As the market reassesses the value of AI and other high-flying tech stocks, a market rotation is underway. It’s going from the digital back to the physical. Defensive stocks such as consumer goods and healthcare companies have been faring well.
So too have companies that produce materials for physical infrastructure. That’s in-line with long-term infrastructure spending globally, and a trend that’s likely to continue and benefit companies related to that investment.
For instance, Ireland-based materials producer CRH (CRH), recently reported strong growth, albeit with some short-term challenges. But shares have been trending steadily higher over the past 12 months, up 27%.
Even with that push higher, shares are reasonably valued at 17 times forward earnings.
As a global leader in aggregate business across North America and Europe, CRH is well positioned for further infrastructure spending.
Plus, the company’s vertical integration gives it further strength across the construction space and across the materials supply chain.
Action to take: Investors may like shares as a continued momentum play here, or as a defensive stock play with some further upside this year. At current prices, CRH investors can also get a 1.5% dividend yield.
For traders, the June $110 calls, last trading for about $4.20, could see mid-to-high double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.