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 CRH plc (NYSE:CRH) 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 construction worker wearing a hard hat and safety glasses at a site, carrying concrete blocks.
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.
Overall, CRH ranks 1st on our list of Best Cement and Construction Materials Stocks to Buy Now. 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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Disclosure: None. This article is originally published at Insider Monkey.