The demand for building materials is on the rise due to government investments in infrastructure development, including public buildings, utilities, and transportation systems. Therefore, investors could consider quality industrial stocks CRH plc (CRH), Owens Corning (OC), and CEMEX, S.A.B. de C.V. (CX). These stocks are rated an A (Strong Buy) in our proprietary rating system.
The continual development of highways, railways, tunnels, non-residential buildings, and mining, makes the construction of new infrastructure imperative. The demand for products with speedy manufacturing schedules and reduced production costs is driving the demand for innovative materials for building applications.
As a result, the Global Building Materials market is expected to reach $1.70 trillion by 2030, growing with a CAGR of 3.9% until 2030.
In addition, the global industrial artificial intelligence (AI) market is gaining traction because of the extensive use of robotics in manufacturing, the use of computer vision technology in manufacturing, and significant increase in venture capital investments.
The global industrial artificial intelligence (AI) market is projected to grow at a robust CAGR of 52.5%, reaching a value of $58.30 billion by 2029.
Moreover, despite geopolitical factors such as trade tensions and changes in government policies, the industrial sector is expected to grow due to rising global demand and ongoing technological advancements. As per Statista, U.S. manufacturing is expected to grow at a CAGR of 3% until 2028.
Take a look at the stocks mentioned above:
CRH plc (CRH)
Headquartered in Dublin, Ireland, CRH manufactures and distributes building materials in Ireland and internationally. It operates through three segments, Americas Materials; Europe Materials; and Building Products.
CRH’s trailing-12-month gross profit margin of 33.25% is 17.1% higher than the 28.39% industry average. Its trailing-12-month net income margin of 11.76% is 63.8% higher than the 7.18% industry average.
CRH pays $2.06 annually as dividends which translates to a yield of 3.59% at the current price. Its four-year average dividend yield is 2.58%. Its dividend payouts have grown at 11.8% CAGR over the past three years.
During the fiscal year that ended December 31, 2022, CRH’s revenue increased 12% year-over-year to $32.72 billion. Group profit for the financial year increased 47.8% year-over-year to $3.87 billion and earnings per ordinary share increased 54.3% year-over-year to $5.73.
Analysts expect CRH’s revenue for the fiscal year ending December 2023 to increase 7% year-over-year to $34.76 billion. Its EPS is expected to be $3.55 for the same year.
Shares of CRH have gained 72.7% over the past nine months to close the last trading session at $57.54.
CRH’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum and a B in Sentiment and Stability. It is ranked #6 out of 47 stocks in the A-rated Industrial - Building Materials industry.
Beyond what is stated above, we’ve also rated CRH for Growth, Value, and Quality. Get all CRH ratings here.
Owens Corning (OC)
OC engages in the manufacturing and sale of insulation, roofing, and fiberglass composite materials in the United States, Canada, Europe, the Asia Pacific, Latin America, and internationally. It operates in three segments, Composites; Insulation; and Roofing.
OC’s trailing-12-month EBITDA margin of 22.61% is 67.6% higher than the 13.50% industry average. Its trailing-12-month net income margin of 13.54% is 113.4% higher than the 6.35% industry average.
On June 15, 2023, OC declared a quarterly dividend of $0.52, payable on August 4.
The company pays an annual dividend of $2.08, which translates to a yield of 1.57% at the current price level. It has a four-year average dividend yield of 1.44%.
OC's net sales came in at $2.33 billion in the fiscal first quarter that ended March 31, 2023. Its operating income increased 21.4% year-over-year to $534 million. Also, its net earnings increased 24.4% year-over-year to $382 million, and earnings per common share attributable to OC common stockholders increased 37.6% year-over-year to $4.17.
Street expects OC’s revenue for the fiscal second quarter ended June 2023 to be $2.15 billion. Its EPS is expected to be $3.15 for the same quarter. Also, it has surpassed EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 67.6% over the past year to close the last trading session at $134.89.
OC’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
OC has an A grade for Momentum and a B in Value and Quality. It is ranked #4 in the same industry.
Click here to see the additional POWR Ratings for OC (Growth, Stability, and Sentiment).
CEMEX, S.A.B. de C.V. (CX)
Headquartered in San Pedro Garza García, Mexico, CX produces, markets, distributes, and sells cement, ready-mix concrete, aggregates, urbanization solutions, and other construction materials worldwide.
CX’s trailing-12-month gross profit margin of 30.71% is 8.2% higher than the 28.39% industry average. Its trailing-12-month levered FCF margin of 4.97% is 39.9% higher than the 3.55% industry average.
CX’s net sales increased 8.4% year-over-year to $4.04 billion in the fiscal first quarter, which ended March 2023. Gross profit increased 12.2% year-over-year to $1.29 billion. Also, consolidated net income increased 5.8% year-over-year to $219.83 million.
CX’s EPS for the fiscal second quarter ended June 2023 is expected to increase 5.6% year-over-year to $0.19. Its revenue is expected to increase 8.1% year-over-year to $4.41 billion for the same quarter. Also, it has surpassed EPS estimates in each of the trailing four quarters.
The stock has gained 113.7% over the past nine months to close the last trading session at $7.35.
CX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
CX also has an A grade for Momentum and a B in Growth and Value. It is ranked #5 in the same industry. For CX’s Sentiment, Stability, and Quality ratings, click here.
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CRH shares were trading at $57.76 per share on Tuesday morning, up $0.22 (+0.38%). Year-to-date, CRH has gained 48.32%, versus a 19.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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