides products and technologies to cater to the critical reinforcement needs of the global construction sector. The firm was the first steel manufacturer to introduce vertical integration in the United States. CMC combined the recycling and processing of scrap metals with the blending of processed scrap into new steel and the fabrication of finished steel products which transformed the steel industry.
CMC is an innovative leader in the industry by opening the first continuous process micro mill and being the first in the US to introduce spooled rebar. The firm is a key supplier to construction projects across two continents by being among the largest manufacturers of steel reinforcing bars in North America and Central Europe. CMC is also a leader in the steel long products market as it produces merchant bar, steel fence post, and wire rod.
The firm closed the fiscal third quarter with core EBITDA margin, core EBITDA, net earnings, and cash flows at levels above long-term averages. The aforementioned metrics also improved as a result of the strong operational performance across CMC’s footprint and a healthy beginning to the 2024 construction season.
CMC is preparing itself to benefit from the favorable long-term structural trends in construction activity by several projects. The firm is ramping up its state-of-the-art Arizona 2 plant, the first micro mill across the globe capable of producing both rebar and merchant bar quality (MBQ) product. CMC is also completing foundations at the site of its fourth micro mill in West Virginia.
CMC has leading positions in core products and geographies and a vertical structure that optimizes returns through the value chain. In conclusion, Commercial Metals Company (NYSE:CMC) is set to deliver industry-leading returns and is stronger than ever to capitalize on the strength in infrastructure, non-residential construction, and OEM.
6. Summit Materials, Inc. (NYSE:SUM)
Number of Hedge Fund Holders: 24
Summit Materials, Inc. (NYSE:SUM) is a vertically integrated aggregates-based business. The company supplies cement, aggregates, ready-mix concrete, and asphalt paving mix in the United States and western Canada.
The firm serves well-diversified customers in advantaged markets with a materials-led portfolio. With aggregates being an essential input for heavyside construction and cement being the most widely used building material globally, the firm benefits from industry characteristics including limited substitutes, barriers to entry, and favorable supplier conditions. Summit also occupies a market leadership position by being one of the largest US cement producers and biggest US aggregates producers.
Despite disruptions related to weather, Summit Materials, Inc. (NYSE:SUM) delivered a strong fiscal second quarter. Net revenue increased 58.1% year-over-year to $1,075.5 million. Results by lines of business were robust. Aggregates net revenue rose 2.5%, cement segment net revenues rose 200.3%, and products net revenues rose 60%, year-over-year. The resilient performance was facilitated by cost-saving initiatives, all lines of business experiencing organic pricing growth, and a durable portfolio.
With attractive industry dynamics for materials lines of business, an industry-dominant position, and a growth-oriented portfolio, Summit Materials, Inc. (NYSE:SUM) is a promising cement and construction materials stock.
5. Eagle Materials Inc. (NYSE:EXP)
Number of Hedge Fund Holders: 28
Eagle Materials Inc. (NYSE:EXP) is a manufacturer of basic construction materials used in residential, commercial, industrial, infrastructure, and energy applications. It has two primary lines, Portland Cement and Gypsum Wallboard, which are used for building and repairing roads and highways as well as for building and renovating commercial, residential, and industrial structures. The company manufactures and sells its products through a network of over 70 facilities across the US. It is headquartered in Dallas, Texas.
Eagle Materials owns virtually all its raw material and has relative self-sufficiency with decades of supply located close to its production facilities. Conditions are favorable with cement being the essential binding material in concrete with few substitutes and the water molecule imbedded in gypsum wallboard chemistry with an inherent fire resistance benefit essential to satisfy US construction specifications. To expand its heavy materials footprint, Eagle Materials has taken strategic initiatives such as the $430 million Mountain Cement plant expansion and modernization and a new Houston slag-cement facility through its joint venture at Texas Lehigh Cement.
For the first quarter of fiscal 2025 ended June 30, Eagle Materials Inc. (NYSE:EXP) had a record revenue of $608.7 million and record net earnings per diluted share of $3.94. Although the weather conditions were adverse across many of the core markets, Eagle’s portfolio of businesses performed well. While cement demand continues to be driven by construction spending on infrastructure and heavy industrial projects, residential construction activity is resilient due to housing supply shortages.
With favorable underlying fundamentals in markets and significant cash flow generation, Eagle Materials Inc. (NYSE:EXP) is positioned well to perform through the remaining fiscal year. The company has driven competitiveness and strong returns through sustained investment for low-cost positioning through cycles.
4. Knife River Corporation (NYSE:KNF)
Number of Hedge Fund Holders: 37
Knife River Corporation (NYSE:KNF) is an aggregates-based construction materials and services company. The company supplies aggregates, ready-mix concrete, asphalt, and contracting services in the United States. It is vertically integrated with operations spanning 14 states.
The company has the privilege of being one of the nation’s largest construction materials and contracting businesses which has 188 aggregate sites totaling over 1 billion tons of reserves. It is among the largest producers of sand and gravel in the US. KNF’s growth history is strong with over 85 acquisitions in the past thereby being the acquirer of choice in its midsized high-growth markets. To drive long-term profitable growth, the company is pursuing the EDGE strategy which refers to EBITDA margin improvement, discipline, growth, and excellence.
The second quarter remained promising for the firm with a good start to the construction season. Knife River Corporation (NYSE:KNF) saw a record second-quarter revenue of $806.9 million, net income of $77.9 million, and adjusted EBITDA of $154.3 million. Adjusted EBITDA margin also grew by 240 basis points, on a trailing twelve-month basis through June 30. The firm is also considering potential acquisitions across its segments which are focused on materials-based businesses.
Market conditions are an additional pro with lawmakers in eight of Knife River’s fourteen states introducing additional legislation to fund construction projects. The company also hopes to benefit from the Infrastructure Investment and Jobs Act, with 56% of its funding still to be obligated in KNF’s market areas.
Knife River Corporation (NYSE:KNF) is a leading construction materials company with a beneficial combination of products and services amidst favorable market conditions and future growth opportunities. The company ranks among the best cement and construction materials stocks to buy now.
3. Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders: 40
Vulcan Materials Company (NYSE:VMC) is a major producer of aggregates-based construction materials including asphalt and ready-mixed concrete. Vulcan has an old history as it became a publicly traded company with trading starting in 1957. The company is headquartered in Birmingham, Alabama.
Vulcan is the leading supplier of aggregates which are essential to infrastructure, growth, and construction. The firm has an unmatched coast-to-coast footprint that spans the high-growth US markets. The firm has shown resilience despite the external market conditions. Vulcan’s focus on aggregates presents it with favorable fundamentals in the form of a diverse end-market demand with aggregates used in all kinds of construction, limited product substitutions, attractive pricing characteristics, and high barriers to entry. The demographics also help drive growth as Vulcan serves states that are advantaged for better growth in population, employment, and household.
Vulcan Materials Company (NYSE:VMC) closed the fiscal second quarter with record earnings growth and margin expansion. The aggregates cash gross profit per ton increased 12% year-over-year while the gross profit margin expanded 120 basis points, year-over-year. Thus, the firm’s aggregates-led business remained durable and performed despite the rainfall impacting construction activity during the quarter.
The prospects for growth remain favorable with a uniquely positioned aggregates business, proven expertise, a compelling footprint, and favorable market dynamics. During the last 10 years, Vulcan Materials Company (NYSE:VMC) has completed almost 40 acquisitions across its top 10 revenue states and is poised for expansion.
2. Martin Marietta Materials, Inc. (NYSE:MLM)
Number of Hedge Fund Holders: 45
Martin Marietta Materials, Inc. (NYSE:MLM) is a supplier of building materials such as aggregates, cement, ready-mixed concrete, and asphalt. The company has a network of operations across 28 states, Canada, and the Bahamas. Martin Marietta Materials also has a Magnesia Specialties business which produces high-purity magnesia and dolomitic lime products.
Martin Marietta Materials, Inc. (NYSE:MLM) has an aggregates-led business that focuses on the nation’s most vibrant markets and has been resilient against macroeconomic conditions. The firm’s operations are strategically positioned in high-growth markets. The total revenues, adjusted EBITDA, and diluted earnings per share rising from 2010 to 2023 reflect the firm’s robust financial performance. Furthermore, Martin Marietta Materials has a diversified end-market exposure which lowers the cyclical demand volatility.
The firm’s second-quarter financial results were negatively impacted by the restrictive monetary policy and precipitation in Texas and in the Midwest. However, the company witnessed record aggregates profitability. The aggregates gross profit per ton increased 9% to a second-quarter record of $7.41. In April, the firm also completed the acquisition of 20 active aggregates operations in Alabama, South Florida, South Carolina, Tennessee, and Virginia from Blue Water Industries LLC.
Martin Marietta Materials, Inc. (NYSE:MLM) has a resilient aggregates business that is delivering results despite the prevailing challenges. As of Q2, the stock is held by 45 hedge funds thereby ranking among the best cement and construction materials stocks to buy now.
1. CRH plc (NYSE:CRH)
Number of Hedge Fund Holders: 75
CRH plc (NYSE:CRH) is a Fortune 500 company that serves as a leading provider of building materials solutions. The company has a global footprint with operations spanning 28 countries and 4 continents. Its global business operates as two divisions, CRH Americas and CRH Europe. CRH is a vertically integrated supplier of aggregates, asphalt, ready-mixed concrete, cement, paving, and construction services. CRH also manufactures high-value-added building products for use in residential and non-residential construction projects.
The fully integrated building solutions provider CRH has an unmatched size & scale. It is the largest building materials business in North America, with operations in 48 US states and 7 Canadian provinces. Simultaneously, CRH is in a market leadership position in Europe and has a regional leadership position in Asia. The firm’s products are used in some of the most iconic construction projects globally. Other than having market-leading positions, CRH has also been consistently delivering double-digit earnings growth through the cycle other than having a strong balance sheet.
CRH continues to drive an industry-leading financial performance. For Q2 2024, CRH plc (NYSE:CRH) recorded net income of $1.3 billion which has increased 8% as compared to 2023. Adjusted EBITDA also grew by 12% year-over-year. With leading positions in high-growth markets and a positive underlying momentum, the future outlook remains bright.
Recently, the company announced the appointment of Jim Mintern as the next CEO who will be succeeding Albert Manifold retiring at 2024’s end. With 30 years of experience in the building materials industry, Jim Mintern is well-positioned to lead the high-performing group through future opportunities. In conclusion, CRH plc (NYSE:CRH) has shown a legacy of continuous growth and financial performance.
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 timeframe. 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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