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 Vulcan Materials Company (NYSE:VMC) 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 construction site with a truck and crane unloading the company’s 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).
Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders: 49
Vulcan Materials Company (NYSE:VMC) is a major producer of aggregates-based construction materials. The company has a history with over 100 years of dedication as it became a publicly traded company with trading starting on January 2, 1957. The company is headquartered in Birmingham, Alabama.
Vulcan is the leading supplier of aggregates which are essential to infrastructure, growth, and construction. The firm is one of the nation’s largest producers of construction aggregates and a major producer of aggregates-based construction materials including asphalt and ready-mixed concrete. Vulcan’s coast-to-coast footprint is unmatched and spans the high-growth US markets.
Vulcan’s focus on aggregates presents it with favorable conditions in the form of a diverse end market demand with aggregates utilized in all kinds of construction, attractive pricing characteristics, limited product substitutions, and high barriers to entry. The demographics are an additional pro as the company serves states that are advantaged for better growth in population, employment, and household.
The firm’s industry-leading aggregates cash gross profit per ton increased 10% in the third quarter, despite lower shipments and harsh weather conditions, and has grown by double-digits for 8 consecutive quarters. Although bad weather impacted construction activity in the first 9 months of the year, overall demand fundamentals are strong, due to growth in public construction activity and an improving private demand environment.
Vulcan Materials Company (NYSE:VMC) has a uniquely positioned aggregates business and an impressive footprint, while market dynamics are positive. With what the firm produces being used in nearly all forms of construction, Vulcan has bright growth prospects to pursue. As of Q3, the stock is held by 49 hedge funds.
Overall, VMC ranks 2nd on our list of best construction materials stocks to buy now. While we acknowledge the potential of VMC 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 VMC 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.
