This Dublin Gravel Supplier Is Undervalued Compared To Rivals VMC, MLM: Here's Why

Zinger Key Points
  • CRH has a similar growth outlook to Martin Marietta and Vulcan Materials, which trade at 22x and 25x forward earnings, respectively.
  • Commercial construction activity in the U.S. was up 19% YoY in March; road construction is up 20%.

A construction supply company stands to benefit from recent U.S. government initiatives.

What Happened: According to Street Sheet, traders would be wise to consider CRH plc CRH, which currently touts a $35.4 billion market cap.

The Dublin-based company will likely see an uptick in demand for its products, which are used to make concrete, cement, and asphalt. Why? Because some $2 trillion in spending "will pour into the economy" due to three pieces of legislation:

  • The Infrastructure Investment and Jobs Act, passed by the U.S. House of Representatives in November 2021.
  • The Inflation Reduction Act, enacted by President Joe Biden last August.
  • The Chips Act, which provides tax credits and subsidies for domestic U.S. semiconductor manufacturers.

See Also: Dow Drops Over 100 Points, Crude Oil Rises

CRH is an "undervalued" stock to watch, Street Sheet explained, citing the growing need for building supplies as new battery plants and chip facilities get built.

The stock gained 23% during the past 12 months, but it currently trades at 11x the estimated 2024 earnings, whereas its competitors — Martin Marietta Materials MLM and Vulcan Materials VMC — trade at 22x and 25x forward earnings, respectively.

Why It Matters: CRH, which stands for Cement Roadstone Holdings, is in the process of moving its primary stock market listing to the U.S. This will help CRH establish stateside recognition and close the valuation gaps it has with its rivals.

Reporting rules in the U.S. will also make it easier to compare CRH to its two American competitors: MLM and VMC.

That could, in turn, drive the stock higher.

Meanwhile, commercial construction activity in the U.S. was up 19% in March year-over-year, and road construction is up 20%.

"More of the same, if not better, can be in the cards for soon-to-be US-listed CRH," Street Sheet predicts.

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