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Still Time to Invest in the Booming Zacks Construction Sector Going into 2024?
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Extensive backlogs from the pandemic continued to propel homebuilders and many building material companies this year. Year to date the Zacks Construction sector has a total return of +52% when including dividends to easily top the S&P 500’s +22% and even the Nasdaq’s +44%.
Even better, several Zacks Construction sector stocks still appear to be undervalued considering their strengthened outlooks. Several of these construction stocks also belong to top-rated Zacks business industries at the moment making now a good time to invest going into 2024.
Standing out in terms of value here are three of the more promising Zacks Construction sector stocks for the new year.
Boasting a Zacks Rank #1 (Strong Buy) we’ll start with Knife River Corporation which spun off from MDU Resources Group (MDU - Free Report) ) earlier in the year and began trading independently on the New York Stock Exchange in June. Notably, Knife River’s stock belongs to the Zacks Building Products-Miscellaneous Industry which is currently in the top 11% of over 250 Zacks industries.
Knife River is benefiting from its strong business environment as a miner of aggregates and markets crushed stone, sand, gravel, and other construction related materials including ready-mix concrete and asphalt.
Standing out in terms of value and growth, Knife River’s stock trades at 21.3X forward earnings which is slightly below the S&P 500’s 22.4X and not a stretched premium to its industry average of 18X. Furthermore, Knife River’s annual earnings are now forecasted at $3.13 per share in fiscal 2023 and expected to rise another 5% in FY24. Most compelling, over the last 60 days, earnings estimate revisions for FY23 and FY24 have soared 30% and 16% respectively.
Plus, total sales are projected to be up 8% from the $2.53 billion the company brought in for MDU Resources last year and rise another 6% in FY24 to $2.93 billion. In terms of price to sales, Knife River has a P/S ratio of 1.4X which is nicely beneath the S&P 500’s 3.9X and the industry average of 1.8X.
Despite its blazing price performance in 2023 CRH PLC is another Zacks Construction sector stock that could have a nice amount of upside going into the new year.
CRH currently sports a Zacks Rank #2 (Buy) and also belongs to the top-rated Zacks Building Products-Miscellaneous Industry as a provider of cement, concrete products, aggregates, roofing, and insulation among other building materials. CRH has a global footprint operating in the U.S. and throughout Europe, with its stock soaring +73% year to date to largely outperform the broader indexes and top its Zacks Subindustry’s +59%.
Image Source: Zacks Investment Research
More intriguing, CRH shares still trade at a very reasonable 15.3X forward earnings multiple which is a pleasant discount to the industry average and the benchmark. This comes as annual earnings are now anticipated to climb 29% in FY23 to $4.49 per share versus $3.48 a share last year.
Even better, FY24 earnings are expected to jump another 10%. CRH’s total sales are now expected to leap 13% this year and rise another 5% in FY24 to $36.9 billion and the company offers a 2.35% annual dividend yield that further bolsters its value at current levels.
Also sporting a Zacks Rank #2 (Buy) is Century Communities which belongs to the Zacks Building Products-Home Builders Industry that is currently in the top 27% of all Zacks industries.
Century Communities operations consist of land acquisition, development, marketing, and sales of various single-family detached and attached residential home projects.
Despite Century Communities' stock spiking +83% YTD, CCS shares still trade at a very appealing 12.3X forward earnings multiple which is near the industry average of 10.8X. To that point, Century Communities stock appears to be undervalued as earnings are expected to drop to $7.44 a share in FY23 following a record year that saw EPS at $16.16 per share.
Image Source: Zacks Investment Research
With that being said, FY24 earnings are expected to rebound and rise 18% to $8.78 per share. It’s also noteworthy that Century Communities stock trades at just 0.79X sales although total sales are now forecasted to dip -25% to $3.39 billion after such a superb year. However, the company’s top line is expected to rebound and rise 7% in FY24 to $3.63 billion.
Century Communities does offer a 1% annual dividend yield and has a monstrous total return of +450% over the last five years making it one of the stock market's best performers in recent years.
Image Source: Zacks Investment Research
Takeaway
These Zacks Construction sector stocks look very attractive going into 2024 and now looks like a good time to buy considering their reasonable valuations and promising outlooks. The stellar performance of the Zacks Construction sector should certainly be getting investors' attention and Knife River Corporation, CRH PLC, and Century Communities are worthy investments in the space.
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Still Time to Invest in the Booming Zacks Construction Sector Going into 2024?
Extensive backlogs from the pandemic continued to propel homebuilders and many building material companies this year. Year to date the Zacks Construction sector has a total return of +52% when including dividends to easily top the S&P 500’s +22% and even the Nasdaq’s +44%.
Even better, several Zacks Construction sector stocks still appear to be undervalued considering their strengthened outlooks. Several of these construction stocks also belong to top-rated Zacks business industries at the moment making now a good time to invest going into 2024.
Standing out in terms of value here are three of the more promising Zacks Construction sector stocks for the new year.
Image Source: Zacks Investment Research
Knife River Corporation (KNF - Free Report)
Boasting a Zacks Rank #1 (Strong Buy) we’ll start with Knife River Corporation which spun off from MDU Resources Group (MDU - Free Report) ) earlier in the year and began trading independently on the New York Stock Exchange in June. Notably, Knife River’s stock belongs to the Zacks Building Products-Miscellaneous Industry which is currently in the top 11% of over 250 Zacks industries.
Knife River is benefiting from its strong business environment as a miner of aggregates and markets crushed stone, sand, gravel, and other construction related materials including ready-mix concrete and asphalt.
Standing out in terms of value and growth, Knife River’s stock trades at 21.3X forward earnings which is slightly below the S&P 500’s 22.4X and not a stretched premium to its industry average of 18X. Furthermore, Knife River’s annual earnings are now forecasted at $3.13 per share in fiscal 2023 and expected to rise another 5% in FY24. Most compelling, over the last 60 days, earnings estimate revisions for FY23 and FY24 have soared 30% and 16% respectively.
Plus, total sales are projected to be up 8% from the $2.53 billion the company brought in for MDU Resources last year and rise another 6% in FY24 to $2.93 billion. In terms of price to sales, Knife River has a P/S ratio of 1.4X which is nicely beneath the S&P 500’s 3.9X and the industry average of 1.8X.
Image Source: Zacks Investment Research
CRH (CRH - Free Report)
Despite its blazing price performance in 2023 CRH PLC is another Zacks Construction sector stock that could have a nice amount of upside going into the new year.
CRH currently sports a Zacks Rank #2 (Buy) and also belongs to the top-rated Zacks Building Products-Miscellaneous Industry as a provider of cement, concrete products, aggregates, roofing, and insulation among other building materials. CRH has a global footprint operating in the U.S. and throughout Europe, with its stock soaring +73% year to date to largely outperform the broader indexes and top its Zacks Subindustry’s +59%.
Image Source: Zacks Investment Research
More intriguing, CRH shares still trade at a very reasonable 15.3X forward earnings multiple which is a pleasant discount to the industry average and the benchmark. This comes as annual earnings are now anticipated to climb 29% in FY23 to $4.49 per share versus $3.48 a share last year.
Even better, FY24 earnings are expected to jump another 10%. CRH’s total sales are now expected to leap 13% this year and rise another 5% in FY24 to $36.9 billion and the company offers a 2.35% annual dividend yield that further bolsters its value at current levels.
Image Source: Zacks Investment Research
Century Communities (CCS - Free Report)
Also sporting a Zacks Rank #2 (Buy) is Century Communities which belongs to the Zacks Building Products-Home Builders Industry that is currently in the top 27% of all Zacks industries.
Century Communities operations consist of land acquisition, development, marketing, and sales of various single-family detached and attached residential home projects.
Despite Century Communities' stock spiking +83% YTD, CCS shares still trade at a very appealing 12.3X forward earnings multiple which is near the industry average of 10.8X. To that point, Century Communities stock appears to be undervalued as earnings are expected to drop to $7.44 a share in FY23 following a record year that saw EPS at $16.16 per share.
Image Source: Zacks Investment Research
With that being said, FY24 earnings are expected to rebound and rise 18% to $8.78 per share. It’s also noteworthy that Century Communities stock trades at just 0.79X sales although total sales are now forecasted to dip -25% to $3.39 billion after such a superb year. However, the company’s top line is expected to rebound and rise 7% in FY24 to $3.63 billion.
Century Communities does offer a 1% annual dividend yield and has a monstrous total return of +450% over the last five years making it one of the stock market's best performers in recent years.
Image Source: Zacks Investment Research
Takeaway
These Zacks Construction sector stocks look very attractive going into 2024 and now looks like a good time to buy considering their reasonable valuations and promising outlooks. The stellar performance of the Zacks Construction sector should certainly be getting investors' attention and Knife River Corporation, CRH PLC, and Century Communities are worthy investments in the space.