For Immediate Release
Chicago, IL – June 25, 2026 – Today, Zacks Equity Research United Rentals Inc. URI, Argan, Inc. AGX, Simpson Manufacturing Co., Inc. SSD, Everus Construction Group, Inc. ECG and Construction Partners, Inc. ROAD.
Industry: Building Products
Link: https://www.zacks.com/commentary/2941962/5-building-product-stocks-to-buy-despite-industry-headwinds
The Zacks Building Products - Miscellaneous industry remains under pressure amid elevated input costs, tariff-related uncertainty and an unpredictable macroeconomic environment that continues to pressure margins, complicate sourcing decisions and weigh on customer spending. Meanwhile, high interest rates and housing affordability challenges are limiting new residential construction, keeping demand uneven across several product categories.
Nevertheless, these headwinds are partly offset by sustained investment in infrastructure, power, grid modernization, data centers and advanced manufacturing, which continues to support healthy project pipelines. In addition, resilient repair and remodeling activity, coupled with growing demand for premium, energy-efficient and innovative building products, is helping companies maintain pricing power and generate stable growth despite broader market uncertainties. Against this backdrop, United Rentals Inc., Argan, Inc., Simpson Manufacturing Co., Inc., Everus Construction Group, Inc. and Construction Partners, Inc. are well-positioned to capitalize on these positive trends.
Industry Description
The Zacks Building Products - Miscellaneous industry primarily comprises manufacturers, designers and distributors of home improvement and building products like ceiling systems, doors, windows, flooring and metal products. Some industry players provide solutions to rehabilitate the aging infrastructure, primarily pipelines in the wastewater, water, energy, mining and refining industries.
The companies also manufacture expansion joints and structural bearings, ventilation products, ground-mounted solar racking and commercial greenhouses, as well as mail storage (solutions including mailboxes along with package delivery products). Companies in this industrial cohort also rent out equipment to a diverse customer base, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities.
4 Trends Shaping the Future of the Building Products Industry
Cost Inflation, Tariffs and Macroeconomic Uncertainty Persist : The industry continues to face a challenging cost environment in 2026. Manufacturers are dealing with persistent inflation in raw materials, transportation, labor and procurement, while higher wages and ongoing investments in manufacturing capacity continue to pressure operating expenses.
At the same time, evolving U.S. tariff policies and uncertainty surrounding imported construction materials have complicated sourcing strategies and increased the risk of additional input-cost inflation. Companies are responding through selective price increases, supply-chain diversification, productivity initiatives and restructuring programs, but the ability to fully pass higher costs on to customers varies across end markets.
Macroeconomic uncertainty adds another layer of risk. Elevated interest rates, cautious commercial investment and affordability challenges in residential construction have caused customers to delay purchasing decisions and adjust project timelines. Many contractors and distributors are also managing inventory conservatively, reducing order visibility for manufacturers. While infrastructure, power and data center investments remain supportive, uncertainty over trade policy, inflation and the pace of economic growth continues to weigh on business confidence, making demand forecasting and capital allocation more difficult across the industry.
Residential Construction Remains Under Pressure : The biggest challenge for the industry in 2026 continues to be the sluggish residential construction environment. Elevated mortgage rates, affordability constraints, higher home prices and cautious consumer spending have kept both new housing demand and discretionary renovation activity below historical levels.
Builders remain selective with new project launches, while customers continue delaying large purchases until financing conditions improve. Although repair and remodeling demand has been relatively resilient, weaker housing starts continue to pressure volumes across several residential-focused product categories, limiting broader industry growth.
Infrastructure, Power and Data Center Investments Support Demand : Large-scale investments in power generation, grid modernization, transportation infrastructure and AI-driven data centers remain the strongest demand drivers for the industry in 2026. Utilities continue expanding generation capacity while transmission, distribution and electrification projects are accelerating.
At the same time, hyperscale data centers, semiconductor facilities and advanced manufacturing projects require specialized building materials, engineered products and construction solutions. Public infrastructure spending, reshoring initiatives and long-duration industrial projects are also supporting healthy order pipelines and backlogs, providing companies with improved revenue visibility despite weakness in some traditional construction markets.
Repair & Remodeling and Product Innovation Remain Resilient : Although new residential construction remains uneven, repair and remodeling activity continues to provide a stable source of demand. Aging housing stock, ongoing maintenance requirements and consumers' focus on improving existing homes continue to support spending on roofing, insulation, plumbing fixtures, coatings, fastening systems and other building products.
Manufacturers are also benefiting from premium product offerings, energy-efficient solutions, sustainable materials and digital design tools that help expand market share and improve pricing. Innovation in commercial interiors, architectural products and building efficiency solutions is creating additional growth opportunities, while restructuring and productivity initiatives are supporting profitability.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Building Products – Miscellaneous industry is a 35-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #170, which places it in the bottom 31% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a lower earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since March 2026, the industry’s earnings estimates for 2026 have decreased to $4.29 per share from $4.32.
Despite the industry’s blurred near-term view, we will present a few stocks that one may consider adding to their portfolio. Before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.
Industry Lags S&P 500 & Sector
The Zacks Building Products – Miscellaneous industry has underperformed the Zacks S&P 500 Composite and the broader Zacks Construction sector over the past year.
Over this period, the industry has gained 11.6%, below the broader sector’s 23.8% increase. Meanwhile, the Zacks S&P 500 Composite has gained 26.1% over the same period.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings, which is a commonly used multiple for valuing building products’ stocks, the industry is trading at 18.92X versus the S&P 500’s 21.32X and the sector’s 22.26X.
Over the past five years, the industry has traded as high as 19.36X, as low as 10.61X and at a median of 16.04X.
5 Building Product Stocks to Buy Now
We have selected five stocks from the Zacks universe of building products that have solid growth prospects.
Argan: Based in Arlington, VA, Argan provides EPC and related services for power and renewable energy projects, along with industrial construction and telecom infrastructure services. The company has been benefiting from a robust pipeline of energy infrastructure projects driven by rising electricity demand from data centers, electrification, EV adoption and domestic manufacturing.
Management expects to secure several new projects over the next 10-18 months while maintaining the capacity to execute 10-12 projects simultaneously. Strong demand for combined-cycle natural gas plants, continued opportunities in industrial fabrication for data centers, expansion of its North Carolina facility and selective pursuit of renewable energy projects provide additional long-term growth avenues. The company's debt-free balance sheet, disciplined project selection and proven execution further strengthen its ability to capitalize on favorable industry trends.
Argan, a Zacks Rank #1 (Strong Buy) stock, has gained 252.5% over the past year. AGX has seen an upward estimate revision for fiscal 2027 earnings to $12.60 per share from $11.44 over the past 30 days, depicting analysts’ optimism for the company’s prospects. The estimated figure indicates 29.4% year-over-year growth for fiscal 2027 on 38% growth in revenues. The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 40.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Everus: Based in Bismarck, ND, Everus delivers contracting services across the United States. Robust demand across data centers, high-tech, hospitality, utility transmission and undergrounding markets, which is driving record backlog growth, has been benefiting the company. Everus is also expanding into new geographies, securing anchor projects with major customers that should create additional award opportunities over time.
Its acquisition of SE&M broadens exposure to attractive end markets such as pharmaceuticals, healthcare and complex industrial projects while strengthening its presence in the fast-growing Southeast. Management also expects continued growth through disciplined acquisitions, organic expansion, strong customer relationships and consistent project execution, backed by a healthy acquisition pipeline and record backlog.
Everus, a Zacks Rank #1 stock, has gained 153.4% over the past year. ECG’s earnings estimates have increased for 2026 earnings to $4.39 per share from $4.13 over the past 60 days. The estimated figure indicates 11.1% year-over-year growth for 2026, on 17% growth in revenues. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 62%.
United Rentals: Headquartered in Stamford, CT, this company is the largest equipment rental company in the world. United Rentals' growth outlook remains supported by robust demand across large-scale construction and industrial projects, particularly in nonresidential construction, infrastructure, power, industrial manufacturing and data centers.
The company continues to expand its higher-growth specialty business through new branch openings and targeted fleet investments, while healthy demand for used equipment supports capital efficiency and strong free cash flow generation. Management also highlighted a multiyear pipeline of major projects, stable local markets, positive fleet productivity and disciplined capital allocation, prompting it to raise its 2026 revenues, EBITDA and capital expenditure guidance, reflecting confidence in another record year of profitable growth.
United Rentals, a Zacks Rank #2 (Buy) stock, has gained 44.4% over the past year. URI has seen an upward estimate revision for 2026 earnings to $47.26 from $47.07 per share over the past 30 days. The estimated figure indicates 12.4% year-over-year growth for 2026, on 7.1% revenue growth. The company’s earnings surpassed the Zacks Consensus Estimate in only one of the trailing four quarters and missed on the other three, with an average being negative 1.5%. It currently holds a VGM Score of B.
Simpson: Based in Pleasanton, CA, Simpson provides structural connection solutions for wood, concrete and steel globally. Despite a softer housing market, Simpson continues to see several long-term growth drivers. The company is gaining market share through new customer wins in its component manufacturing business, supported by cloud-based software, design tools and AI-enabled solutions that improve productivity.
Strong momentum in OEM products, including mass timber and prefabricated construction, also expands growth opportunities. In residential markets, cross-selling, new product launches and enhanced service offerings are helping increase content per home, while engineering expertise and code-compliant solutions position the commercial business for continued share gains. Management remains focused on delivering above-market growth through innovation and customer-centric execution.
Simpson, a Zacks Rank #2 stock, has gained 26% over the past year. SSD’s earnings estimates have increased for 2026 earnings to $9.17 per share from $8.98 over the past 60 days. The estimated figure indicates 11.3% year-over-year growth for 2026, on 4.1% growth in revenues. The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 8.8%.
Construction Partners: Based in Dothan, AL, Construction Partners is a civil infrastructure firm focused on building and maintaining roadways across eight U.S. states. Strong demand across both public infrastructure and private construction markets is encouraging for Construction Partners.
The company continues to benefit from rising investments in data centers, manufacturing facilities, warehouses and transportation infrastructure across the Sunbelt, while maintaining a record backlog that covers most of the next 12 months of revenues. Its disciplined acquisition strategy, greenfield expansion, organic growth initiatives and robust pipeline of acquisition opportunities further strengthen long-term prospects. Management also expects continued benefits from federal and state infrastructure spending, reinforcing confidence in achieving its ROAD 2030 growth targets.
Construction Partners, a Zacks Rank #2 stock, has gained 16% over the past year. ROAD has seen an upward estimate revision for fiscal 2026 earnings to $2.95 from $2.89 per share over the past 60 days. The estimated figure indicates 34.1% year-over-year growth for fiscal 2026, on 27.1% revenue growth. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed on the other two, with an average being 125.3%.
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