We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Stocks to Watch From the Thriving Concrete & Aggregates Industry
Read MoreHide Full Article
A boost in infrastructural and public construction spending should continue to favor the Zacks Building Products - Concrete & Aggregates industry. An improving residential construction market and favorable pricing dynamics have also been aiding companies in navigating hard times. Indeed, macroeconomic uncertainties, weather-related woes and higher labor costs are causes of concern. Nonetheless, prominent companies in the industry, like Martin Marietta Materials, Inc. (MLM - Free Report) , Eagle Materials Inc. (EXP - Free Report) and Summit Materials, Inc. (SUM - Free Report) , have been gaining from the positives.
Industry Description
The Zacks Building Products - Concrete & Aggregates industry consists of manufacturers, distributors and sellers of construction materials like aggregates and concrete along with other related items for public infrastructure, residential and non-residential, as well as other end markets. The materials also include gypsum wallboard, recycled paperboard, concrete blocks, ready-mix concrete, and oil and gas proppants. The industry players are also involved in designing, engineering, manufacturing, marketing, and installation of external building products for commercial, residential, and repair and remodel markets in domestic as well as international markets.
3 Trends Shaping the Future of Concrete & Aggregates Industry
Focus on Reviving Infrastructure: The Infrastructure Investment and Jobs Act, the Creating Helpful Incentives to Produce Semiconductors and Science Act, and the Inflation Reduction Act collectively signify a substantial commitment to bolstering American competitiveness. These three enacted laws are aimed at revitalizing American infrastructure, expediting the shift toward a sustainable economy, and fortifying the domestic semiconductor sector. These bills comprise new investments in almost every infrastructure sector, including transportation, energy, broadband and water. The U.S. administration’s endeavor to pump money for rebuilding the nation's roads, bridges and other infrastructure would give construction companies like Martin Marietta and others a solid foundation for growth.
Acquisitions & Focus on Operating Efficiency: The industry participants follow a well-chalked-out acquisition plan to enhance domestic and international portfolios. Moreover, companies are increasingly focusing on reducing controllable costs and maximizing operating efficiency across business lines to generate higher earnings and cash flows. The industry players have also been experiencing a solid pricing environment across their product portfolios, thereby helping to boost margins.
Fluctuation in Input Prices, Weather Woes & Shortage of Skilled Labors: The industry players are struggling with escalating material expenses, the shortage of skilled laborers and rising wage costs. The companies use electricity, diesel fuel, liquid asphalt and other petroleum-based resources. Hence, supply-related woes and significant fluctuations in the prices of these resources affect operating results. Also, businesses are exposed to weather-related risks affecting production schedules and profitability. Excessive rainfall, flooding or severe droughts jeopardize shipments and production. The first and fourth quarters are mostly affected by winter. Again, hurricanes in the Atlantic Ocean and Gulf Coast are most active during these quarters. These impediments may bump up costs and mar the industry participants’ profits.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Building Products - Concrete & Aggregates industry is a nine-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #57, which places it in the top 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates impressive near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500, Lags Sector
The Zacks Building Products - Concrete & Aggregates industry has outperformed the Zacks S&P 500 composite but lagged the broader Zacks Construction sector over the past year.
Stocks in this industry have collectively gained 43.2% versus the broader sector’s rise of 49.3% over the past year. Meanwhile, the S&P 500 has gained 25.2% in the same period.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price to earnings, which is a commonly used multiple for valuing Building Products - Concrete & Aggregates stocks, the industry is currently trading at 21.9X versus the S&P 500’s 22.4X and the sector’s 18.6X.
Over the past five years, the industry has traded as high as 24.7X, as low as 14X and at a median of 19.4X, as the chart below shows.
Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500
3 Concrete & Aggregates Stocks to Watch
Below, we have discussed three stocks from the Zacks Concrete & Aggregates universe that have solid growth potential. The chosen companies currently carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Martin Marietta Materials: Based in Raleigh, NC, Martin Marietta produces and supplies construction aggregates as well as other heavy building materials — mainly cement — in the United States. Expanded infrastructure investment, recovering private non-residential and residential markets, heavy industrial projects of scale, large-scale energy projects and domestic manufacturing are expected to support near-term shipment levels. Also, the company has been realigning its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. Also, proficient acquisitions have been enhancing its reach in new geographies for consistent industry-leading growth.
Martin Marietta currently carries a Zacks Rank #2. Shares of the company have rallied 47.7% in the past year. Earnings estimates for 2024 have increased to $21.02 per share from $20.86 over the past 30 days. This depicts analysts’ optimism over the company’s prospects. Also, earnings for 2024 are expected to rise 14%. It has a three-to-five-year expected EPS growth rate of 21.6%. It also has a favorable VGM Score of B, making it a potentially interesting investment opportunity.
Price and Consensus: MLM
Eagle Materials: This Dallas, TX-based company produces and supplies heavy construction materials, light building materials and materials used for oil and natural gas extraction in the United States. Higher demand for wallboard and cement, strong homebuyer demand, increasing infrastructure awards and significant investment in domestic manufacturing facilities are aiding the company’s growth. These tailwinds have been offsetting higher rates. Higher pricing is also adding to the positives. The company remains well-positioned courtesy of its broad geographic footprint, population-growth trends, shortages of residential units, and higher state-level infrastructure spending owing to a multi-year federal highway bill.
Eagle Materials currently carries a Zacks Rank #2. The shares have surged 52.7% in the past year. Also, fiscal 2024 earnings estimates have increased to $14.16 per share from $14.14, over the past 30 days. Earnings for fiscal 2024 are expected to grow 13%.
Price and Consensus: EXP
Summit Materials: Based in Denver, CO, this is a construction material company. Summit Materials has been witnessing solid pricing growth across all lines of business and expects the trend to continue in 2024. The company has also been optimizing its portfolio as it intends to shift toward a more materials-led portfolio. Meanwhile, the company remains optimistic as it believes public markets are poised to experience robust and durable growth driven by well-funded state budgets and infrastructure funding. A solid state Department of Transportation budget flow will aid the company, which has been receiving more contracts associated with highways and related works.
Summit Materials currently carries a Zacks Rank #3. The company’s shares have gained 35.4% in the past year. Earnings estimates for 2024 have increased to $1.82 per share from $1.76 over the past 30 days. Also, earnings for 2024 are expected to rise 23.1%. It also has a favorable VGM Score of A.
Price and Consensus: SUM
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Stocks to Watch From the Thriving Concrete & Aggregates Industry
A boost in infrastructural and public construction spending should continue to favor the Zacks Building Products - Concrete & Aggregates industry. An improving residential construction market and favorable pricing dynamics have also been aiding companies in navigating hard times. Indeed, macroeconomic uncertainties, weather-related woes and higher labor costs are causes of concern. Nonetheless, prominent companies in the industry, like Martin Marietta Materials, Inc. (MLM - Free Report) , Eagle Materials Inc. (EXP - Free Report) and Summit Materials, Inc. (SUM - Free Report) , have been gaining from the positives.
Industry Description
The Zacks Building Products - Concrete & Aggregates industry consists of manufacturers, distributors and sellers of construction materials like aggregates and concrete along with other related items for public infrastructure, residential and non-residential, as well as other end markets. The materials also include gypsum wallboard, recycled paperboard, concrete blocks, ready-mix concrete, and oil and gas proppants. The industry players are also involved in designing, engineering, manufacturing, marketing, and installation of external building products for commercial, residential, and repair and remodel markets in domestic as well as international markets.
3 Trends Shaping the Future of Concrete & Aggregates Industry
Focus on Reviving Infrastructure: The Infrastructure Investment and Jobs Act, the Creating Helpful Incentives to Produce Semiconductors and Science Act, and the Inflation Reduction Act collectively signify a substantial commitment to bolstering American competitiveness. These three enacted laws are aimed at revitalizing American infrastructure, expediting the shift toward a sustainable economy, and fortifying the domestic semiconductor sector. These bills comprise new investments in almost every infrastructure sector, including transportation, energy, broadband and water. The U.S. administration’s endeavor to pump money for rebuilding the nation's roads, bridges and other infrastructure would give construction companies like Martin Marietta and others a solid foundation for growth.
Acquisitions & Focus on Operating Efficiency: The industry participants follow a well-chalked-out acquisition plan to enhance domestic and international portfolios. Moreover, companies are increasingly focusing on reducing controllable costs and maximizing operating efficiency across business lines to generate higher earnings and cash flows. The industry players have also been experiencing a solid pricing environment across their product portfolios, thereby helping to boost margins.
Fluctuation in Input Prices, Weather Woes & Shortage of Skilled Labors: The industry players are struggling with escalating material expenses, the shortage of skilled laborers and rising wage costs. The companies use electricity, diesel fuel, liquid asphalt and other petroleum-based resources. Hence, supply-related woes and significant fluctuations in the prices of these resources affect operating results. Also, businesses are exposed to weather-related risks affecting production schedules and profitability. Excessive rainfall, flooding or severe droughts jeopardize shipments and production. The first and fourth quarters are mostly affected by winter. Again, hurricanes in the Atlantic Ocean and Gulf Coast are most active during these quarters. These impediments may bump up costs and mar the industry participants’ profits.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Building Products - Concrete & Aggregates industry is a nine-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #57, which places it in the top 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates impressive near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500, Lags Sector
The Zacks Building Products - Concrete & Aggregates industry has outperformed the Zacks S&P 500 composite but lagged the broader Zacks Construction sector over the past year.
Stocks in this industry have collectively gained 43.2% versus the broader sector’s rise of 49.3% over the past year. Meanwhile, the S&P 500 has gained 25.2% in the same period.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price to earnings, which is a commonly used multiple for valuing Building Products - Concrete & Aggregates stocks, the industry is currently trading at 21.9X versus the S&P 500’s 22.4X and the sector’s 18.6X.
Over the past five years, the industry has traded as high as 24.7X, as low as 14X and at a median of 19.4X, as the chart below shows.
Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500
3 Concrete & Aggregates Stocks to Watch
Below, we have discussed three stocks from the Zacks Concrete & Aggregates universe that have solid growth potential. The chosen companies currently carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Martin Marietta Materials: Based in Raleigh, NC, Martin Marietta produces and supplies construction aggregates as well as other heavy building materials — mainly cement — in the United States. Expanded infrastructure investment, recovering private non-residential and residential markets, heavy industrial projects of scale, large-scale energy projects and domestic manufacturing are expected to support near-term shipment levels. Also, the company has been realigning its overall portfolio for opportunities to maximize value by monetizing or exchanging select assets. Also, proficient acquisitions have been enhancing its reach in new geographies for consistent industry-leading growth.
Martin Marietta currently carries a Zacks Rank #2. Shares of the company have rallied 47.7% in the past year. Earnings estimates for 2024 have increased to $21.02 per share from $20.86 over the past 30 days. This depicts analysts’ optimism over the company’s prospects. Also, earnings for 2024 are expected to rise 14%. It has a three-to-five-year expected EPS growth rate of 21.6%. It also has a favorable VGM Score of B, making it a potentially interesting investment opportunity.
Price and Consensus: MLM
Eagle Materials: This Dallas, TX-based company produces and supplies heavy construction materials, light building materials and materials used for oil and natural gas extraction in the United States. Higher demand for wallboard and cement, strong homebuyer demand, increasing infrastructure awards and significant investment in domestic manufacturing facilities are aiding the company’s growth. These tailwinds have been offsetting higher rates. Higher pricing is also adding to the positives. The company remains well-positioned courtesy of its broad geographic footprint, population-growth trends, shortages of residential units, and higher state-level infrastructure spending owing to a multi-year federal highway bill.
Eagle Materials currently carries a Zacks Rank #2. The shares have surged 52.7% in the past year. Also, fiscal 2024 earnings estimates have increased to $14.16 per share from $14.14, over the past 30 days. Earnings for fiscal 2024 are expected to grow 13%.
Price and Consensus: EXP
Summit Materials: Based in Denver, CO, this is a construction material company. Summit Materials has been witnessing solid pricing growth across all lines of business and expects the trend to continue in 2024. The company has also been optimizing its portfolio as it intends to shift toward a more materials-led portfolio. Meanwhile, the company remains optimistic as it believes public markets are poised to experience robust and durable growth driven by well-funded state budgets and infrastructure funding. A solid state Department of Transportation budget flow will aid the company, which has been receiving more contracts associated with highways and related works.
Summit Materials currently carries a Zacks Rank #3. The company’s shares have gained 35.4% in the past year. Earnings estimates for 2024 have increased to $1.82 per share from $1.76 over the past 30 days. Also, earnings for 2024 are expected to rise 23.1%. It also has a favorable VGM Score of A.
Price and Consensus: SUM