We recently published a list of 11 Best Cement and Construction Materials Stocks to Buy Now. In this article, we are going to take a look at where CEMEX, S.A.B. de C.V. (NYSE:CX) stands against other best cement and construction materials stock.
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.
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).
A pile of cement on the top of the wheelbarrow in construction site.
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.
Overall, CX ranks 8th on our list of Best Cement and Construction Materials Stocks to Buy Now. While we acknowledge the potential of CX 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 CX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
