Best Way To Play The Construction Rebound [Cemex SAB de CV (ADR), Vulcan Materials Company, Martin Marietta Materials, Inc.]

concreteTyler Laundon: If you would like a little more exposure to the U.S. construction market before the busy season hits this summer, you may want to consider investing in concrete stocks.

This is a very basic way to gain exposure to residential and commercial construction. Mix together some aggregate (gravel or crushed rock), sand, Portland cement … add a little water and you have concrete. It doesn’t get much more basic than that.

I know that last week’s numbers for housing starts and building permits came in a bit under expectations. While U.S. home construction grew 2.8% in March to 946,000 (seasonally adjusted), that figure was short of consensus estimates of 965,000 units.

But one month of slower than expected growth doesn’t kill a trend. And when we look beyond home construction and include commercial construction spending, the trend is still up.

As the chart below shows, U.S. construction spending (including residential and commercial) has been growing 8% annually over the past three years. Of course, some markets are growing far faster.

If you believe, as I do, that the U.S. construction market will continue to recover over the next five years, having a little exposure to concrete stocks is almost a no-brainer. Concrete’s simple yet proven recipe has made it a must-have building material. Almost every building utilizes some form of concrete. The uses are only limited by the imagination.

On a ton for ton basis, concrete is the most widely used building material on the planet. Twice as much concrete is used as steel, wood, plastics and aluminum combined. The World Business Council for Sustainable Development states that concrete is the second most consumed product in the world. Water is the first.

I could go on, but you get the point. Concrete is a critical material in residential and commercial construction, which is an extremely large, and growing, segment of the U.S. economy.

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