The Zacks Building Products - Concrete and Aggregates industry plunged 27.5% this year along with the Zacks Construction sector’s 24.9% fall. The whole construction sector has been grappling with supply chain issues and persistent rise in material prices and labor shortages. The Concrete and Aggregates players witnessed intense volatility in energy markets, continuous rise in diesel prices and higher liquid asphalt input cost. Defying all the above-mentioned challenges, Vulcan Materials Co. ( VMC Quick Quote VMC - Free Report) recently came up with solid quarterly results. The company has been banking on robust pricing actions and solid demand in the residential construction market. Also, strategic disciplines, impressive Aggregates business, improving public demand and accretive buyouts are adding to the bliss. This construction-aggregates producer’s shares have outperformed the industry as well as the broader construction sector. Earnings estimates for the current year have also remained stable in the past 30 days at $6.32 per share. This reflects a 25.4% year-over-year improvement. The positive trend signifies bullish analysts’ sentiments, indicating robust fundamentals and the expectation of outperformance in the near term. Image Source: Zacks Investment Research Moreover, solid prospects in the aggregates business and the acquisition of U.S. Concrete are likely to somewhat offset challenges for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Supporting Growth Factors Solid Demand in Both Public & Private: Increasing public and private construction demand, particularly in the residential market, has been benefiting Vulcan. The company has been witnessing strong pricing, underpinned by growing public demand (mainly transport) and operational discipline. Vulcan-served markets should continue to benefit from public construction demand, primarily led by significantly higher levels of highway funding in key states. During the first quarter earnings discussion call, VMC noted that public demand is improving and future growth is expected in both highways and other infrastructure. Meanwhile, private consumer demand also strengthened in the past year, especially in residential construction. Privately-funded construction accounted for approximately 58% of total aggregate shipments in 2021. Residential construction continues to be the strongest end market, backed by growth in starts in both single-family and multifamily housing. Long-Term Strategic Moves: The company remains focused on creating long-term value by compounding unit margins through four strategic initiatives — Commercial Excellence, Operational Excellence, Strategic Sourcing and Logistics Innovation — that enhance price growth as well as operating efficiencies. Higher price realizations and its four strategic initiatives should continue to increase unit profitability. For 2022, the company anticipates adjusted EBITDA in the range of $1.720-$1.820 billion. Net earnings are expected within $800-$890 million and aggregates shipment growth is anticipated to be 5-7%. Earlier in February, the board of directors approved a 7.5% hike in quarterly cash dividend to 40 cents per share. This hike reflects its focus on a balanced capital allocation strategy via balance sheet strength and operational excellence. The increase also reflects VMC’s confidence in its future performance and ability to drive shareholder value. Inorganic Drive: Since 2014, Vulcan has completed more than two dozen value-enhancing acquisitions in some of the fastest-growing markets in the country. In first-quarter 2022, the company acquired five aggregates facilities in Texas. Three are in the production stage, one in the development phase and one in the sales yard. On Aug 26, 2021, Vulcan acquired U.S. Concrete, Inc., which expanded the aggregates business in the growing metropolitan areas. Based in Euless, TX, U.S. Concrete has 27 aggregates operations serving California, Texas and the Northeast regions. The buyout of U.S. Concrete provides strategically oriented ready-mixed concrete operations that will expand Vulcan's service capabilities. In 2022, Vulcan expects to spend between $600 million and $650 million on capital expenditures — including growth and capacity-adding projects — versus $465 million invested in 2021. Aggregates Prospects Look Good: Backed by favorable pricing dynamics and aggregates unit profitability, Vulcan expects high single-digit growth in Aggregates cash gross profit per ton. It expects total shipment growth of 5-7%, a freight-adjusted price increase of 6-8% and a mid-single-digit increase in freight-adjusted cash cost due to higher energy-related costs (mostly diesel fuel) and continued inflationary pressures. Industry Woes Ail Since 2021, the company has been facing supply woes and inflationary pressures, particularly in energy and labor. Energy inflation was a significant headwind in 2021 and first-quarter 2022. Labor constraints have also caused delays and inefficiencies in operations. The company anticipates these headwinds to persist. This apart, Vulcan is susceptible to bad weather conditions, including hurricanes, tornadoes and other weather events, as most of its products are used outdoors in the public or private construction industry. Also, the company’s production and distribution facilities are located outdoors. Inclement weather affects both the companies’ ability to produce and distribute products as well as demand, as construction work can be hampered by weather. Some Better-Ranked Stocks in the Broader Construction Sector Beazer Homes USA, Inc. ( BZH Quick Quote BZH - Free Report) currently sports a Zacks Rank #1. This Atlanta-based homebuilder continues to gain from solid operational execution and the continued strength of the housing market. Beazer Homes’ earnings are expected to grow 48.9% in fiscal 2022. NVR, Inc. ( NVR Quick Quote NVR - Free Report) currently carries a Zacks Rank #1. The company is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis. To serve homebuilding customers, NVR operates a mortgage banking and title services business. NVR operates in two business segments: Homebuilding and Mortgage Banking. NVR’s expected earnings growth rate for the current year is 68.4%. TRI Pointe Group Inc. ( TPH Quick Quote TPH - Free Report) currently carries a Zacks Rank #2 (Buy). This Irvine, CA-based homebuilder designs, constructs, and sells single-family detached and attached homes in the United States. Robust demand and pricing and improved operating leverage have been driving TRI Pointe's performance. Cost-cutting initiatives implemented earlier this year and focus on entry-level buyers have been adding to the positives. TRI Pointe’s earnings for 2022 are expected to grow 29.6%.