The Zacks Building Products - Miscellaneous industry is benefiting from rising government infrastructure spending, which is driving demand for construction-related products and services. Companies in the industry are also leveraging geographic and product diversification, operational efficiency, and strategic acquisitions to enhance resilience and capture new market opportunities. Leaders like United Rentals, Inc. (URI Quick QuoteURI - Free Report) , Masco Corporation (MAS Quick QuoteMAS - Free Report) , Construction Partners, Inc. (ROAD Quick QuoteROAD - Free Report) , Hillman Solutions Corp. (HLMN Quick QuoteHLMN - Free Report) , and Quanex Building Products Corporation (NX Quick QuoteNX - Free Report) are well positioned to capitalize on these trends.

While the industry continues to face near-term challenges from high mortgage rates, affordability concerns, and inflation-related cost pressures, including tariffs on raw materials like iron, steel, and copper, these headwinds are being mitigated by proactive cost management and pricing strategies. Despite macroeconomic uncertainty, the industry’s fundamentals remain solid, and its adaptability and strategic focus position it well for sustained growth.

Industry Description

The Zacks Building Products - Miscellaneous industry primarily comprises manufacturers, designers and distributors of home improvement and building products like ceiling systems, doors, windows, flooring and metal products. Some industry players provide solutions to rehabilitate the aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries. The companies also manufacture expansion joints and structural bearings, ventilation products, ground-mounted solar racking and commercial greenhouses, as well as mail storage (solutions including mailboxes along with package delivery products). Companies in this industrial cohort also rent out equipment to a diverse customer base, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.

4 Trends Shaping the Future of the Building Products Industry

U.S. Administration’s Infrastructural Spending: The industry players are expected to benefit from strong global trends in infrastructure modernization, energy transition, national security and a potential super-cycle in global supply-chain investments. The U.S. administration’s endeavor to rebuild the nation’s deteriorating roads and bridges and fund new climate-resilient and broadband initiatives is expected to aid the companies. Meanwhile, as the industry players’ business prospects are highly correlated with U.S. housing market conditions, improving residential construction markets are expected to drive growth. Builders are now cautiously optimistic for 2025 as the lack of existing inventory is shifting demand to the new home market, thereby driving the demand for companies’ products in the industry. Also, the Federal Reserve maintained the rate in the range of 4.25%-4.5% and mortgage rates remained elevated at around 7%. The housing and repair markets could see a recovery driven by potential market stabilization and anticipated reductions in interest rates later in 2025.

Operational Excellence, Product Innovation & Acquisitions: The industry participants have been undertaking strong cost-saving initiatives like business consolidation, system implementations, plant/branch closures, improvement in the global supply chain and headcount reductions to boost profitability. Industry participants have also been strategically investing in new products, sales and support services, digitally enabled solutions and advanced manufacturing capabilities to boost revenues. The companies are also following a systematic acquisition strategy to supplement organic growth and expand access to additional markets and products.

Tariff Impact: The U.S. administration’s tariff policies are reshaping the U.S. building products industry by increasing costs, disrupting supply chains, and influencing consumer behavior. While these policies aim to bolster domestic manufacturing, the immediate effects include heightened inflation and challenges for builders and consumers alike. According to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics, overall construction input prices are 1.1% higher in June than a year ago, but overall inflation as measured by the Producer Price Index is hotter than expected. Yet, it fell 0.3% from May, likely due to fewer project starts and softer demand across several construction sectors. While near-term contractor activity remains supported by a strong backlog, persistent cost inflation and growing market uncertainty pose a threat to project viability.

Rising Costs & Soft Residential Market: Inflationary headwinds with respect to transportation costs, material costs and energy costs have been a pressing concern. Also, rising labor costs are compressing margins. These are dampening the companies’ operating performance. Although the industry participants have been working to recover higher costs through various price increases, they expect this ongoing volatility in material and transportation costs to be a concern. Apart from higher raw material costs, the companies bear expenses related to product launches. If companies are unable to offset these costs through price increases or supply-chain initiatives, their profits may be affected.

The industry's outlook is closely tied to the U.S. housing and renovation markets. The residential real estate market has been facing several challenges, including elevated interest rates, which make it difficult for buyers to secure affordable mortgages. The challenging real estate environment, coupled with the effects of inflation on consumer confidence, has been weighing on industry players.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Building Products – Miscellaneous industry is a 31-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #64, which places it in the top 26% 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 solid 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 highlighting some stocks you might consider adding to your portfolio, let’s first review the industry’s recent market performance and current valuation landscape.

Industry Lags S&P 500 & Sector

The Zacks Building Products – Miscellaneous industry has underperformed the Zacks S&P 500 Composite and the broader Zacks Construction sector over the past year.

Over this period, the industry has lost 8.4%, below the broader sector’s 1.9% decrease. Meanwhile, the Zacks S&P 500 Composite has gained 10.3% over 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’ stocks, the industry is trading at 16.7X versus the S&P 500’s 22.61X and the sector’s 18.76X.

Over the past five years, the industry has traded as high as 18.24X, as low as 10.31X and at a median of 15.75X, as the chart below shows.

Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500

Industry’s P/E Ratio (Forward 12-Month) Versus Sector

5 Building Product Stocks to Buy Now

We have selected five stocks from the Zacks universe of building products that have solid growth prospects.

Construction Partners: Based in Dothan, AL, this is a civil infrastructure company. Construction Partners is positioned for strong growth in 2025, driven by multiple reinforcing factors. A record project backlog of $2.84 billion (as of the second quarter of fiscal 2025) sets the stage for robust revenue visibility, while ongoing strength in public infrastructure funding across the Sunbelt region continues to support a steady stream of work. The company is also benefiting from the successful integration of acquisitions, particularly the recent addition of PRI, which significantly expanded its Tennessee footprint and added nearly 300 employees. This acquisition not only boosted scale but also opened up new opportunities in one of the fastest-growing states with strong transportation funding and demographic tailwinds. Approximately 47% of the fiscal second-quarter revenue growth came from acquisitions, while 7% was organic, showing both inorganic expansion and internal momentum. Reflecting confidence, management raised its full-year guidance across all key financial metrics.

Construction Partners, a Zacks Rank #1 (Strong Buy) stock, has gained 72.8% over the past year. ROAD has seen an upward estimate revision for fiscal 2025 earnings to $2.17 from $2.16 per share over the past 60 days, depicting analysts’ optimism for the company’s prospects. The estimated figure indicates 63.2% year-over-year growth for fiscal 2025. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 97.4%. It currently holds a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: ROAD

Quanex: Based in Houston, TX, this company provides components for the fenestration industry. Management’s focus on maintaining margin discipline across the business, supported by both the cost synergies from integration efforts and continued focus on operational efficiency, has been driving growth. The acquisition of Tyman, which closed on Aug. 1, 2024, has been contributing to its performance. This strategic move added $175.7 million in revenues during the first quarter, contributing to a 67.3% year-over-year increase in consolidated sales. The acquisition not only expanded the company’s geographic footprint and product portfolio but also enhanced overall scale, leading to increased operating leverage and margin expansion. The transaction was pivotal in reshaping Quanex’s earnings profile for the quarter.

Quanex, a Zacks Rank #2 (Buy) stock, has lost 35.7% over the past year. Nonetheless, NX has seen an upward estimate revision for 2025 earnings to $2.62 from $2.55 per share over the past 60 days, depicting analysts’ optimism for the company’s prospects. The estimated figure indicates 19.6% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 115.3%.

Price and Consensus: NX

United Rentals: Headquartered in Stamford, CT, this company operates as an equipment rental company. United Rentals’ growth outlook for 2025 is anchored in strong demand across large infrastructure and industrial projects, continued expansion of its high-margin specialty rental segment, and resilient customer confidence. The company expects to benefit from ongoing investments in data centers, pharmaceuticals, manufacturing facilities, and airport projects, which are driving demand for equipment. Specialty rentals are forecasted to grow at a double-digit pace, supported by geographic white space, product expansion, and the opening of at least 50 new locations. URI’s cross-selling strategy—leveraging its general rental base to drive specialty penetration—is gaining traction, with national accounts significantly increasing their spend. Additionally, healthy used equipment sales, robust free cash flow, and a well-capitalized balance sheet provide the flexibility to invest in organic growth, pursue selective M&A, and return capital to shareholders. Despite macroeconomic uncertainties, United Rentals reaffirmed its full-year guidance, citing strong backlog visibility and stable customer sentiment heading into the busy construction season.

United Rentals, a Zacks Rank #2 stock, has gained 8.8% over the past year. URI’s earnings estimates have remained stable for 2025 earnings at $43.63 per share over the past 30 days. The estimated figure indicates 1.1% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed on the other two occasions, the average negative surprise being 1.2%. It currently holds a VGM Score of B.

Price and Consensus: URI

Masco: Based in Livonia, MI, this company provides home improvement and building products in North America, Europe, and international markets. Masco’s growth prospects for 2025 are anchored in its strategic pricing initiatives, brand strength, and operational resilience amid rising tariff pressures. While the company faces a potential $400 million tariff headwind this year, management expects to offset 50%–65% of that through price increases, cost reduction efforts, and ongoing changes to its sourcing footprint. Growth in its plumbing segment remains supported by strong e-commerce performance, rising demand for spa and sauna products, and share gains in international markets like Germany. Meanwhile, Masco’s PRO paint segment is gaining momentum, driven by strong ties with Home Depot and growing demand in the professional channel. Although DIY paint sales remain under pressure and consumer sentiment is cautious, Masco’s emphasis on innovation, award-winning products, and disciplined capital allocation positions it to navigate macroeconomic challenges while sustaining long-term growth. With a robust U.S. manufacturing base and a more diversified supply chain, the company expects to mitigate most tariff impacts by the end of 2026.

Masco, a Zacks Rank #2 stock, has lost 11.3% over the past year. MAS’ earnings estimates have remained stable for 2025 earnings at $3.50 per share over the past 30 days. The estimated figure indicates a 14.6% year-over-year decline for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, met on one occasion and missed on another occasion, the average negative surprise being 0.2%.

Price and Consensus: MAS

Hillman: Headquartered in Forest Park, OH, the company supplies hardware products and merchandising services across the United States, Canada, Mexico, Latin America, and the Caribbean. Hillman sees several key factors driving growth in 2025, despite macro and tariff-related headwinds. The company is maintaining its full-year sales and EBITDA guidance, banking on price increases to offset $250 million in annualized tariff costs. Hillman is accelerating its Dual Faucet sourcing strategy, aiming to reduce reliance on Chinese suppliers from 50% in 2018 to just 20% by year-end 2025. The company also expects continued contribution from its recent Intex acquisition and new business wins, each adding approximately 2% to sales growth. Despite guiding for a 17% volume decline in the second half of 2025, which is more conservative than historical trends, Hillman remains confident in its pricing power and resilient demand, particularly for its low-cost, essential repair and maintenance items. Additionally, operational execution, including efficient logistics, product rollouts like MinuteKey 3.5, and strong retail relationships, supports the company’s strategy to manage tariff disruptions while sustaining profitability growth.

Hillman, a Zacks Rank #2 stock, has lost 21.4% over the past year. Hillman’s earnings estimates have remained stable for 2025 earnings at 53 cents per share over the past 30 days. The estimated EPS figure indicates 8.2% year-over-year growth for 2025. The company’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, met in two and missed on one occasion, the average surprise being 1.3%.

Price and Consensus: HLMN