New buildings are popping up everywhere. Homeowners, businesses, and governments are investing substantially in new construction projects. As construction activity rises, investors can capitalize on various stocks that support the building materials sector. These stocks can provide an opportunity for growth as construction spending accelerates. Whether you’re planning to build your own dream home or just renovate the old one will need various products to complete the project successfully and cost-effectively. From roofing materials to wall cladding, there are many products that you will need for almost any home improvement project. In this article, we’ll look at some of the top building product stocks that investors should keep an eye on in 2022 and beyond.
Gibraltar Industries (ROCK)
Gibraltar Industries, Inc. (ROCK) supplies engineered building materials for residential and commercial construction. The company’s products include roofing, siding, insulation, windows, and other building products. It serves residential, commercial, and government construction segments. The company’s products are primarily manufactured and sold under the CertainTeed, James Hardie, and Franklin brands. Gibraltar Industries, Inc. has a market cap of $5.14 billion; its shares traded at around $69.63 as of May 21, 2019. The company has a dividend yield of 2.94% and a profit margin of 1.24%. Gibraltar’s business is expected to benefit from an improving economy, which will help drive increased residential and commercial construction activity. In addition, the company owns a leading addition, and its position in the siding and windows market should help it outperform the industry in the coming years. Gibraltar’s products are used in residential and commercial construction, with a focus on the upper end of the market. This approach allows the company to charge a higher price for its products, which should help drive strong profit growth over the next few years.
Masco Corporation (MAS) is a manufacturer and distributor of various home improvement products, including roofing, siding, windows, and storage solutions. The company markets its products through a network of independent contractors. Masco Corporation has a market cap of $6.78 billion; its shares traded at around $54.61 as of May 21, 2019. The company has a dividend yield of 3.19% and a profit margin of 8.09%. The housing market is expected to remain robust in the coming years, as rising interest rates will likely not significantly impact homeownership. This should support strong growth in the home improvement sector over the next few years. In addition, Masco has a leading market position in roofing, siding, and windows. This is a positive for the company, as homeowners will likely remain focused on the top brands when purchasing building products. With the housing market expected to remain strong, demand for Masco’s products should increase, likely to drive strong profit growth.
Builders FirstSource (BLDR)
Builders FirstSource, Inc. (BLDR) engages in the distribution of building materials. The company offers a broad range of building materials, such as lumber; millwork, including windows, doors, and beams; hardware; siding and roofing products; prefabricated walls; and electrical and plumbing products. It also provides various related products and services, such as engineering and design, logistics and distribution, and marketing and sales. Builders FirstSource, Inc. has a market cap of $2.02 billion; its shares traded at around $32.74 as of May 21, 2019. The company has a dividend yield of 1.80% and a profit margin of 7.95%. The residential construction segment is expected to remain strong shortly, supporting strong growth in the building materials industry. Builders FirstSource is an integrated distributor of building materials for residential and commercial construction. The company has a broad product selection focused on the higher end of the building materials market. This approach allows the company to charge a higher price for its products, which should help drive strong profit growth over the next few years.
Allegion P.E. provides security and locking solutions for commercial and residential markets. The company offers products in access control, locking systems, cash handling, intrusion detection, security alarms, and identity theft and fraud prevention. Allegion P.E. has a market cap of $16.83 billion; its shares traded at around $68.19 as of May 21, 2019. The company has a dividend yield of 2.62% and a profit margin of 9.19%. The security and safety segment will likely benefit from the rising construction activity in the coming years, which should support strong growth in the industry.
Furthermore, Allegion has a leading market position in the cash handling and security alarms sectors, which should help the company outperform the industry in the coming years. Additionally, the company offers identity theft and fraud prevention solutions, which are expected to grow as online commerce expands. Therefore, overexpandskely to generate strong profit growth in the coming years as construction activity rises and demand for its products increases.
The construction sector is booming in the U.S. Construction spending is expected to grow at an annualized rate of 5.5% through 2022, according to the latest data compiled by the U.S. Bureau of Economic Analysis (BEA). This growth is driven by several factors, including a rising interest rate environment, a strong economy, and increasing investment in infrastructure. Investors looking to profit from this sector should keep an eye on stocks in the building products industry. Building products companies produce materials and equipment to construct residential, commercial, and industrial buildings. They include asphalt and paving materials, bricks and masonry, carpentry and roofing products, doors and windows, and electrical supplies. These companies rely heavily on residential construction and commercial real estate activity. These stocks are best for long-term investors who can hold the shares through the ups and downs of the business cycle. Remember that construction stocks are some of the most volatile and can experience sharp price fluctuations from quarter to quarter.