In this article, we will discuss 7 Best Building Materials Stocks to Buy for the Residential Recovery.
The next housing boom may not be built on cheap land or low rates; it may be built on supply. That’s the increasingly compelling thesis behind building materials stocks, a sector drawing renewed interest from institutional investors and long-term funds positioning ahead of what could be one of the most significant residential construction cycles in a generation. And unlike the frothy corners of the market, this is not yet a consensus of trade. It’s a structural opportunity where the fundamentals are quietly aligning, but only for those willing to look past near-term rate noise.
The investment case is being driven by arithmetic. Decades of underbuilding, a persistent shortage of entry-level housing, and an aging existing home stock are creating durable demand for new residential construction. Controlled-cost building materials, from engineered lumber and insulation to roofing systems and specialty aggregates, are the backbone of any recovery. Data from Grand View Research projects the global building materials market to grow from approximately $1.3 trillion in 2024 at a CAGR of around 5% to 7% through 2030, underpinned by rising homeownership demand across emerging and developed economies alike. An analysis highlighted by PR Newswire points to accelerating momentum in prefabricated and manufactured materials driven by labor shortages, faster build timelines, and a decisive shift toward energy-efficient construction standards.
At the same time, academic and industry research underscores how automation and next-generation material science are reshaping the cost structure of homebuilding and improving margins for best-in-class manufacturers while raising the barrier to entry for competitors. From fiber cement siding to spray foam insulation and smart roofing systems, innovation is compressing construction timelines and expanding the addressable market, reinforcing the long-term durability of the sector’s growth trajectory.
With this context in mind, here are the building materials stocks to buy for the residential recovery.
Our Methodology
We used stock screeners to identify building materials stocks with a short percentage of shares outstanding, less than 4%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. To make the list easier to navigate, we ranked the stocks in descending order of their short percentage of shares outstanding as of May 29, 2026.
“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. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).”
7 Best Building Materials Stocks to Buy for the Residential Recovery
7. Installed Building Products, Inc. (NYSE:IBP)
Short Percentage of Shares Outstanding: 3.97%
On June 1, DA Davidson analyst Kurt Yinger maintained a Neutral rating and $242 price target on Installed Building Products, Inc. (NYSE:IBP) while adding the stock to the firm’s “Best-of-Breed Bison List,” which highlights companies with attractive business opportunities, durable competitive advantages, strong financial performance, and compelling risk-reward profiles. The analyst cited the company’s ability to manage material costs effectively, generate value from its bundled labor-intensive services, and execute a successful acquisition strategy. DA Davidson also noted that Installed Building Products has consistently delivered organic sales growth above housing completion rates while maintaining strong profitability even during periods of residential market weakness.
On May 19, Installed Building Products, Inc. announced the acquisition of Diamond Energy Systems, a Minnesota-based provider of mechanical insulation services focused primarily on industrial and commercial retrofit projects. Management stated that the acquisition adds approximately $12 million in annual revenue and strengthens the company’s presence across the Upper Midwest. Chief Executive Officer Jeff Edwards noted that the company has acquired approximately $40 million in annual revenue so far in 2026 and continues to view acquisitions as a key component of its long-term growth strategy.
Founded in 1977 and headquartered in Columbus, Ohio, Installed Building Products, Inc. is one of the largest installers of insulation and complementary building products in the United States. The company provides insulation, garage doors, rain gutters, shower doors, closet shelving, and other products for residential and commercial construction projects.
6. The Sherwin-Williams Company (NYSE:SHW)
Short Percentage of Shares Outstanding: 2.58%
On June 3, Citi reinstated coverage of The Sherwin-Williams Company (NYSE:SHW) with a Buy rating and a $355 price target. The firm views the current share price as an attractive entry opportunity despite potential near-term volume pressures stemming from a challenging housing market environment. Citi noted that the stock offers meaningful upside potential in the event of a cyclical recovery and believes that any stabilization in housing activity and construction spending could serve as a catalyst for improved operating performance and shareholder returns.
On June 2, UBS downgraded The Sherwin-Williams Company to Neutral from Buy and reduced its price target to $330 from $385. The revised rating reflects a more balanced risk-reward outlook, although the updated price target still suggests confidence in the company’s ability to maintain its market leadership position within the paints and coatings industry.
Founded in 1866 and headquartered in Cleveland, Ohio, The Sherwin-Williams Company manufactures, distributes, and sells paints, coatings, and related products globally.
5. Apogee Enterprises, Inc. (NASDAQ:APOG)
Short Percentage of Shares Outstanding: 2.52%
On May 28, Apogee Enterprises, Inc. (NASDAQ:APOG) announced that it entered into a definitive agreement to acquire Kalwall Companies from the Keller family for up to $115 million on a cash-free and debt-free basis, subject to customary closing conditions. The transaction includes an initial cash payment of $105 million at closing, along with a potential earnout of up to $10 million tied to financial performance through the end of the company’s fiscal 2027 third quarter. Management expects the acquisition to close during fiscal 2027’s second quarter and believes the transaction will enhance Apogee’s portfolio and expand its capabilities within the building products market.
On April 24, Apogee Enterprises, Inc. provided fiscal 2027 guidance, forecasting revenue in the range of $1.38 billion to $1.43 billion. The company’s outlook assumes approximately $10 million in interest expense, an adjusted effective tax rate of 26% to 27%, and capital expenditures between $35 million and $40 million, reflecting management’s expectations for continued investment in growth initiatives and operational execution.
Founded in 1949 and headquartered in Minneapolis, MN, Apogee Enterprises, Inc. designs and fabricates commercial glass, aluminum framing, and installation services for building exteriors. The stock gains residential recovery exposure through its Apogee Renovation segment and high-rise multi-family housing projects requiring advanced glass and curtainwall envelope solutions.
4. CRH plc (NYSE:CRH)
Short Percentage of Shares Outstanding: 1.94%
On June 16, CRH plc (NYSE:CRH) announced the election of Tony Will to its Board of Directors, effective July 1, 2026. Will previously served as President, Chief Executive Officer, and board member of CF Industries Holdings, bringing extensive leadership and industrial sector experience to the company’s board.
Earlier, on May 26, CRH plc (NYSE:CRH) announced the appointment of Danilo Juvane as Head of Investor Relations. Juvane brings more than 25 years of capital markets experience, most recently serving as Vice President of Corporate Development, Investor Relations, and ESG at The Williams Companies. In his new role, he will oversee shareholder engagement and investor communications while helping articulate CRH’s strategic priorities and long-term value creation initiatives. He succeeds Tom Holmes, who is transitioning to a senior leadership role within the company’s strategy organization.
Founded in 1970 and headquartered in Dublin, Ireland, CRH plc (NYSE:CRH) is one of the world’s largest providers of building materials and construction solutions. The company supplies a broad portfolio of products and services across infrastructure, non-residential, and residential construction markets.
3. Lowe’s Companies, Inc. (NYSE:LOW)
Short Percentage of Shares Outstanding: 1.77%
On June 11, Lowe’s Companies, Inc. announced a new multi-year partnership with Live Nation aimed at providing MyLowe’s Rewards and MyLowe’s Pro Rewards members with exclusive live entertainment experiences. Through the collaboration, members will gain access to a variety of concert-related benefits, including discounted children’s tickets with the purchase of an adult lawn ticket, complimentary lawn chair rentals at select events for eligible members, and sweepstakes opportunities to win free concert tickets throughout the year. The initiative is designed to enhance customer engagement by extending the value of Lowe’s loyalty programs beyond traditional retail offerings and creating additional benefits for members.
On May 29, Lowe’s Companies, Inc. board of directors approved a quarterly cash dividend of $1.25 per share, payable on August 5 to shareholders of record as of July 22. The new dividend represents a 4% increase from the company’s previous quarterly payout of $1.20 per share, reflecting management’s continued commitment to returning capital to shareholders and confidence in the company’s financial position and cash flow generation capabilities.
Founded in 1921 and headquartered in Mooresville, North Carolina, Lowe’s Companies, Inc. is a premier home improvement retailer. It serves both DIY homeowners and contractors by providing crucial building materials, appliances, and trade services to support home renovations, repairs, and property value appreciation.
2. The Home Depot, Inc. (NYSE:HD)
Short Percentage of Shares Outstanding: 1.21%
On May 20, UBS analyst Michael Lasser reduced his price target on The Home Depot, Inc. (NYSE:HD) to $430 from $450 while maintaining a Buy rating on the shares. Despite the lower target, the continued Buy recommendation reflects the firm’s confidence in the company’s long-term competitive position and its ability to navigate current market conditions within the home improvement sector.
On the same day, Mizuho lowered its price target on The Home Depot, Inc. to $385 from $415 while reiterating an Outperform rating on the stock. The revision followed the company’s latest earnings report and reflects updated financial assumptions, though the firm continues to view Home Depot favorably relative to its peers and expects the company to deliver solid performance over the long term.
Founded in 1978 and headquartered in Atlanta, Georgia, The Home Depot, Inc. provides building materials, home decor, and lawn products, along with tool rentals and installation services for DIY enthusiasts and professionals. It supplies contractors and homeowners with the essential materials required for home repairs, remodeling, and renovations.
1. Lennar Corporation (NYSE:LEN)
Short Percentage of Shares Outstanding: 0.22%
On June 15, RBC Capital reduced its price target on Lennar Corporation (NYSE:LEN) to $85 from $88 while maintaining an Underperform rating on the shares. The firm cited the company’s weaker-than-expected third-quarter guidance and continued softness in housing demand, leading it to lower its fiscal 2026 and 2027 earnings-per-share forecasts by 12% and 10%, respectively. RBC also noted that recent improvements in sales incentives may prove difficult to sustain given ongoing pricing pressures and the need for base price reductions, while expected gains from product mix and cost initiatives are projected to provide only modest sequential margin improvement.
On the same day, Barclays lowered its price target on Lennar Corporation to $79 from $80 and reiterated an Underweight rating on the stock. The firm expressed concerns regarding the company’s land banking strategy, noting that option-related costs could pose a longer-term risk as they are recognized over time. Barclays also indicated that it anticipates additional downward revisions to earnings estimates in the periods ahead.
Founded in 1954 and headquartered in Miami, Florida, Lennar Corporation provides residential mortgage, title, and financial services. It actively fuels residential recovery by offering adaptable, cost-effective new homes and buyer financing, driving market demand and housing supply growth across the United States.
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