2024 Construction Stock Rankings Must-Read: Complete Guide to Taiwan and US Industry Leaders and Investment Strategies

Construction stocks have experienced over two years of downturn and began a significant rebound starting February 2024. Benefiting from industry rotation, a warming housing market, and capital shifting, this previously neglected sector is once again back in investors’ focus. Which construction stocks are worth watching at this stage? What are the top picks in Taiwan and the US markets? This article will provide a detailed overview.

Quick Identification of Construction Stocks: Complete Chart from Infrastructure to Real Estate

“Construction stocks” cover a broad range, referring to listed companies engaged in building construction, engineering contracting, real estate development, and infrastructure projects. In simple terms, these companies may be mixed-use developers for residential and commercial properties, or specialized engineering firms handling roads, bridges, tunnels, and other infrastructure projects.

The industry typically divides construction stocks into two main categories:

Construction Industry — primarily responsible for contract work, transforming design plans into physical projects, with a relatively focused business scope. Examples in Taiwan include Runhong (2597.TW), Daxin Engineering (2535.TW), Genki (2546.TW).

Building Industry — covering land development, housing design, project execution, and sales across the entire chain, with companies either specializing in certain segments or operating comprehensively. Related stocks include Huaguo (2548.TW), Zongtai (3056.TW), Huangxiang (2545.TW), Yaxin (5213.TW).

Taiwan Construction Stocks Ranking: Who Are the Market Favorites

Based on dividend yield and fundamentals, here are the top performers among Taiwan construction stocks:

Focus on the top three Taiwan construction stocks

Huaguo (2548.TW): Direct beneficiary of the housing market boom

Huaguo’s main business includes commercial office buildings, residential development, factory leasing, and interior decoration. Taiwan’s economy is clearly on an upward trend in 2024, with government policies like the “New Qing An Housing Loan” further stimulating home buying demand, keeping the housing market vibrant. Huaguo remains optimistic about its development prospects over the next 1-2 years.

In terms of stock performance, its price has risen from about NT$82 in late February to over NT$170, an increase of more than 100%.

Changhong (5534.TW): Delivery surge supports performance

Changhong, a top builder, is expected to reach a peak in completed units this year, with seven new projects expected to be finished, boosting annual revenue toward the billion-dollar mark. In 2023, revenue was NT$9.845 billion, EPS NT$6.32, with a cash dividend of NT$5.5, payout ratio 87%, and a dividend yield of 4.3%. Its current projects exceed NT$150 billion, providing stable revenue over the coming years.

Since February, Changhong’s stock price has surged over 70%, successfully reversing previous declines.

Xingfufa (2542): Expansion of territory brings growth

Famous domestic builder Xingfufa continues to acquire land and develop projects in Taiwan’s seven key regions, extending into dining, shopping malls, and hotels. Internal forecasts suggest that completed projects over the next 4-5 years will total NT$4,485 billion, with revenue recognized increasing year by year. Over the past three months, its stock price has risen over 50%, reaching a record high.

US Construction Stocks Ranking: Investment Opportunities from Infrastructure Boom

The US government has committed to investing $1 trillion in infrastructure renewal and modernization of public transportation, creating opportunities across the entire industry chain—from raw material procurement and component manufacturing to project management. US construction companies are generally characterized by stable earnings and reliable dividends, with limited short-term gains but relatively certain long-term returns.

Focus on key US construction stocks

Caterpillar (NYSE:CAT): Global leader in construction machinery

As the world’s largest manufacturer of construction and mining equipment, increased construction activity directly benefits Caterpillar’s performance. Besides selling heavy machinery, the company generates substantial revenue through financing, services, and parts. In 2023, sales reached $67.1 billion, up 13% year-over-year; operating margin was 19.3%, a 600 basis point improvement; EPS was $20.12, up 37% annually.

Nucor (NYSE:NUE): Efficient steel producer

Nucor pioneered the use of scrap melting methods for rebar manufacturing in the 1960s, revolutionizing the industry. Today, it ranks as one of the largest steel producers in the US, with mature low-cost operations capable of maintaining profitability even during demand downturns. In 2023, net profit was $4.525 billion (down 40.27% YoY), operating revenue $34.714 billion (down 16.38%), EPS $18.12.

United Rentals (NYSE:URI): Largest equipment rental company in North America

When contractors need additional equipment temporarily, United Rentals provides solutions through over 1,000 branches across North America and Europe. The company benefits from demand in construction, utilities, and other industries, making it relatively countercyclical. Over the past decade, revenue has grown at a CAGR of 14%, with EPS increasing 28%. In 2023, net profit was $2.1 billion (up 51.9%), revenue $11.64 billion (up 19.8%).

Why Construction Stocks Are Rising in Market Focus in 2024

Performance of construction stocks is closely linked to economic growth and development in the construction industry. During periods of accelerated infrastructure investment or urbanization, this sector often shows excellent growth prospects.

Attractions of construction stocks include:

• Stable dividend income: Generally high payout ratios, suitable for income-seeking investors
• Inflation hedge: Housing prices and rents tend to rise with inflation, partially offsetting price risks
• Growth driven by economic cycles: Housing market improvements directly boost revenue and profit for construction companies, lifting stock prices

Market Conditions and Risk Alerts

Positive factors: In 2024, Taiwan’s residential transaction volume increased by 28.3% YoY, with home prices remaining high. Government policies like “New Qing An” encourage home purchases further stimulating demand. Many construction stocks have high dividend yields, combined with a wave of presale and move-in activities, and optimistic investor sentiment, creating a clear upward trend.

Potential concerns: Rising construction costs squeeze profit margins on public projects; demand in commercial and industrial sectors remains weak; export slowdown; construction stocks have already gained significantly in the short term, with risks of correction.

Investment precautions:

• Changes in real estate supply and demand, industry policies, and increased competition can impact construction stock performance
• Policy adjustments such as purchase restrictions, loan limits, and land policies directly influence housing supply, demand, and development directions
• Company-level monitoring of operational capacity, project progress, and financial health is essential
• Financial issues like funding difficulties, high debt, and insufficient debt repayment ability may trigger risks

Rational investors should diversify holdings, closely follow policy developments, and implement proper risk management to participate in the investment opportunities within the construction stock rankings.