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Owens Corning (OC) to Buy Natural Polymers, Enhance Portfolio

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Owens Corning Inc. (OC - Free Report) has signed a deal to acquire a manufacturer of spray polyurethane foam insulation, Natural Polymers, LLC, thereby expanding its core insulation product offerings. However, the terms of the transaction, which is expected to close in third-quarter 2022, were not disclosed.

Shares of this building materials systems and composite solutions provider slipped by a meager 0.5% in the trading session on Jun 21, 2022.

Key Takeaways

Based in Cortland, IL, Natural Polymers has the expertise in developing high-quality products and systems, and offers the least-volatile organic compound products currently available in the spray foam industry.

The various business products of Natural Polymers are GREENGUARD Gold Certified by Underwriter’s Laboratories, which help in reducing indoor air pollution and the risk of chemical exposure.

This buyout will enhance Owens Corning’s approach to strengthen its core building and construction products, and expand addressable markets into higher-growth segments.

Natural Polymers’ technology will enable Owens Corning to offer its customers a more diversified insulation product portfolio.

Natural Polymers’ business, which is expected to generate $100 million of sales in 2022, has shown a solid record of above-market growth. It is also expected to realize double-digit growth over the next several years.

Product Expansion Via Acquisitions

Acquisitions are an important part of Owens Corning’s growth strategy. It is assessing its investment in bolt-on acquisitions that leverage its commercial, operational and geographic strength and expand its functional areas of offering.

In April 2022, Owens Corning signed a deal with JR Plastics Corporation to acquire WearDeck, a premium producer of composite weather-resistant decking for commercial and residential applications. WearDeck is estimated to generate revenues of approximately $60 million in 2022.

Owens Corning continues to invest in accelerating new product and process innovation to support customers and generate additional growth. Owens Corning anticipates gaining from the existing product portfolio and initiatives to better production efficiency. Its efforts to introduce products are encouraging. During first-quarter 2022, the company launched 16 new or refreshed products across global businesses. These products span across core product platforms, including roofing shingles and components, insulation XPS foam and mineral wool, and wind, non-woven, and other composite materials.

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Coming to the share price performance, OC shares have outperformed its industry so far this year despite supply-chain disruptions, and significant inflation in material and transportation, given the above-mentioned tailwinds.

This Zacks Rank #3 (Hold) company is benefiting from market-leading businesses, innovative products and process technologies, and capabilities.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 Top-Ranked Construction Stocks to Buy

Some better-ranked stocks which warrant a look in the Construction sector are Meritage Homes Corporation (MTH - Free Report) , NVR, Inc. (NVR - Free Report) and M/I Homes, Inc. (MHO - Free Report) .

Meritage Homes is one of the leading designers and builders of single-family homes. The company currently sports a Zacks Rank #1.

Meritage Homes has declined 46.8% year to date. That said, earnings are expected to grow 42.7% in 2022. Earnings estimates have moved 1.4% north for 2022 over the past 30 days.

NVR currently holds 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.

NVR shares have declined 35.6% over a year. However, earnings are expected to grow 68.4% in 2022. Earnings estimates have increased 20.4% for 2022 over the past 30 days.

M/I Homes currently carries a Zacks Rank #2 (Buy). This is one of the nation's leading builders of single-family homes.

M/I Homes has lost 42.1% year to date. Earnings for 2022 are expected to grow 21.3%. Earnings estimates have increased 5.6% for 2022 over the past 30 days.