The building materials market remains robust, supported by robust government spending on construction, falling interest rates and a positive economic outlook. Amid this construction boom, investing in fundamentally strong stocks like Owens Corning (OC), Apogee Enterprises, Inc. (APOG), and Griffon Corporation (GFF) could be a smart choice.
Given the significant demand for materials in the construction sector, the building materials industry is expected to benefit from significant infrastructure investments. U.S. housing starts are projected to increase by 8.5% in 2025, with nonresidential construction starts increasing by 6.9% and residential construction starts increasing by 12%. In particular, manufacturing construction is expected to recover after declines in 2023 and 2024.
The market is expected to benefit from the US government's 2025 Construction Plan, which includes $1.8 billion in grants for 148 infrastructure projects as well as financing initiatives such as road repairs, electric buses and bridge construction in various states. Additionally, the global building materials market is expected to exceed $2.01 trillion by 2034 and grow at a healthy CAGR of 3.9% from 2024 to 2034.
Additionally, the building materials sector has a strong outlook for 2025, driven by growing demand for sustainable and resilient construction projects across the US. Let's take a closer look at the fundamentals of the three industrial and building materials stocks featured, starting with number three.
Stock #3: Owens Corning (OK)
OC manufactures and distributes insulation, roofing and fiberglass composite materials in the United States, Canada, Europe, Asia Pacific, Latin America and internationally. The Company operates through three segments: Composites, Insulation and Roofing.
Based on the EBITDA margin for the last 12 months, OC is 23.12%, 65.8% higher than the industry average of 13.94%. Likewise, the company's net profit margin for the last 12 months stands at 9.92%, 53.1% higher than the industry average of 6.48%. Additionally, the company's leveraged FCF margin of 7.81% over the past 12 months is 14.3% higher than the industry average of 6.83%.
OC's net sales increased 22.9% year-over-year to $3.05 billion in the third quarter ended September 30, 2024. The Company's adjusted earnings attributable to OC common stockholders and adjusted earnings per share were $385 million and $4.38, respectively, an increase of 1.3% and 4.8%, respectively, from the prior year corresponds. Additionally, Adjusted EBITDA increased 18.9% year-over-year to $766 million.
For the quarter ending December 31, 2024, OC's revenue is expected to increase 20.4% year-over-year to $2.77 billion. Revenue for the quarter ending June 30, 2025 is expected to increase marginally year-over-year to $4.67. It topped consensus EPS estimates in each of the last 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, which equates to a Buy in our proprietary rating system. The POWR Ratings evaluate stocks based on 118 different factors, each with its own weighting.
It has a grade of B for growth, dynamism and mood. Within the industrial and building materials sector, the company ranks 4th out of 42 stocks. Click here to see all other grades for OC's Value, Stability and Quality ratings.
Stock #2: Apogee Enterprises, Inc. (LIME)
APOG provides architectural products and services for building enclosures, as well as glass and acrylic products for preservation, protection and enhanced visibility in the United States, Canada and Brazil. The company operates through 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. The company is thus strengthening its large-scale optics segment and forecasts significant sales growth by the 2026 financial year.
Based on the leveraged FCF margin over the last 12 months, APOG stands at 9.50%, 39.1% higher than the industry average of 6.83%. Likewise, the return on assets of 15.93% over the last 12 months is 124.6% higher than the industry average of 7.09%. Additionally, the stock's asset turnover ratio over the past 12 months stands at 1.51, 92.9% higher than the industry average of 0.78.
For the second quarter ended August 31, 2024, APOG reported net sales of $342.44 million. Likewise, the company's adjusted operating income increased 6.4% to $43.14 million compared to the same quarter last year. Adjusted net income was $31.46 million, or $1.44 per share, up 6% and 5.9%, respectively, from the prior year.
Street expects APOG's revenue for the quarter ended May 31, 2025 to rise 9.7% year-over-year to $363.80 million. Earnings per share for fiscal 2025 are expected to rise 6.5% year over year to $5.08. APOG beat consensus estimates in each of the trailing four 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 equates to a Strong Buy in our proprietary rating system.
It has a grade of B for value, dynamics and quality. It is number 3 in the same industry. Click here to view APOG's Growth, Stability and Sentiment Ratings.
Camp No. 1: Griffon Corporation (GFF)
GFF offers consumer and commercial products as well as home and building products internationally through its subsidiaries. The company operates in the consumer and professional products as well as home and building products segments.
Based on the EBITDA margin for the last 12 months, GFF is 19.10%, 37% higher than the industry average of 13.94%. Likewise, the leveraged FCF margin of 10.87% over the last 12 months is 59.1% higher than the industry average of 6.83%. Additionally, the stock's gross profit margin of 40.26% in the last 12 months is 27.5% higher than the industry average of 31.57%.
In the fourth fiscal quarter ended September 30, 2024, GFF's revenue increased 2.9% year-over-year to $659.67 million. Operating income was $111.67 million, up 40.6% year-over-year. During the same period, GFF's adjusted net income was $70.94 million, an increase of 12.5% from the year-ago quarter, and adjusted earnings per share were $1.47, an increase of 23, 5% compared to the same quarter of the previous year.
Analysts expect GFF's earnings per share to rise 11.6% year-over-year to $1.19 for the quarter ended December 31, 2024. Revenue for the quarter ending June 30, 2025 is expected to increase 3.1% year over year to $667.64 million. It beat consensus estimates in three of the most recent four quarters. Over the past year, the stock has gained 22.7%, closing the most recent trading session at $72.87.
GFF's promising prospects are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a grade of B for growth, value, dynamism and quality. It takes first place within the Industry – Building Materials sector. Click here to access GFF's additional ratings (Stability and Sentiment).
What to do next?
Get this special report featuring three low-priced companies that have tremendous upside potential, even in today's volatile markets:
3 Stocks to DOUBLE This Year >
Want more great investing ideas?
3 stocks to DOUBLE this year
OC shares closed Friday at $172.14, up $2.85 (+1.68%). Year-to-date, OC has gained 1.07%, while the benchmark S&P 500 index has gained 1.00% over the same period.
About the Author: Abhishek Bhuyan
Abhishek started his professional career as a financial journalist due to his keen interest in identifying the fundamental factors that influence the future performance of financial instruments. More…