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 Eagle Materials Inc. (NYSE:EXP) 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.
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).
Eagle Materials Inc. (NYSE:EXP)
Number of Hedge Fund Holders: 31
Eagle Materials Inc. (NYSE:EXP) is a manufacturer of basic construction materials utilized in residential, commercial, industrial, infrastructure, and energy applications. It has two primary products, Portland Cement and Gypsum Wallboard, which are used for building and repairing roads and highways as well as for building and renovating commercial, residential, and industrial structures. The company manufactures and sells its products through a network of facilities spanning 21 states across the US.
The firm owns virtually all of its raw materials and has relative self-sufficiency with decades of supply located close to its production facilities. With cement being the essential binding material in concrete with few substitutes and the water molecule imbedded in gypsum wallboard chemistry with an inherent fire resistance benefit essential to satisfy US construction specifications, the conditions remain favorable for Eagle Materials Inc. (NYSE:EXP).
For the second quarter of fiscal 2025 ended September 30, Eagle Materials Inc. (NYSE:EXP) witnessed record revenue of $623.6 million although weather conditions were adverse. Revenue in the Light Materials sector which includes Gypsum Wallboard and Paperboard, increased 5% to $244.1 million, due to higher Wallboard and Paperboard sales volume and sales prices. On the other hand, revenue in the Heavy Materials sector which includes Cement, Concrete and Aggregates, Joint Venture, and intersegment Cement revenue, was $418.7 million, a 2% decline, as a result of lower sales volume. The decline was partially offset by higher sales prices and the effects of an Aggregates acquisition during the quarter.
Other than favorable underlying fundamentals, Eagle Materials Inc. (NYSE:EXP) can potentially advantage of the positive economic environment with strong employment, an extreme housing shortage, and spending from the Infrastructure Investment and Jobs Act (IIJA) still in the beginning phases. As of Q3, the stock is held by 31 hedge funds and ranks among the best construction materials stocks to buy now.
Overall, EXP ranks 5th on our list of best construction materials stocks to buy now. While we acknowledge the potential of EXP 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 EXP 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.