Bank of America Global Research has refined its selection to a targeted group of standout stocks within the European building materials sector for 2026, emphasizing companies distinguished by robust earnings momentum, effective pricing power, and solid financial health.
While the broader sector is experiencing a tapering in valuation gains, these leading stocks provide investors with carefully chosen exposure to an anticipated recovery in housing markets, accelerated infrastructure investments, and opportunities arising from flexible capital deployment.
Heidelberg Materials
Heidelberg Materials is identified as a leading heavy-side investment prospect entering 2026. The firm's stronghold in European cement pricing and increasing volumes from previously suppressed levels, coupled with efficient operational leverage, underscore its position. Despite the sector’s general revaluation, Heidelberg maintains an attractive valuation in comparison to its peers. Additionally, climbing CO₂ costs are expected to reinforce disciplined pricing within the industry, further supporting its earnings trajectory.
Buzzi Unicem
Buzzi offers a compelling profile blending cyclical improvement and balance-sheet robustness. The company benefits from upward pricing momentum in Europe, early indicators of volume gains, and significant optionality in the U.S. market. With a considerable net cash position and strong free cash flow generation, Buzzi stands out for its capital allocation flexibility, positioning it as a premier choice within the cement segment.
CRH
CRH is strategically placed to capitalize on infrastructure-driven demand in both Europe and the U.S., supported by steady pricing in aggregates and disciplined cost control measures. Its earnings outlook remains stable, and its scale alongside geographic diversification provides a buffer against downside risks, while enabling potential upside from infrastructure and rebuilding initiatives.
Saint-Gobain
Among the lighter building product companies, Saint-Gobain offers unique valuation support and cyclical growth potential. Although housing demand has been relatively subdued, improving European housing trends may unlock additional operating leverage. The company's attractive cash generation metrics further enhance its appeal as a recovery play without the burden of elevated peak valuations.
Kingspan Group
Kingspan merges structural growth themes with possibilities for cyclical recovery. The company’s focus on energy-efficient building solutions underpins long-term demand, while positive shifts in housing activity could yield further earnings improvements. Despite a premium valuation, the market prices in expectations of strong execution capabilities and sustained value creation.
Ferguson plc
Ferguson provides high-quality exposure to the North American construction and repair sector. It benefits from robust margins, consistent cash flow generation, and disciplined capital allocation. While short-term growth prospects appear modest, Ferguson is well-positioned to benefit from a potential rebound in housing and non-residential construction.
Balfour Beatty
Within construction contractors, Balfour Beatty is notable for its improving margin profile, solid cash generation, and exposure to expanding UK infrastructure projects. A healthier balance sheet than in prior cycles allows the company to leverage public-sector investments while mitigating typical balance-sheet risks associated with this segment.
Travis Perkins
Travis Perkins offers optionality tied to recovery in UK housing and renovation markets. Following a challenging period marked by weakening demand, stabilizing housing indicators and internal self-help initiatives may drive earnings improvements. The stock maintains an attractive valuation relative to its long-term cash flow potential.