The construction sector is growing, driven by government spending and housing demand. Here are top stocks to consider in 2024.
Sectors & Industries
October 24, 2024
The construction industry is experiencing significant growth, fueled by government infrastructure spending, the rising need for new housing, and the rebuilding of aging infrastructure. Whether you are investing in companies that produce raw materials, build equipment, or handle project management, construction stocks offer unique opportunities for steady returns and long-term growth. Here's a closer look at the top construction stocks to consider in 2024.
1. Caterpillar (NYSE: CAT)
Caterpillar is one of the world’s largest manufacturers of construction and mining equipment. It benefits from a diverse portfolio of products like heavy equipment, engines, and gas turbines used in construction and mining.
Caterpillar's extensive network and exposure to industrial growth make it a strong pick for long-term investors. Yet few investors know they also have a line of autonomous vehicles, making it a tech play as well.
2. Nucor (NYSE: NUE)
Nucor is a leading steel manufacturer, known for efficiently turning scrap metal into steel for construction projects.
Nucor's innovative methods and its strong dividend history (yield: ~1.3%) make it one of the top construction-related stocks.
3. United Rentals (NYSE: URI)
United Rentals offers equipment rentals for construction and industrial purposes. The company benefits from high demand in North America, driven by construction and utility markets.
Over the last decade, the company has consistently increased revenue and earnings per share.
4. Vulcan Materials (NYSE: VMC)
As the largest U.S. producer of aggregates like sand, stone, and gravel, Vulcan Materials plays a crucial role in infrastructure and road-building projects.
With a growing demand for raw materials, Vulcan’s nationwide presence provides stable long-term investment opportunities.
5. Fluor (NYSE: FLR)
Fluor is an engineering and construction giant involved in massive global projects, from highways to energy facilities.
With a significant project backlog, Fluor is well-positioned for steady future growth.
6. NV5 Global (NASDAQ: NVEE)
NV5 provides professional and technical consulting services across various sectors, including construction and civil engineering.
As a smaller player, NV5 offers strong growth potential in a growing market.
If you invest in Construction companies, it’s important to monitor for material events to avoid missing news or announcements that can significantly affect your investments.
Looking at a global scale, some of the biggest construction companies are leading industry innovation, particularly in sustainable and large-scale infrastructure projects.
1. Vinci (France)
Market Cap: $62.53 billion
Vinci is a global leader in infrastructure and urban development, handling large projects such as the Atlantic Bridge in Panama. Its focus on sustainable mobility and renewable energy projects sets it apart.
2. Larsen & Toubro (India)
Market Cap: $59.61 billion
A construction powerhouse from India, L&T operates in various sectors, including power, defense, and infrastructure. L&T recently expanded its global presence, focusing on digital transformation and infrastructure.
3. D.R. Horton (USA)
Market Cap: $44.52 billion
As America’s largest homebuilder by volume, D.R. Horton has a major presence in the residential construction industry, with a focus on affordable housing.
1. Is now a good time to invest in construction stocks?
Yes, construction stocks are benefiting from increased infrastructure spending, housing demands, and long-term government investments in public projects. As the U.S. commits $1 trillion to modernizing infrastructure, construction-related companies are expected to see steady growth.
2. What are the top construction stocks to buy in 2024?
Top picks include Caterpillar, Nucor, United Rentals, Vulcan Materials, and Fluor. These companies have large market shares in their respective segments of construction, from materials to equipment and project management.
3. Should I invest in construction ETFs?
If you're looking for exposure to multiple companies in the construction sector without picking individual stocks, construction ETFs like the Global X U.S. Infrastructure Development ETF (PAVE) can be a great choice. They provide diversification and reduce risk.
4. What risks are associated with investing in construction stocks?
Construction companies are sensitive to economic cycles. A slowdown in the economy, rising interest rates, or increased material costs can reduce demand for construction projects, impacting profits. Moreover, changes in government policies and regulations can affect construction companies.
5. Do construction stocks pay dividends?
Many construction stocks, especially established companies like Caterpillar and Nucor, offer dividends. Dividends from construction companies can provide steady income for investors, making them attractive for long-term portfolios.
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