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 Martin Marietta Materials, Inc. (NYSE:MLM) 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.
A large construction project with cranes and forklifts in action, demonstrating the company’s building materials business.
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).
Martin Marietta Materials, Inc. (NYSE:MLM)
Number of Hedge Fund Holders: 44
Martin Marietta Materials, Inc. (NYSE:MLM) is a leading supplier of building materials such as aggregates, cement, ready-mixed concrete, and asphalt. The firm has a network of operations across 28 US states, Canada, and the Bahamas. Martin Marietta Materials also has a Magnesia Specialties business which produces high-purity magnesia and dolomitic lime products used in industrial, agricultural, environmental, and specialty applications worldwide.
Martin Marietta Materials, Inc. (NYSE:MLM) has an aggregates-led business that has been resilient against macroeconomic conditions. The firm benefits from a strategically positioned footprint in the country’s fastest-growing markets. It has a diversified end market exposure which lowers the cyclical demand volatility. The financials have also been strong with total revenues, adjusted EBITDA, and diluted earnings per share rising from 2010 to 2023.
The firm was successful in achieving record quarterly aggregates gross profit per ton in the third quarter despite weather-related events impacting the financial results, product shipments, and geographic mix. Regardless, the firm witnessed record third-quarter cash flows from operations and record third-quarter revenues and gross profit in its Magnesia Specialties business. MLM continues penetrating attractive growing markets as it acquired pure aggregates assets in South Florida and Southern California in October.
Martin Marietta Materials, Inc. (NYSE:MLM) looks forward to benefiting from record levels of federal and state investments in highways, streets, and bridges in 2025 and beyond. The conditions are turning out to be more positive with the Fed rate cuts which are expected to drive a recovery in housing and light nonresidential construction activity. Thus, the company is set to reap the benefits of its resilient aggregates-led business model in the positively forecasted future. As of Q3, the stock is held by 44 hedge funds.
Overall, MLM ranks 3rd on our list of best 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 time frame. 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.
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.
