2 Concrete & Aggregates Stocks to Gain From the Infrastructure Boom

The Concrete & Aggregates industry anticipates strong demand visibility and healthy pricing into 2026, primarily fueled by substantial public infrastructure investments from acts like the Infrastructure Investment and Jobs Act and stabilizing industrial construction, particularly data centers. While residential construction faces headwinds from affordability pressures and the sector grapples with cost inflation and labor shortages, solid pricing power, limited quarry supply, and operational efficiencies are expected to sustain momentum. Industry leaders such as Vulcan Materials (VMC) and Martin Marietta Materials (MLM) are well-positioned, benefiting from these tailwinds despite the industry's forward P/E of 24.06x trading above the S&P 500.

Analysis

The Concrete & Aggregates industry anticipates strong demand visibility and healthy pricing into 2026, primarily driven by substantial public infrastructure investments from acts like the Infrastructure Investment and Jobs Act. This commitment, alongside stabilizing industrial construction in data centers and warehouses, provides significant tailwinds for growth.

Residential construction remains a weak spot due to affordability pressures and high interest rates, while the sector also faces cost inflation and labor constraints. However, solid pricing power, stemming from limited quarry supply and high barriers to entry, combined with operational efficiencies, helps mitigate these challenges.

The industry holds a Zacks Industry Rank #87, indicating solid near-term prospects and an improving earnings outlook, with 2025 estimates rising to $2.30 per share. Despite outperforming the broader Construction sector, it lagged the S&P 500 over the past year. Its forward 12-month P/E of 24.06x trades at a premium to both the S&P 500 (23.74x) and the broader sector (19.87x).

Industry leaders Vulcan Materials (VMC) and Martin Marietta Materials (MLM) are well-positioned. VMC projects strong 2025 and 2026 EPS growth of 11.8% and 16.5%, respectively, driven by public and private nonresidential demand. MLM, despite a projected 43.3% EPS decline in 2025, forecasts an 18.4% EPS rebound in 2026, supported by infrastructure and nonresidential activity.

Key Decisions for Investors

• Investors should prioritize companies with strong exposure to public infrastructure projects and industrial construction, particularly data centers, given the robust demand visibility in these segments.
• Closely monitor residential construction trends and individual companies' ability to manage cost inflation and labor constraints effectively, as these remain key headwinds.
• Evaluate individual company growth prospects, especially the differing near-term EPS outlooks for VMC and MLM, to justify the industry's current valuation premium relative to the S&P 500.