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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.

Let’s take a look at the industry’s three major themes:

• The industry is poised to benefit from increased construction activity backed by robust construction spending. Spending on construction in the United States has ramped up lately on a steady increase in outlays on private as well as public construction projects. Public outlays of total U.S. construction spending totaled $62.2 billion in the first three months of 2019, reflecting an increase of 9.2% year over year. Meanwhile, total construction spending during the period was almost unchanged year over year. Precisely, the industry is poised to benefit from growth in public sector construction activity as well as strong pricing. Large transportation projects and increased contract work for highways have boosted demand. Recently, Trump agreed to pursue a $2-trillion infrastructure plan to upgrade the nation’s highways, railroads, bridges and broadband. This is expected to prove as a key catalyst for the industry.
  

• The industry participants strongly follow a well-chalked-out acquisition plan to enhance domestic and international portfolios. Meanwhile, companies are increasingly focusing on the pricing of products to offset higher input and freight expenses. The focus is also on reducing controllable costs and maximizing operating efficiency across business lines to generate higher earnings and cash flow.
  

• However, the industry players are plagued with shortage of skilled laborers, rising wage costs and increasing material and transportation expenses. The companies use electricity, diesel fuel, liquid asphalt and other petroleum-based resources. Hence, supply-related woes and significant fluctuation in prices of these resources affect operating results. The businesses are also exposed to weather-related risks that affect production schedules and hence profitability. Excessive rainfall, flooding or severe drought jeopardize shipments and production. The first and fourth quarters are mostly affected by winter. Again, hurricanes in the Atlantic Ocean and Gulf Coast are the most active during the third and fourth quarters. These impediments may continue to bump up costs and mar profits of the industry participants.

Zacks Industry Rank Indicates Bullish Prospects

The Zacks Building Products - Concrete & Aggregates industry is a 11-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #83, which places it at the top 32% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector & S&P 500

The Zacks Building Products - Concrete & Aggregates industry has lagged the broader Zacks Construction sector as well as the Zacks S&P 500 composite over the past year.

The stocks in this industry have collectively lost 13.1% versus the broader sector’s decline of 10.6%. Meanwhile, the S&P 500 has gained 4.3%.

One-Year Price Performance