In addition to rising demand driven by the economy’s reopening, President Biden’s proposed infrastructure spending should further buoy the growth of building material companies in the United States. So, it could be wise to bet now on Carrier (CARR), Owens (OC), GMS (NYSE:GMS), and Quanex (NYSE:NX). We think they are well positioned to capitalize on the industry tailwinds.While the housing market has remained hot amid the COVID-19 pandemic, companies producing and supplying building materials were severely hit by the public health crisis, due to the precipitous decline in construction activities it caused. However, because the U.S. economy is reopening at a faster-than-expected pace, the demand for building materials has started to increase this year. Furthermore, the expected positive impact of President Biden’s proposed infrastructure spending on the industry is driving investors’ interest. According to Fitch Ratings, “Passage of an infrastructure bill would be a credit positive for U.S. buildings material issuers but financial implications will depend on the actual size of the bill and take time to materialize.”
Investor interest in this space can be partly evidenced by the SPDR Homebuilders ETF’s (XHB) 28.3% returns so far this year, compared to SPDR S&P 500 ETF Trust’s (SPY) 11.3% gains over this period.
The industry’s prospects look bright worldwide. With mass vaccination drives gradually containing the spread of the virus, increasing activity in the commercial, infrastructure, and residential segments is likely. The global building materials market is expected to grow to $343 billion in 2025 from $272 billion in 2020.