The recent increase in infrastructure spending is leading the overall trajectory of the construction market, poising it for robust growth and expansion. Also, changing consumer behavior, government initiatives, and the latest technologies offer new opportunities.

So, it could be wise to invest in fundamentally sound construction stocks United States Lime & Minerals, Inc. (USLM), Griffon Corporation (GFF), and Apogee Enterprises, Inc. (APOG) as infrastructure spending rises.

Falling mortgage rates, increasing worldwide population levels, urbanization, and shifting demographics are rapidly boosting the construction sector's prospects and avenues. Also, consumers' demand for better infrastructure, technological developments, and the government's aspiration for competitiveness and efficient facilities are further contributing to the infrastructure spending.

Construction spending for September 2024 was estimated at $2.15 trillion, marking a 0.1% rise from the revised August estimate of $2.146 trillion. The September spending was also 4.6% above the September 2023 estimate of $2.05 trillion. Further, during the first nine months of 2024, construction spending totaled $1.62 trillion, up 7.3% from the prior year period.

With this, the building construction market is expected to grow steadily in the next few years at a CAGR of 4.9%, resulting in a market value of about $9.18 trillion by 2028. Digitalization and building information modeling, housing affordability, remote work, and office space adaption are some of the major industry trends.

Besides, growing construction activities are fueling the construction and building materials market as a consequence since it provides a wide array of products, like cement, aggregates, concrete, bricks, steel, and glass, essential for construction. The construction & building materials market will likely grow from $2.04 trillion in 2024 to $2.81 trillion by 2030 at a CAGR of 5.43%.

Given these favorable trends in mind, let’s look at three fundamentally strong B-rated Industrial – Building Materials stocks, beginning with number three.

Stock #3: United States Lime & Minerals, Inc. (USLM)

USLM manufactures and supplies lime and limestone products. The company extracts limestone from open-pit quarries and an underground mine and processes it as pulverized limestone, quicklime, hydrated lime, and lime slurry.

On October 31, USLM's Board of Directors declared a regular quarterly cash dividend of $0.05 per share on its common stock. This dividend is payable on December 13, 2024, to shareholders of record at the close of business on November 22, 2024.

USLM’s annual dividend of $0.20 per share translates to a yield of 0.15% on the prevailing share price. Its four-year average yield is 0.56%. The company’s dividend payouts have grown at a 14.1% CAGR over the past three years.

For the third quarter that ended September 30, 2024, USLM’s revenues increased 19.4% year-over-year to $89.43 million, while its gross profit grew 53.1% from the year-ago value to $43.11 million. The company’s operating profit came in at $38.14 million, up 60.2% year-over-year.

In addition, the company reported net income of $33.35 million and $1.16 per common stock, indicating growth of 60.9% and 58.9% from the prior year’s quarter, respectively.

USLM’s stock has gained 90.5% over the past six months and 240.5% over the past year to close the last trading session at $137.25.

USLM’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Quality and Momentum. It also has a B for Growth. Within the Industrial – Building Materials industry, USLM is ranked #10 among 45 stocks.

Click here to access additional ratings of USLM for Stability, Value, and Sentiment.

Stock #2: Griffon Corporation (GFF)

GFF offers consumer and professional, and home and building products internationally. The company operates through two segments: Home and Building Products; and Consumer and Professional Products.

On August 6, GFF's Board of Directors declared a regular quarterly cash dividend of $0.15 per share. The dividend was paid on September 19, 2024, to shareholders of record as of the close of business on August 28, 2024.

GFF pays an annual dividend of $0.60, which translates to a yield of 0.89% at the current share price. Its four-year average dividend yield is 3.73%. Also, the company’s dividend payouts have increased at a CAGR of 23.3% over the past three years. GFF has raised its dividends for 12 consecutive years.

On July 1, GFF’s subsidiary, The AMES Companies, Inc., acquired Pope, a leading Australian provider of residential watering products, from The Toro Company (TTC). The acquisition expands AMES’s product portfolio in the Australian market where Pope is expected to contribute approximately $25 million in annualized revenue.

For the third quarter that ended June 30, 2024, GFF reported revenue of $647.81 million and gross profit of $249.15 million for the same period. The company’s adjusted net income and adjusted EPS totaled $60.53 million and $1.24 for the quarter, respectively.

Furthermore, the company’s cash and equivalents stood at $133.45 million as of June 30, 2024, compared to $102.89 million as of September 30, 2023.

Street expects GFF’s revenue for the fiscal year (ending September 2025) to increase 2.1% year-over-year to $2.66 billion. For the same year, the company’s EPS is expected to grow 15.5% year-over-year to $5.59.

Shares of GFF have surged 59.3% over the past year to close the last trading session at $67.25.

GFF’s POWR Ratings reflect its promising prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

GFF has an A grade for Momentum and a B for Value, Growth, and Quality. It is ranked #4 out of 45 stocks in the B-rated Industrial – Building Materials industry.

In addition to the POWR Ratings we’ve just highlighted, you can see GFF’s ratings for Stability and Sentiment here.

Stock #1: Apogee Enterprises, Inc. (APOG)

APOG provides architectural products and services for enclosing buildings, and glass and acrylic products used for preservation, protection, and enhanced viewing. It operates through four segments: Architectural Framing Systems; Architectural Glass; Architectural Services; and Large-Scale Optical (LSO).

On November 4, APOG completed the previously announced acquisition of UW Interco, LLC, a vertically integrated manufacturer of high-performance coated substrates used in graphic arts, building products, and other applications, for $242 million in cash.

The strategic acquisition expands APOG's capabilities and market opportunity in the large-scale optical segment, leveraging the combined strengths of both companies to create a new engine for growth.

For the second quarter that ended August 31, 2024, APOG posted net sales of $342.44 million. The company’s adjusted operating income grew 6.4% from the prior year’s quarter to $43.14 million. Its adjusted net earnings came in at $31.46 million or $1.44 per share, up 6% and 5.9% from the previous year’s period, respectively.

In addition, the company’s adjusted EBITDA increased 3.9% from the year-ago value to $53.12 million.

Analysts expect APOG’s revenue for the first quarter (ending May 2025) to increase 9.7% year-over-year to $363.80 million, while its EPS is expected to be $1.14 for the same period. Further, the company surpassed the consensus EPS estimates in all of the trailing four quarters.

Over the past six months, the stock has gained 30.1% and 88.1% over the past year to close the last trading session at $84.12.

APOG’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, translating to a Strong Buy in our proprietary rating system.

APOG has an A grade for Momentum and a B for Value and Quality. It is ranked #3 in the list of 45 stocks within the same industry.

To see the other ratings of APOG for Growth, Stability, and Sentiment, click here.

What To Do Next?

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USLM shares were unchanged in after-hours trading Thursday. Year-to-date, USLM has gained 200.17%, versus a 26.49% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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