We recently published a list of 10 Best Construction Materials Stocks To Buy Now. In this article, we are going to take a look at where Boise Cascade Company (NYSE:BCC) stands against the other best construction materials stocks.
The New Administration: Implications for the Building Materials and Construction Sector
Donald Trump’s policy agenda including deregulation, tariffs, and tax cuts, has different implications for different investment sectors, according to market experts. As reported by CNBC, the housing and related sectors will be negatively impacted if Trump’s policies of tariffs, tax cuts, and mass deportations drive inflation since the Fed would have to keep the interest rates higher for longer than anticipated which would likely drive mortgage rates up. At the same time, deregulation could be a boosting factor for the industry if it lowers costs for developers and accelerates building timelines. Although Trump plans to open up federal land for building and create tax incentives for homebuyers, there is not much clarity on the front as of now.
It is important to consider that U.S. homebuilder sentiment rose to a seven-month high in November. The National Association of Home Builders/Wells Fargo Housing Market Index rose to 46 in November from 43 in October. Meanwhile, expectations for sales in the next 6 months climbed to the highest since April 2022 after Trump’s win in the election. This was backed up by the optimism regarding more residential construction under the new government. Commenting on the situation, NAHB Chairman Carl Harris, stated:
“With the elections now in the rear view mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry that will lead to the construction of more homes and apartments”
Although the sentiment around construction has improved, the market continues to be subject to various challenges including elevated materials costs, a limited supply of building lots, and labor shortages. A negative consequence of Trump’s administration could also be the planned deportation of immigrants, considering the fact that the construction market is one of the biggest employers of immigrant workers.
Aerial shot of a building site stocked with lumber and other building materials.
Our Methodology
In order to compile a list of the 10 best construction materials stocks to buy now, we first use a stock screener to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best construction materials stocks to buy now have been arranged in ascending order of their hedge fund holders, as of Q3.
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).
Boise Cascade Company (NYSE:BCC)
Number of Hedge Fund Holders: 29
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. The firm serves diversified customer segments, ranging from independent dealers to large chains and home centers.
Boise Cascade is a leader 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 strengths setting the firm apart. Additionally, Boise Cascade’s complementary divisions have been strategically aligned and have demonstrated market share growth together.
Boise Cascade Company (NYSE:BCC) is also seeing favorable demographics including a large cohort entering the homebuying age and a shortage of homes as a result of decades of underbuilding. Furthermore, locked-in low-rate mortgages and record-high home equity levels are driving strength in repair and remodeling. For the third quarter, BCC reported net income of $91.0 million on sales of $1.7 billion. While demand was moderate for the quarter, the financial performance was good with steady execution in both businesses. Home affordability and economic uncertainties constrained demand.
Therefore, Boise Cascade Company (NYSE:BCC) is a leading national provider of essential building materials and has a strong moat supported by a leading national footprint, supplier alignment, logistics expertise, and a trusted brand. As of Q3, the stock is held by 29 hedge funds.
Overall, BCC ranks 6th on our list of best construction materials stocks to buy now. While we acknowledge the potential of BCC 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 time frame. If you are looking for a deeply undervalued AI stock that is more promising than BCC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
