In this article, we will take a look at the 10 best material stocks to buy now.
The material sector is one of the industries that grew during the pandemic, owing to unrestrained production and rising demand for resources. In the previous year, material ETF Materials Select Sector SPDR Fund (XLB) gained nearly 27%, trailing tech Technology Select Sector SPDR Fund (XLK) which increased 38%. Recently, material stocks surged as the $1.2 trillion infrastructure bill was signed into law by President Joe Biden on November 15. Some of the material stocks that investors are watching include Eagle Materials Inc. (NYSE:EXP), Summit Materials, Inc. (NYSE:SUM), and Freeport-McMoRan Inc. (NYSE:FCX).
According to market analysts, the material sector is well-positioned to benefit from the recently passed infrastructure bill. Baird analysts expect construction and materials companies to see strong earnings in the coming years, according to Forbes. Meanwhile, Jefferies analysts predict that construction behemoths Vulcan Materials Company (NYSE:VMC) and Martin Marietta Materials, Inc. (NYSE:MLM) will experience “strong pricing momentum.”
The global construction and building materials industry was worth approximately $916 billion in 2019, as per the report published by Research and Markets. The material sector is expected to reach $1.28 trillion by 2025, driven by global industrialization and technological advancement.
Our Methodology
We chose these stocks based on their fundamentals and growth prospects. We included companies engaged in producing construction and building materials. These companies are industry leaders in manufacturing cement, aluminum, and steel, and asphalt. We also considered companies that are operating in the production of specialty chemicals and packaging materials.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey. The stocks are arranged according to the number of hedge fund holders in each company.
Let’s now look at the 10 best material stocks to buy now.
Best Material Stocks To Buy Now
10. Astec Industries, Inc. (NASDAQ:ASTE)
Number of Hedge Fund Holders: 10
We start our list of 10 best material stocks to buy now with Astec Industries, Inc. (NASDAQ:ASTE), a Tennessee-based road building equipment manufacturer. The company sells construction materials including asphalt, concrete, and soil stabilizers. In its third-quarter report, the company’s net revenue came in at $267 million, an increase of 15.4% year over year.
The material stock gained 23% year to date. Astec Industries, Inc. (NASDAQ:ASTE) was recently upgraded to Buy from Neutral by analyst Steve Ferazani of Sidoti on November 8. Ferazani also increased his price target for the stock to $82 from $65.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm GAMCO Investors is a leading shareholder in Astec Industries, Inc. (NASDAQ:ASTE) with 959,330 shares worth more than $51.6 million at the end of September quarter. Of the 873 elite funds tracked by Insider Monkey, 10 were long Astec Industries, Inc. (NASDAQ:ASTE) at the end of June, up from 12 in the first quarter of 2021
Just like Eagle Materials Inc. (NYSE:EXP), Summit Materials, Inc. (NYSE:SUM), Freeport-McMoRan Inc. (NYSE:FCX), Vulcan Materials Company (NYSE:VMC), and Martin Marietta Materials, Inc. (NYSE:MLM), Astec Industries, Inc. (NASDAQ:ASTE) is one of the best material stocks to buy now, according to market analysts.
9. Summit Materials, Inc. (NYSE:SUM)
Number of Hedge Fund Holders: 20
Shares of construction materials producer Summit Materials, Inc. (NYSE:SUM) increased 105% year to date. The company’s revenue in the third quarter jumped by 2.6% to $662.3 million due to an increase in volumes in aggregates, cement, and ready-mix concrete.
On October 27, Wolfe Research analyst Timna Tanners initiated an Outperform rating on Summit Materials, Inc. (NYSE:SUM). The analyst believes that the material stock could gain from infrastructure projects in the US. Tanners set a price target of $45 for the materials stock. On November 8, Philip Ng of Jefferies recommended a Buy rating for Summit Materials, Inc. (NYSE:SUM) following the passage of the $1.2 trillion infrastructure plan.
Of the 873 elite funds tracked by Insider Monkey, 20 were long Summit Materials, Inc. (NYSE:SUM) at the end of June, compared to 32 in the first quarter of 2021. Select Equity Group is the leading stakeholder of the company with 162,599 shares worth $5.19 billion at the end of September.
In the Q2 2021 investor letter of Carillon Tower Advisers, the fund mentioned Summit Materials, Inc. (NYSE:SUM) and discussed its stance on the firm. Here is what the fund said:
“Summit Materials is a vertically integrated construction materials-based company that supplies aggregates, cement, ready-mix concrete, and asphalt in the United States and British Columbia. The firm continues to benefit from recent migration trends that favor construction activity in the rural and exurban markets it primarily serves, allowing it to outpace the broader private construction markets. The potential extensive infrastructure plan recently proposed by the Biden administration could also provide an additional tailwind for future growth.”
8. Martin Marietta Materials, Inc. (NYSE:MLM)
Number of Hedge Fund Holders: 34
Martin Marietta Materials, Inc. (NYSE:MLM) is one of North America’s largest aggregates manufacturers, with over 500 locations. The North Carolina-based company sells cement, ready mixed concrete, asphalt, magnesia chemicals, and lime. The company’s net sales in the third quarter came in at $1.56 billion, up 18% year over year.
Martin Marietta Materials, Inc. (NYSE:MLM) is also a suitable option for income investors, as the company pays an annual dividend of $2.44 per share.
On November 3, DA Davidson analyst Brent Thielman kept a Buy rating on Martin Marietta Materials, Inc. (NYSE:MLM). The analyst increased his price target for the material stock to $465 from $425.
Overall, 34 funds were bullish on Martin Marietta Materials, Inc. (NYSE:MLM) by the end of the June quarter, compared to 41 in the previous quarter. Among the hedge funds being tracked by Insider Monkey, Select Equity Group is a leading shareholder in Eagle Materials Inc. (NYSE:EXP) with 3.44 million shares worth more than $1.18 billion at the end of the September quarter.
7. Eagle Materials Inc. (NYSE:EXP)
Number of Hedge Fund Holders: 36
Eagle Materials Inc. (NYSE:EXP) is one of the largest construction material manufacturers in the US, with over 70 facilities. The Dallas-based company sells cement, aggregates, concrete, wallboards, and other light and heavy construction supplies.
In Q2 2022, the company’s revenue came in at $510 million, up 14% year over year, and beat revenue estimates by $5.98 million. Revenues from the heavy materials and light materials segment both improved by 5% and 28%, respectively, in the second quarter. On November 8, Eagle Materials Inc. (NYSE:EXP) declared a quarterly dividend of $0.25 per share with a forward yield of 0.62%.
As of the end of the second quarter, 36 hedge funds tracked by Insider Monkey reported owning stakes in Eagle Materials Inc. (NYSE:EXP). The total worth of these stakes is $244 million. This shows the hedge fund sentiment is positive for the material company as 35 funds had stakes in the company in the previous quarter, having a total worth of $348 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Anomaly Capital Management is a leading shareholder in Eagle Materials Inc. (NYSE:EXP) with 227,550 shares worth more than $29.8 million at the end of September quarter.
Trey Grooms of Stephens on November 2 maintained an Overweight rating on Eagle Materials Inc. (NYSE:EXP). Grooms increased his price target for the stock to $185 from $175. The stock gained 60% year to date.
6. Celanese Corporation (NYSE:CE)
Number of Hedge Fund Holders: 37
Celanese Corporation (NYSE:CE) produces special materials and chemical products. The Texas-based company sells polymers, chemicals, food ingredients, and engineered materials globally. In October, the company reported third-quarter revenue of $2.3 billion, a 63% increase year over year.
On November 12, Piper Sandler analyst Charles Neivert initiated an Overweight rating on Celanese Corporation (NYSE:CE) following the company’s strong free cash flow outlook for 2022. The analyst set a price target of $200 on the material stock.
Overall, 37 funds were bullish on Celanese Corporation (NYSE:CE) by the end of the June quarter, compared to 36 in the previous quarter.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Holocene Advisors is a leading shareholder in Celanese Corporation (NYSE:CE) with 1.5 million shares worth more than $227 million at the end of September quarter.
Celanese Corporation (NYSE:CE) is among the material stocks that would benefit from the infrastructure bill passage just like Eagle Materials Inc. (NYSE:EXP), Summit Materials, Inc. (NYSE:SUM), Freeport-McMoRan Inc. (NYSE:FCX), Vulcan Materials Company (NYSE:VMC), and Martin Marietta Materials, Inc. (NYSE:MLM).
5. Air Products and Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 40
Air Products and Chemicals, Inc. (NYSE:APD) sells industrial gases and chemicals to the manufacturing, metals, and electronics industries. The Pennsylvania-based company markets its industrial products globally in its over 750 facilities.
Earlier in November, the gas and chemical company announced a $15 billion agreement with the Indonesian government to build a coal gasification industry in the country. The material stock gained 10.4% year to date.
The material company’s revenue in the fiscal fourth quarter came in at $2.84 billion, beating estimates by $171 million. Aside from the 22% revenue growth from last year, Air Products and Chemicals, Inc. (NYSE:APD) is also a good dividend option for income investors. The company pays an annual dividend of $6 per share and a dividend yield of 2%.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Adage Capital Management is a leading shareholder in Air Products and Chemicals, Inc. (NYSE:APD) with 351,940 shares worth more than $90 million at the end of the September quarter.
Meanwhile, on November 5, Deutsche Bank analyst David Begleiter maintained a Buy rating on Air Products and Chemicals, Inc. (NYSE:APD), citing the company’s cautious 2022 earnings forecast. Begleiter increased his price target for the stock to $340 from $315.
4. Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders: 43
Vulcan Materials Company (NYSE:VMC) is one of the major construction material manufacturers in the US. The company has operations in the US, Bahamas, Mexico, Canada, and the Virgin Islands. The Alabama-based construction company sells sand and gravel, aggregates, and crushed stone.
The construction material company is one of the best material stocks to buy now according to Jefferies analyst Philip Ng. The stock rose 3.7% on November 8 following the passage of the US infrastructure plan. Shares of Vulcan Materials Company (NYSE:VMC) increased 37% year to date.
Of the 873 elite funds tracked by Insider Monkey, 43 were long Vulcan Materials Company (NYSE:VMC) at the end of June, compared to 48 in the first quarter of 2021.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Vulcan Materials Company (NYSE:VMC) with over 1.79 million shares worth $303 million at the end of the third quarter of 2021.
3. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 44
Alcoa Corporation (NYSE:AA) is a Pennsylvania-based aluminum producer. In the second quarter of 2021, more hedge funds were long on the metal stock with 44 hedge funds in the database of Insider Monkey holding stakes worth $1.16 billion, up from 38 in the previous quarter worth $1 billion. The stock returned 173% gains to investors in the previous year.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alcoa Corporation (NYSE:AA) with 6.43 million shares worth more than $315 million at the end of the September quarter.
Wolfe Research analyst Timna Tanners initiated an Outperform rating on Alcoa Corporation (NYSE:AA) on November 16. The analyst sees a bullish view on aluminum fundamentals and high prices until 2023. Tanners set a price target of $63 for the metal stock.
Alcoa Corporation (NYSE:AA) pays its shareholders an annual dividend of $0.40 per share.
2. DuPont de Nemours, Inc. (NYSE:DD)
Number of Hedge Fund Holders: 57
DuPont de Nemours, Inc. (NYSE:DD) sells construction and packaging materials. The company also manufactures medical devices, fabric, resins, and solar materials. The company recently reported Q3 2021 earnings where revenue increased by 18% year over year to $4.3 billion.
DuPont de Nemours, Inc. (NYSE:DD) is also a good investment option for income investors as the material stock pays an annual dividend of $1.20 per share.
Of the 873 elite funds tracked by Insider Monkey, 57 were long DuPont de Nemours, Inc. (NYSE:DD) at the end of June, up from 49 in the first quarter of 2021.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm 40 North Management is a leading shareholder in DuPont de Nemours, Inc. (NYSE:DD) with over 4.87 million shares worth $331 million at the end of the third quarter of 2021.
On November 3, Deutsche Bank analyst David Begleiter kept a Buy rating on the material stock. Begleiter also increased his price target for DuPont de Nemours, Inc. (NYSE:DD) to $95 from $92.
In its Q1 2021 investor letter, Longleaf Partners Fund mentioned DuPont de Nemours, Inc. (NYSE:DD) and shared their insights on the company. Here is what the fund said:
“We exited three businesses in the quarter (including) DuPont. We have owned DuPont successfully three times now in the last decade and have great respect for CEO Ed Breen, who has delivered on creating value and focusing the company on its core businesses. We continue to view the business and leadership highly and hope to have the opportunity to partner with them again.”
1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 76
Metal manufacturer Freeport-McMoRan Inc. (NYSE:FCX) tops the list of 10 best material stocks to buy now. Recently, the Arizona-based company announced a 58% revenue growth in Q3 2021. Aside from the metal producer’s robust business, Freeport-McMoRan Inc. (NYSE:FCX) offers its stockholders a 0.76% dividend yield.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Freeport-McMoRan Inc. (NYSE:FCX) with 46 million shares worth more than $1.53 billion as of the third quarter.
As of the end of the second quarter, 76 hedge funds tracked by Insider Monkey reported owning stakes in Freeport-McMoRan Inc. (NYSE:FCX). The total worth of these stakes is $3.87 billion. This shows the hedge fund sentiment is positive for the company as 68 funds had stakes in the company in the previous quarter, having a total worth of $3.29 billion.
Analyst Timna Tanners of Wolfe Research initiated an Outperform rating on Freeport-McMoRan Inc. (NYSE:FCX) on November 16. The analyst sees potential on Freeport-McMoRan’s copper segment through at least 2023. Tanners set a price target of $47 for the material stock.
You can also take a peek at the 10 Best Mining Stocks To Buy Now and Cathie Wood’s Latest Stock Picks Under $10.
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Disclosure: None. 10 Best Material Stocks to Buy Now is originally published on Insider Monkey.
