Investing.com -- The global building materials sector heads into 2026 with expectations for outperformance concentrated among companies with significant exposure to U.S. infrastructure spending and active in mergers, acquisitions and internal efficiency programs, according to analysts at RBC Capital Markets in a note dated Monday
Peak disbursement under the U.S. Infrastructure Investment and Jobs Act (IIJA) is expected in 2026 and 2027. The brokerage identifies Breedon, CRH and Knife River as the names with the highest implied upside potential based on valuation analysis.
Across the sector, the brokerage states that market conditions seen through 2025 are expected to continue into the first half of 2026, with no major shifts anticipated.
Broader improvement later in the year would rely on lower interest rates and faster conversion of infrastructure budgets into physical activity, but the report notes there is no clear line of sight on either catalyst.
It flags Mexico as a market that outperformed expectations during 2025 and could again in 2026, with residential and infrastructure spending stronger than anticipated.
RBC Capital Markets assigns “outperform” ratings to Breedon, CRH and Knife River, describing the three as the most leveraged to U.S. public infrastructure, M&A and internal operational programs.
Breedon, a U.K.-based aggregates and cement producer expanding in the United States, is noted as positioned to benefit from an expected volume recovery in U.K. residential building and continued U.S. acquisition activity.
CRH, the largest IIJA beneficiary in North America, is described as combining infrastructure tailwinds with a strong M&A track record and vertically integrated operations.
Knife River, a U.S. infrastructure and construction materials provider, is presented as benefiting from road spending exposure and self-help initiatives identified as the EDGE strategy.
The brokerage upgraded Cemex, the Mexican cement and materials producer, to “sector perform” from “underperform,” citing stronger-than-expected economic outcomes following political transition and early progress under new CEO Jaime Muguiro.
Downgrades are issued for Amrize, Heidelberg Materials and Sika. Amrize, a U.S. cement and roofing materials provider, moves to “sector perform” from “outperform” due to subdued U.S. cement volume outlook and weak storm-season roofing demand.
Heidelberg Materials, the global cement producer focused on decarbonization, is cut to Sector Perform after shares rose about 80% in 2025, with expectations already reflected in consensus.
Sika, the Swiss construction chemicals company, receives a downgrade based on slower APAC recovery expectations and 2026 viewed as a transition year.
Valuation metrics in the report show the greatest implied upside at Breedon, Knife River and CRH. Martin Marietta and Vulcan Materials, two large U.S. aggregates companies, retain Sector Perform ratings due to valuations viewed as reflecting embedded assumptions.
Cemex’s new price target is $11.25 from $8.25. Amrize is set at $60, and Sika at CHF184. Knife River’s target is $106, while CRH’s is $164.
Regionally, the brokerage states that Europe shows early signs of stabilization in residential markets tied to lending trends, while near-term indicators in France remain weak under political and bond-yield pressures.
The U.K. market is expected to see gradual residential improvement in 2026 amid contracting PMI data and muted pricing. Germany faces further residential declines in 2026 due to lagged impacts from historically weak housing starts.
The U.S. remains the primary sector growth driver through public infrastructure allocations, while Mexico continues to outperform expectations. China remains challenged with no near-term recovery identified.
The brokerage added that performance gaps between companies will be shaped less by broad demand recovery and more by capital deployment and infrastructure exposure.
