The building materials market remains resilient, bolstered by robust government spending on construction, declining interest rates, and a positive economic outlook. Amid this construction surge, investing in fundamentally strong stocks like Owens Corning (OC), Apogee Enterprises, Inc. (APOG), and Griffon Corporation (GFF), could be a wise choice.
Given the substantial demand for materials in construction activities, the building material industry stands to gain from significant infrastructure investments. U.S. construction starts are forecasted to grow by 8.5% in 2025, with non-residential starts rising by 6.9% and residential buildings surging by 12%. Notably, manufacturing construction is expected to rebound after declines in 2023 and 2024.
The market is poised to benefit from the U.S. government's 2025 construction plan, which includes $1.8 billion in grants for 148 infrastructure projects, and funding initiatives such as road repairs, electric buses, and bridge constructions across various states. Additionally, the global construction materials market is expected to surpass $2.01 trillion by 2034, growing at a healthy CAGR of 3.9% from 2024 to 2034.
Furthermore, the building materials sector has a bright outlook in 2025, driven by growing demand for sustainable and resilient construction projects across the U.S. Let's take a closer look at the fundamentals of the three featured Industrial - Building Materials stocks, starting with number three.
Stock #3: Owens Corning (OC)
OC manufactures and sells insulation, roofing, and fiberglass composite materials in the United States, Canada, Europe, Asia Pacific, Latin America, and internationally. It operates in three segments: Composites, Insulation, and Roofing.
In terms of the trailing-12-month EBITDA margin, OC’s 23.12% is 65.8% higher than the 13.94% industry average. Likewise, its 9.92% trailing-12-month net income margin is 53.1% higher than the 6.48% industry average. Furthermore, its 7.81% trailing-12-month levered FCF margin is 14.3% higher than the 6.83% industry average.
OC’s net sales for the third quarter, ended September 30, 2024, increased 22.9% year-over-year to $3.05 billion. The company’s adjusted earnings and adjusted EPS attributable to OC common stockholders were $385 million and $4.38, representing increases of 1.3% and 4.8% from the year-ago values, respectively. Additionally, its adjusted EBITDA rose 18.9% year-over-year to $766 million.
For the quarter ended December 31, 2024, OC’s revenue is expected to increase 20.4% year-over-year to $2.77 billion. Its revenue for the quarter ending June 30, 2025, is expected to rise marginally year-over-year to $4.67. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 15.7%.
OC’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Momentum, and Sentiment. Within the Industrial - Building Materials industry, it is ranked #4 out of 42 stocks. To view all other grades for OC's Value, Stability, and Quality ratings, click here.
Stock #2: Apogee Enterprises, Inc. (APOG)
APOG provides architectural products and services for enclosing buildings, and glass and acrylic products used for preservation, protection, and enhanced viewing in the United States, Canada, and Brazil. The company operates in four segments: Architectural Framing Systems, Architectural Glass, Architectural Services, and Large-Scale Optical (LSO).
On November 4, 2024, APOG announced the completion of its $242 million acquisition of UW Interco, LLC, enhancing its Large-Scale Optical segment and projecting significant revenue growth by fiscal 2026.
In terms of the trailing-12-month levered FCF margin, APOG’s 9.50% is 39.1% higher than the 6.83% industry average. Likewise, its 15.93% trailing-12-month Return on Total Capital is 124.6% higher than the 7.09% industry average. Furthermore, the stock’s 1.51x trailing-12-month asset turnover ratio is 92.9% higher than the 0.78x industry average.
For the second quarter ended August 31, 2024, APOG reported net sales of $342.44 million. Likewise, the company’s adjusted operating income grew 6.4% from the prior year’s quarter to $43.14 million. Its adjusted net earnings were $31.46 million, or $1.44 per share, up 6% and 5.9% from the year-ago values, respectively.
Street expects APOG’s revenues for the quarter ending May 31, 2025, to increase 9.7% year-over-year to $363.80 million. Its EPS for fiscal 2025 is expected to grow 6.5% year-over-year to $5.08. APOG surpassed the consensus estimates in each of the four trailing quarters. Over the past year, the stock has gained 35.5%.
APOG’s promising outlook is reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Value, Momentum, and Quality. It is ranked #3 in the same industry. To see APOG’s ratings for Growth, Stability, and Sentiment, click here.
Stock #1: Griffon Corporation (GFF)
GFF, through its subsidiaries, provides consumer and professional, home and building products internationally. It operates under the Consumer and Professional Products and Home & Building Products segments.
In terms of the trailing-12-month EBITDA margin, GFF’s 19.10% is 37% higher than the 13.94% industry average. Likewise, its 10.87% trailing-12-month levered FCF margin is 59.1% higher than the 6.83% industry average. Furthermore, the stock’s 40.26% trailing-12-month gross profit margin is 27.5% higher than the 31.57% industry average.
During the fiscal fourth quarter ended September 30, 2024, GFF’s revenue increased by 2.9% year-over-year to $659.67 million. Its income from operations came in at $111.67 million, up 40.6% year-over-year. For the same period, GFF’s adjusted net income was $70.94 million, a 12.5% increase from the same quarter last year, and its adjusted EPS was $1.47, reflecting a 23.5% rise from the prior-year quarter.
Analysts expect GFF’s EPS for the quarter ended December 31, 2024, to increase 11.6% year-over-year to $1.19. Its revenue for the quarter ending June 30, 2025, is expected to increase 3.1% year-over-year to $667.64 million. It surpassed the consensus estimates in three of the four trailing quarters. Over the past year, the stock has gained 22.7% to close the last trading session at $72.87.
GFF’s promising prospects are reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Momentum, and Quality. Within the Industrial - Building Materials industry, it is ranked first. Click here, to access the additional ratings of GFF (Stability and Sentiment).
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OC shares closed at $172.14 on Friday, up $2.85 (+1.68%). Year-to-date, OC has gained 1.07%, versus a 1.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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