5 Stocks From The Promising Concrete & Aggregates Industry

Strong demand stemming from the U.S. housing market rebound will benefit companies under the Zacks Building Products - Concrete & Aggregates industry. Also, a significant boost in infrastructural and public construction spending should continue to favor the industry.

Indeed, coronavirus-led restrictions, softness in non-residential construction activity, weather-related woes and higher labor are eating into margins of industry players. Nonetheless, prominent companies in the industry like Forterra, Inc. (FRTA - Free Report), Eagle Materials Inc. (EXP - Free Report), U.S. Concrete, Inc. (USCR - Free Report), Summit Materials, Inc. (SUM - Free Report) and Vulcan Materials Company (VMC - Free Report) have been gaining from the positives.

Industry Description

The Zacks Building Products - Concrete & Aggregates industry consists of manufacturers, distributors and sellers of construction materials like aggregates, concrete, and other such items. The materials also include gypsum wallboard, recycled paperboard, concrete blocks, ready-mix concrete and oil and gas proppants.

4 Trends Shaping the Future of Heavy Construction Industry

Housing Sector Rebound & Funding to Aid Highway and Intermodal Projects: The housing market rebound and focus on enhancing the country’s infrastructure by upgrading highways, railroads, bridges and broadband are expected to be key catalysts for the industry. Solid housing market conditions in the United States backed by rising need for more work-at-home space and record-low mortgage rates are expected to be a major tailwind for industry participants.

The industry is also poised to benefit from the modest growth in public sector construction activity, mainly in transportation projects and contract work for highways as well as strong pricing. Currently, the Highway Trust Fund (HTF) is afloat on a one-year continuing resolution passed at the end of September. The U.S. House passed a legislation that injects $13.6 billion into HTF while extending the FAST Act by a year at current funding levels. The FAST — Fixing America’s Surface Transportation — Act, which was scheduled to expire on Oct 1, 2020, will now run through Oct 1, 2021.

Acquisitions & Focus on Operating Efficiency: The industry participants follow a well chalked-out acquisition plan to enhance domestic and international portfolios. Meanwhile, companies are increasingly focusing on reducing controllable costs and maximizing operating efficiency across business lines to generate higher earnings and cash flow.

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