Billionaire Louis Bacon’s 5 Stock Picks with Huge Upside Potential

3. CRH plc (NYSE:CRH)

Louis Bacon’s Stake Value: $73.99 million

Average analyst price target: $74.56

Average analyst price target upside: 18.43%

CRH plc (NYSE:CRH) is an Ireland-based company that is involved in the production and distribution of construction materials.

On November 22, CRH plc (NYSE:CRH) announced that it reached an agreement with SigmaRoc to divest its lime operations in Europe for a consideration of $1.1 billion. The three phases of the transaction are expected to be completed in 2024.

On November 21, CRH plc (NYSE:CRH) announced that it would acquire a portfolio of cement and ready mixed concrete assets in Texas from Martin Marietta Materials, Inc. (NYSE:MLM).  The purchase consideration is $2.1 billion and is expected to be completed in the first half of 2024.

Voss Capital commented on CRH plc (NYSE:CRH) in its third quarter 2023 investor letter. Here is what it said:

“While the market has recently been focused on GPU chips and AI scripts, our attention has been on cement blocks and crushed rocks. We’ve enthusiastically made CRH one of our largest positions ever at cost due to its limited downside. CRH is among the largest aggregates and infrastructure companies in the United States and Europe and has recently relisted to the NYSE from the LSE, which we believe will be a catalyst for the stock to rerate upwards towards peer valuations as its undeniable value hiding in plain sight becomes more widely discussed.

In 1970, Cement Limited and Roadstone Limited, two Irish infrastructure-focused companies, combined to form Cement and Roadstone Holdings, or “CRH.” An investment of $1 million into CRH upon its founding since that fateful merger ~53 years ago would have turned into ~$1.5 billion by mid-year 2023, an annualized total return to investors of 15.0%, a high rate of compounding we think can continue.

Half a century of success at CRH has been driven by disciplined operations and capital allocation that we believe derives from a company culture built around appropriate financial incentives. CRH’s M&A playbook has proven to be successful as an acquisitive company like CRH can’t compound at a rate of 15% over 50 years unless acquisitions and divestitures have been executed at attractive prices. Over the last five years, CRH has spent $10.3 billion on acquisitions while receiving $10.5 billion in proceeds from divestitures across dozens of transactions, with the average acquisition multiple ranging from 7x – 8x EBITDA depending on the year and the average exit multiple clocking in at 11x EBITDA.”