Hunting for value among construction materials stocks

In a recent piece, I looked at the potential investment appeal of UK housebuilders. I concluded that they might still offer some value, but are probably not at truly compelling valuations anymore.

In the interests of disclosure, I still hold shares in one well-known UK housebuilder. But I’m a little wary about the political exposure of these businesses. Although the new government clearly wants to encourage more housebuilding, this doesn’t necessarily mean that it will support a return to the supernormal profits of the Help to Buy era (2013-23).

My caution may be unwarranted. More houses may mean more profit. But I’m cautious about investing in businesses that can be used as political footballs, unless I’m convinced they’re dirt cheap.

For these reasons, I’ve become more interested in the building materials sector, with a particular focus on companies whose products tend to be used in UK housebuilding.

Where are the opportunities?

While many of these shares have staged something of a recovery already, I think value still exists in this sector.

Last week’s profit warning from premium brickmaker Michelmersh Brick Holdings (LON:MBH)  was also a reminder that the construction sector isn’t out of...