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 United States Lime & Minerals, Inc. (NASDAQ:USLM) 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).
An open-pit quarry with heavy machinery and workers at a lime and limestone production facility.
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.
Overall, USLM ranks 11th on our list of Best Cement and Construction Materials Stocks to Buy Now. While we acknowledge the potential of USLM 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 USLM 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.