The part of the Next Generation funds destined to the rehabilitation of buildings and the fight against global warming drives the business of producers and distributors of fiberglass, mineral wool or polystyrene, such as Saint Gobain, BASF, Kingspan, AGC, TopBuild and BFS.
30% of European funds for recovery will be dedicated to the environment and, in particular, to the battle against global warming – Spain alone has to receive around 800,000 million euros in community loans and grants. In October, the Council of Ministers approved a Royal Decree that regulates the assistance programs in the area of residential rehabilitation and social housing of the Recovery, Transformation and Resilience Plan, which allow the implementation of two of the main investments of the plan, endowed with 4,420 million euros.
“The European funds represent a historic opportunity to rehabilitate an aging and energy-inefficient housing stock , renovations that will simultaneously contribute to the two European objectives of ecological transition and digitization of the economy, for example, through smarter buildings more energy efficient “, explained the experts of CaixaBank Research in December of last year.
In their analysis they also highlighted that the plan contemplates the rehabilitation of 500,000 homes between 2021 and 2023, which is added to the renewal of the thermal envelope (facades and roofs) of 1.2 million homes between 2021 and 2030, as shown in the current National Integrated Energy and Climate Plan.
There are many insulating materials that can be used in home renovation . Perhaps the best known is fiberglass, but rock wool, cellulose, polystyrene, polyurethane or phenolic foam are also used. One of the companies that could benefit the most from the installation of insulating materials in buildings is the French Saint Gobain, which through its subsidiaries Isover and Adfors offers thermal insulation solutions for ceilings, walls, floors or attics.
In fact, the gala company has announced this week that it intends to hire 36,000 people around the world next year due to the boom in construction and rehabilitation. Saint Gobain is one of the most valuable manufacturers of construction products on the stock market, as its capitalization is close to 33,000 million euros . Its shares receive a buy recommendation from the consensus of analysts collected by FactSet and also highlights the fact that the profit for 2022 is listed on the stock market at 11.5 times, below some of its competitors.
“Higher performance materials from BASF improve energy efficiency, increase durability and help accelerate construction.”
Another investment idea is the Irish Kingspan Group , which is worth € 18 billion on the stock market and is also present in Spain. It defines itself as “a market leader in premium quality, high performance rigid thermal insulation products for building and industrial applications”. Market consensus advises keeping your securities in your portfolio and your 2022 earnings are paid multiples of 31 times.
In Europe, BASF is another of the listed companies that markets polyurethane foams and materials of the style, as part of its Performance Materials division for construction. “BASF’s higher performance materials improve energy efficiency, increase durability and help accelerate construction, while offering a lower life cycle cost and lower environmental impact ,” they indicate from the German company. Its shares receive a buy recommendation, have a potential upside of close to 30% and 2022 earnings are trading at 10.9 times (see chart).
On the other side of the Atlantic, in the US, there are two firms specializing in the distribution and installation of insulating materials. They are Builders First Source and TopBuild Corp. The former describes itself as “the nation’s largest supplier of structural construction products, value-added components and services to the professional market for new residential construction and repair and remodeling .” The market consensus gives you favorable advice on your actions and your profit multiplier is 11.4 times for the next fiscal year.
In addition, TopBuild defines itself as “a leader in residential, commercial and industrial construction and insulation materials .” The company was spun off in 2015 from Masco Corporation and operates in the segment of the installation of thermal insulation systems through its subsidiary TruTeam. Your shares also receive a buy recommendation.
The last selected investment opportunity is the Japanese AGC, founded in 1907 as Asahi Glass -specialized in glass-. Among its featured products are insulating layer glass, which “reflects heat from the building into the interior , preventing heat loss,” according to the company, and coated sunscreen glass to control the amount of solar energy that penetrates into a building. Your 2022 earnings are listed on the stock market at 10 times.