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 Martin Marietta Materials, Inc. (NYSE:MLM) 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 large construction project with cranes and forklifts in action, demonstrating the company’s building materials business.
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.
Overall, MLM ranks 2nd on our list of Best Cement and Construction Materials Stocks to Buy Now. While we acknowledge the potential of MLM 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 MLM 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.
