Saira Malik, Nuveen’s head of equities and fixed income, joined ‘Closing Bell’ on CNBC on March 26 to discuss her investment strategy in the middle of this uncertain market. She emphasized that two dominant themes are shaping the second quarter of this year: policy uncertainty and questions surrounding the pace of the economic slowdown. Malik noted that markets have shown a little optimism after a rebound from correction territory. This was driven by investor expectations of watered-down tariffs and the return of the term ‘transitory’ regarding inflation effects from tariffs. However, she highlighted that the economy continues to slow. Given this, Malik prefers defensive market sectors, particularly infrastructure. She also identified municipal bonds as a favored fixed-income category.
These appeal to local investors who seek stable income streams in the middle of this economic uncertainty. Malik also acknowledged the risk that continued negative sentiment about consumer weakness could become a self-fulfilling prophecy. She pointed out that the economy’s recent strength has been driven by consumer spending and employment, with about half of payroll growth since 2019 coming from government jobs. The recent data on consumer spending, retail sales, and confidence have been weak, but consumers often express pessimism without reducing spending proportionally. Despite this, she stressed that the economy is slowing and warned that ongoing tariff uncertainty could cause a sharper economic downturn. However, she also mentioned potential upside from forthcoming tax cuts and deregulation, which could provide economic support. Malik explained that the market’s recent optimism comes from increasing clarity about tariff implementation and targets.
Malik reiterated her preference for sectors like infrastructure, municipal bonds, and small-cap equities as attractive areas in this uncertain environment. That being said, we’re here with a list of the 15 small-cap construction and material stocks hedge funds are buying.
A construction team in a mining datacenter building work site with plans and equipment in hand.
Our Methodology
We first sifted through financial media reports, ETFs, and Insider Monkey’s Q4 2024 hedge funds database reports to compile a list of the small-cap construction and materials stocks hedge funds are buying. For this article, we define small-cap stocks as those that trade between $10 billion and $30 billion, as of April 28. We then selected the top 15 stocks and ranked them in ascending order of the number of hedge funds that have stakes in them. In cases where an equal number of hedge funds held two or more stocks, we used the market cap as a tiebreaker.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15 Small-Cap Construction and Materials Stocks Hedge Funds Are Buying
15. James Hardie Industries (NYSE:JHX)
Market Capitalization as of April 28: $10.09 billion
Number of Hedge Fund Holders: 5
James Hardie Industries (NYSE:JHX) manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products for interior and exterior building construction applications. It operates in three segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products.
The company’s North America segment shipped 744 million standard feet of volume in FQ3 2025, which was consistent with James Hardie’s expectations. The segment also achieved a 29.1% EBIT margin in the quarter, which highlights the company’s ability to deliver savings through its Hardie Operating System initiatives and focused cost-control actions. Year-to-date sales in North America were well over $2 billion, which represents a double-digit CAGR over the last 5 years.
James Hardie Industries (NYSE:JHX) is strategizing through exclusivity arrangements with homebuilders. Furthermore, the completion and commissioning of Prattville Sheet Machine number three represents a key milestone in expanding capacity to support future growth in North America.
14. ArcelorMittal (NYSE:MT)
Market Capitalization as of April 28: $23.04 billion
Number of Hedge Fund Holders: 18
ArcelorMittal (NYSE:MT) operates as an integrated steel and mining company that offers semi-finished flat products, finished flat products, semi-finished long products, finished long products, and seamless & welded pipes & tubes. It sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries.
The company generated over $2 billion of investable cash flow in 2024, which brought the total to $21 billion since 2021. ArcelorMittal (NYSE:MT) also invested $1.3 billion in high-return strategic growth projects in 2024, which are expected to contribute a structural EBITDA impact of $1.9 billion, with $400 million anticipated in 2025 and a further $600 million in 2026.
Completed projects like the Vega coal mill complex in Brazil, the new hot strip mill in Mexico, and the 1GW renewable project in India are performing well. Notably, the company’s absolute carbon emissions are ~half the level of 2018, which is driven by portfolio optimization. There are ongoing investments in decarbonization projects like the EAF in Gijon and the revamp of the two EAFs in Sestao under the XCarb brand.
13. POSCO Holdings Inc. (NYSE:PKX)
Market Capitalization as of April 28: $13.57 billion
Number of Hedge Fund Holders: 19
POSCO Holdings Inc. (NYSE:PKX) operates as an integrated steel producer in Korea and internationally. It operates through six segments: Steel, Trading, Construction, Logistics & Others, Green Materials & Energy, and Others. The company plans, designs, and constructs industrial plants, civil engineering projects, and commercial & residential buildings.
POSCO’s crude steel output in Q1 2025 dropped by 5.5% sequentially due to the impact of overall maintenance works. However, selling prices slightly increased, and raw materials costs remain stable. The company also made several cost-saving efforts enterprise-wide. These factors together caused the operating profit margin to rise by 3.9%.
Therefore, management also anticipates that sales will potentially recover in Q2, as the reduced volumes cannot be attributed to decreased demand. Furthermore, POSCO Holdings Inc. (NYSE:PKX) is expanding its upstream steel production presence in key global regions, which include the US and India, to address evolving trade environments and enhance its automotive steel sheet market position.
12. RPM International Inc. (NYSE:RPM)
Market Capitalization as of April 28: $13.45 billion
Number of Hedge Fund Holders: 30
RPM International Inc. (NYSE:RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. It has a focus on the construction and materials markets, which is why its offerings include services like roofing and building maintenance, sealing & bonding, flooring, and concrete repair, among others.
In FQ3 2025, the company’s PCG (Performance Coatings Group) sales declined slightly against a challenging prior year that saw a 9.2% organic sales increase to a record level. Growth in FQ3 was led by the fiberglass reinforced plastics businesses, which experienced sales in the data center construction market.
While the overall company expects flat consolidated sales in FQ4, PCG is projected to lead with modest earnings growth and margin expansion. This positive outlook for PCG is supported by the spending on high-performance buildings, growth in passive fire protection, and the acquisition of TMPC, which is a seasonal business that generates most of its sales and profits in the fourth and first quarters.
11. Aecom (NYSE:ACM)
Market Capitalization as of April 28: $12.87 billion
Number of Hedge Fund Holders: 31
Aecom (NYSE:ACM) provides professional infrastructure consulting services for governments, businesses, and organizations worldwide. It offers advisory, planning, consulting, architectural & engineering design, construction & program management, and investment & development services. It serves transportation, water, facilities, environmental, and energy sectors.
The company’s Americas Design segment experienced a 9% increase in Net Service Revenue during Q1 2025. This was driven by the transportation project acquisitions in the US and Canada, as well as contributions from the Water, Environment, and Facilities divisions. The segment is capitalizing on the Infrastructure Investment and Jobs Act (IIJA) funding, with less than 35% currently deployed.
Aecom achieved a 100% win rate in its largest and most strategic pursuits in Q1. It’s expanding its addressable markets through high-margin advisory services by using its existing engineering strengths. Notably, Aecom (NYSE:ACM) is developing the Water and Environment Advisory business to 2x its current $200 million annual NSR within 3 years. This initiative, like the Program Management business, which tripled in 4 years, uses the company’s technical expertise to meet growing client demand.
10. Reliance Inc. (NYSE:RS)
Market Capitalization as of April 28: $15.08 billion
Number of Hedge Fund Holders: 31
Reliance Inc. (NYSE:RS) distributes a line of metal products like alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and other specialty steel products. It also provides metals processing services to consumer products, general manufacturing, non-residential construction, transportation, aerospace, energy, electronics & semiconductor fabrication, industrial machinery, and heavy industries.
The Nonresidential Construction market is a crucial segment for the company and represents ~one-third of its sales in Q1 2025. Reliance sells carbon steel tubing, plate, and structural products primarily into this market. In Q1, all three of these product categories experienced year-over-year and sequential quarter shipment growth, which exceeded the service center industry’s year-over-year decline of 0.5%.
This performance at Reliance Inc. (NYSE:RS) came from heightened activity in data center construction and related energy infrastructure, as well as publicly funded infrastructure projects. For Q2 2025, Reliance anticipates demand in the nonresidential construction market, which will contribute to an estimated 1% to 3% increase in the company’s average selling price per ton sold compared to Q1, which saw an average selling price per ton of $2,143.
9. Westlake Corp. (NYSE:WLK)
Market Capitalization as of April 28: $11.92 billion
Number of Hedge Fund Holders: 34
Westlake Corp. (NYSE:WLK) manufactures and markets performance and essential materials, along with housing and infrastructure products. It serves various consumer and industrial markets, such as residential construction, flexible & rigid packaging, automotive products, healthcare products, water treatment, and wind turbines.
Westlake’s HIP (Housing and Infrastructure Products) achieved record results in 2024. In Q4 2024, HIP experienced a 7% year-over-year increase in sales volume, which was driven by the demand for pipe and fittings, as well as siding and trim. For the full year 2024, the HIP achieved record income from operations of $807 million.
Notably, HIP has set annual records for income from operations in each of the last 5 years. However, on March 28, Truist Securities lowered its price target on the stock from $166 to $155 while maintaining a Buy rating. Analyst Peter Osterland revised estimates to reflect a more conservative outlook for Westlake’s performance in its Performance Materials (PEM) segment, especially in H1 2025. This is partly driven by input cost pressure and outage-related expenses.
8. PulteGroup Inc. (NYSE:PHM)
Market Capitalization as of April 28: $20.41 billion
Number of Hedge Fund Holders: 40
PulteGroup Inc. (NYSE:PHM) engages in the homebuilding business in the US. It acquires and develops land primarily for residential purposes and constructs housing on such land. It also offers various home designs, such as single-family detached, townhomes, condominiums, and duplexes under different brand names.
The company’s Homebuilding Operations closed 6,583 homes in Q1 2025, which was a 7% decrease year-over-year due to a deliberate adjustment in start pace to manage spec inventory. However, this was offset by a 6% increase in the average sales price to $570,000, which resulted in home sale revenues of $3.7 billion. This was down only 2% year-over-year.
Net new orders totaled 7,765 homes, which also dropped by 7% due to a 10% decrease in net new orders per store. This was again offset by a 3% increase in average community count to 961. The cancellation rate remained relatively stable at 11%. PulteGroup Inc. (NYSE:PHM) now anticipates delivering between 7,400 and 7,800 closings in Q2 and between 29,000 and 30,000 closings for the full year 2025.
7. Jacobs Solutions Inc. (NYSE:J)
Market Capitalization as of April 25: $14.93 billion
Number of Hedge Fund Holders: 42
Jacobs Solutions Inc. (NYSE:J) is in the construction business and engages in the infrastructure & advanced facilities and consulting businesses. It offers consulting, planning, architecture, design, engineering, and infrastructure delivery services such as project, program, and construction management.
Jacobs’ Infrastructure and Advanced Facilities segment is focused on Water and Environmental Services, which saw adjusted net revenue rise by 11% year-over-year in Q1 2025. Operating profit for this segment improved by 26% year-over-year in this quarter. The growth in Infrastructure and Advanced Facilities spanned all major geographies, with key project wins.
These include a 10-year contract for the JXN Water treatment system, which benefits 180,000 residents. The company is also involved in the $15.4 billion River Torrens to Darlington project in Australia and the BusConnects Dublin program in Ireland. Jacobs Solutions Inc. (NYSE:J) anticipates growth in this segment due to a strong backlog and pipeline.
6. Steel Dynamics Inc. (NASDAQ:STLD)
Market Capitalization as of April 28: $19.00 billion
Number of Hedge Fund Holders: 45
Steel Dynamics Inc. (NASDAQ:STLD) is a steel producer and metal recycler. It operates through four segments: Steel Operations, Metals Recycling Operations, Steel Fabrication Operations, and Aluminum Operations. The company is heavily involved in the materials and construction industries. Its products are used in markets like construction, automotive, manufacturing, and transportation.
The company’s Steel Operations segment made $230 million in operating income for Q1 2025. This was fueled by a record-breaking shipment volume of 3.5 million tons of steel. The segment had to navigate a tightening of metal spreads in this period, with the average realized external steel price experiencing a $13 per ton dip and the average scrap price climbing by $16 per ton.
The Steel Operations segment also propelled the Sinton facility’s transition to positive EBITDA during the quarter, operating at a commendable average of 86% capacity and frequently surging beyond 90%. 75% to 80% of the Steel Operations’ flat-rolled steel business operates under contracts that lag market fluctuations by ~2 months. This suggests that the recent upward trends observed in flat-rolled steel pricing will potentially exert a positive influence on the segment’s financial outcomes in Q2.
5. NVR Inc. (NYSE:NVR)
Market Capitalization as of April 28: $20.88 billion
Number of Hedge Fund Holders: 45
NVR Inc. (NYSE:NVR) operates as a homebuilder in the US. It operates through the Homebuilding and Mortgage Banking segments. It engages in the construction and sale of single-family detached homes, townhomes, and condominium buildings under different brand names.
NVR’s Homebuilding segment reported revenues of $2.35 billion in Q1 2025, which represents a 3% increase year-over-year. This growth was driven by a 1% increase in settlements to 5,133 units and a 2% increase in the average settlement price to $457,900. However, the segment experienced a decrease in new orders by 12% to 5,345 units, and the average sales price of new orders decreased by 1% to $448,500.
The cancellation rate also increased to 16% from 13% in the prior year. On April 17, BofA analyst Rafe Jadrosich lowered the price target on NVR Inc. (NYSE:NVR) to $8,400 from $9,300 while keeping a Buy rating on the shares. This sentiment reflects softer demand at the company. Additionally, BofA expects a challenging environment for homebuilders to continue into H2 2025.
Diamond Hill Large Cap Strategy stated the following regarding NVR, Inc. (NYSE:NVR) in its Q3 2024 investor letter:
“Among our top individual contributors in Q3 were Parker-Hannifin, NVR, Inc. (NYSE:NVR) and SBA Communications. Homebuilder NVR benefited from limited existing home sales, combined with still-strong new home buyer demand. Looking forward, lower interest rates may spur further demand.”
4. APi Group Corp. (NYSE:APG)
Market Capitalization as of April 28: $10.38 billion
Number of Hedge Fund Holders: 48
APi Group Corp. (NYSE:APG) is a construction-related company that designs, installs, inspects, and services integrated systems, such as heating, ventilation, and air conditioning solutions. It also provides various infrastructure services like the maintenance & repair infrastructure, engineering & design, fabrication, installation, access & road, and other services.
The Safety Services segment is the largest part of APi Group’s business and reported revenues of $1.4 billion in Q4 2024, which was up 13% year-over-year. This was driven by a 4.7% organic increase, which was further fueled by double-digit inspection revenue growth within the company’s US Life Safety business. There was also a 7% organic growth in inspection, service, and monitoring revenues across the entire Safety Services segment.
This segment is now positioned as a more pure-play life safety business that encompasses fire protection, electronic security, and elevator & escalator services. APi Group Corp. (NYSE:APG) is also pursuing M&A opportunities within fire protection, electronic security, and elevator and escalator services to further expand its Safety Services offerings.
Maran Capital Management is confident in the company’s continued growth and stated the following regarding APi Group Corporation (NYSE:APG) in its Q4 2024 investor letter:
“As we look to 2025 and beyond, we have great confidence in the business, our backlog, our balance sheet and our ability to continue to evolve APi into an even lower CapEx asset-light business focused on high-margin statutorily mandated services.” – 3Q 2024 earnings call
We have owned APi Group Corporation (NYSE:APG) for a number of years—since it was a sub-$1 billion-dollar market cap, pink-sheet listed, de-SPAC. It is now a ~$10 billion market cap, ~$1 billion EBITDA, NYSE-listed behemoth (at least by our usual standards), but I still believe it can continue to appreciate from here. APi is a possible long-term, buy-and-build compounder, but it still has some “special situation” characteristics in the form of a few upcoming catalysts.
Managements’ share-based compensation scheme matures at year-end 2026, so they are incentivized to maximize APG’s stock price at that time. The company recently announced that starting in 2025, it will report its HVAC business under the Specialty Services segment, which will allow it to highlight its core Life Safety business as a clean segment. This change will certainly highlight the quality of APi’s “best” segment, but it would also be a logical step if a split of the two major business segments were being planned.
Regardless of whether APi executes a spin of its Specialty Services business, it will lay out strategic initiatives for both segments at an upcoming investor day in NYC. APi Group has made excellent progress on its last multi-year plan, and I’m looking forward to seeing what they will target in the next three-to-five years.”
3. Comfort Systems USA Inc. (NYSE:FIX)
Market Capitalization as of April 28: $13.78 billion
Number of Hedge Fund Holders: 50
Comfort Systems USA Inc. (NYSE:FIX) is a construction services company that provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services. It serves the mechanical and electrical services industry in the US. It operates through two segments: Mechanical and Electrical.
In Q1 2025, Comfort Systems made $1.83 billion in revenue, which was up 19.15% year-over-year. The Industrial sector accounted for 62% of this total revenue. Within this sector, Advanced Technology, which includes data centers and chip fabrication facilities, stands out as the largest component of overall revenue at 37%.
This indicates that advanced technology projects are currently the single largest contributor to Comfort Systems’ top line. Q1 2025 saw particularly strong bookings within the technology sub-sector of the Industrial market. Comfort Systems USA Inc. (NYSE:FIX) anticipates continued strong demand from its tech customers and across the broader Industrial sector, which will contribute to the company’s optimistic outlook for 2025 and into 2026.
2. Emcor Group Inc. (NYSE:EME)
Market Capitalization as of April 28: $18.53 billion
Number of Hedge Fund Holders: 55
Emcor Group Inc. (NYSE:EME) provides electrical and mechanical construction in the US and the UK. It offers design, integration, installation, and maintenance services for power transmission, distribution, and generation systems. It also provides site-based operations & maintenance, facility management & maintenance, installation & support for building systems, and other infrastructure & building projects.
Emcor generates 97% of its sales in the US, which provides it with a natural hedge against global trade disruptions, tariffs, and commodity cost volatility. The US Mechanical Construction segment at Emcor Group Inc. (NYSE:EME) made revenues of $1.66 billion in Q4 2024. This was up 12.8% year-over-year and was driven by the demand in the network and communications sector (especially data centers), high-tech manufacturing, and healthcare.
The company is confident in the underlying demand drivers of the manufacturing and industrial sectors, which is supported by a 7% year-over-year increase in manufacturing RPOs (Remaining Performance Obligations). Emcor is now capitalizing on growing markets due to its expertise in complex mechanical and piping systems, VDC (Virtual Design and Construction), and prefabrication capabilities.
TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding EMCOR Group, Inc. (NYSE:EME) in its Q3 2024 investor letter:
“Leaving the strategy this quarter was EMCOR Group, Inc. (NYSE:EME), which provides construction and operational services for mechanical and electrical systems to a broad range of commercial, industrial, utility, and institutional customers. It had been one of the steadiest gainers and contributors this year, though the stock’s market capitalization grew past the upper limit for the strategy.”
1. Lennar Corporation (NYSE:LEN)
Market Capitalization as of April 28: $28.07 billion
Number of Hedge Fund Holders: 70
Lennar Corporation (NYSE:LEN) operates as a homebuilder in the US. Its homebuilding operations include the construction and sale of single-family attached & detached homes. It also engages in the purchase, development, and sale of residential land, along with the development, construction, and management of multifamily rental properties.
Lennar’s Homebuilding segment had 17,834 homes delivered in Q1 2025. This volume was achieved by matching the company’s production pace with sales, which resulted in 18,355 homes sold and 17,651 homes started. While the average sales price net of incentives declined by 1% year-over-year to $408,000, Lennar drove volume in a challenging market by increasing sales incentives to ~13%.
The company also grew its community count from 1,447 in Q4 2024 to 1,584 in Q1 2025, which included the acquisition of Rausch Coleman. Lennar Corporation (NYSE:LEN) now expects to sell between 22,500 and 23,500 homes and deliver between 19,500 and 20,500 homes in Q2, with an anticipated average sales price of $390,000 to $400,000.
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