Despite the macroeconomic and supply-related challenges since last year, the building materials industry is well-positioned for solid growth thanks to the surge in infrastructure projects undertaken by the government and the rising demand for residential housing. Considering these factors, the need for building essentials like roofing, insulation, glass, metals, fenestration services, etc., will remain healthy.
To that end, it could be wise to buy fundamentally strong industrial stocks Owens Corning (OC – Get Rating), Apogee Enterprises, Inc. (APOG – Get Rating), and Quanex Building Products Corporation (NX – Get Rating).
Before delving deeper into the fundamentals of these stocks, let’s discuss the reasons behind the potential growth of the building material industry.
Building materials play a pivotal role in constructing homes. U.S. homebuilding increased 3.9% sequentially in July as lower inventory in the existing home market boosted the demand for new homes. Housing starts, a measure of new home construction, climbed to a seasonally adjusted annual rate of 1.452 million, coming higher than expectations of 1.448 million.
Apart from home construction, the building material industry also benefits from the government’s investments to improve and enhance infrastructure in order to boost the economy.
The Infrastructure Investment and Jobs Act has earmarked $550 billion for infrastructure enhancement from 2022 to 2026. This directly benefits the building material industry by augmenting the demand for construction materials, nurturing its growth.
Investors’ interest in the building material industry is evident from the Invesco Dynamic Building & Construction ETF’s (PKB – Get Rating) 38.8% returns year-to-date. The global construction materials market is anticipated to grow at a CAGR of 11%, reaching $3.52 trillion by 2032.
Let’s take a closer look at the fundamentals of the featured stocks…
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