2 Building Materials Stocks That Are Quietly Becoming Some of the Market's Best Opportunities

Armstrong World Industries (NYSE: AWI) and Carlisle Companies (NYSE: CSL) possess elite, high-margin, cash-compounding financial profiles, but they frequently fly under the radar for mainstream or institutional investors.

That's because they're boring -- in a good way. They make high-margin goods that most investors don't think much about. Armstrong makes acoustical ceiling tiles and mineral fiber wall panels. Carlisle makes single-ply thermoplastic roofing membranes and commercial building envelope insulation.

Here are three reasons why I like each of these construction supply stocks.

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Armstrong gets stability with high renovation exposure

One of the biggest misconceptions about building materials companies is that they are entirely at the mercy of volatile new construction starts. Armstrong breaks this mold cleanly because roughly 70% of its commercial revenue is tied to renovation and remodel work, rather than new buildings.

This structural exposure to remodeling helps the company during economic slowdowns. Commercial properties regularly need ceiling and acoustical updates, even when new from-the-ground-up construction freezes.

Strong growth in its Architectural Specialties segment

Armstrong operates two main divisions: traditional Mineral Fiber and the higher-end Architectural Specialties segment. Management has deliberately leaned into the latter to drive structural margin expansion. The company's strategic acquisitions, including the February purchase of Eventscape, have allowed Armstrong to expand beyond standard drop ceilings into premium, high-aesthetic metal, wood, and resin wall systems.

In the first quarter, the company reported record sales of $409.9 million, up 7.1% year over year, led by 11% growth in Architectural Specialties revenue. This shift toward a more specialized, premium product mix supports management's stellar targeted adjusted earnings before interest, depreciation, taxes, and amortization (EBITDA) margins of 32% to 34%. Adjusted earnings per share (EPS) were up 1.8% over the same period last year, to $1.69. The company also reaffirmed its adjusted EPS yearly guidance of 10% to 14% growth.

Armstrong is shareholder-friendly

The company has increased its dividend for seven consecutive years, including a 10% increase in 2025 to $0.339 per quarterly share. At its current share price, the dividend yield is around 0.8%. There's plenty of room for growth, with a payout ratio of around 18%. In Q1, the company spent $60 million on share repurchases, leaving it with $473 million remaining under its current repurchase program.

Carlisle benefits from the big reroofing moat

The biggest misconception about Carlisle is that it rises and falls with the cyclical real estate market. In reality, most of Carlisle's core commercial roofing demand comes from recurring maintenance and reroofing projects on an aging U.S. building stock.

Commercial flat roofs have a hard expiration date. Every 15 to 25 years, regardless of interest rates or new construction starts, a building owner must replace a failing roof to protect the assets below. This creates a highly predictable, defensive base of revenue that insulates Carlisle from severe economic downturns and provides incredibly reliable cash flow visibility.

Carlisle is also shareholder-friendly

Carlisle leverages its consistent, annual operating cash flow of more than $1 billion into share buybacks and above-average dividends. Carlisle repurchased $250 million of its shares in Q1, and is actively executing against a massive $1 billion buyback target. This shrinking share count provides a powerful, structural tailwind to long-term EPS growth. In Q1, the company also paid out $46 million in dividends.

The company has increased its dividend for 49 consecutive years, making it just one year shy of being a Dividend King, the rare group of stocks that have raised their dividends for 50 or more consecutive years. Carlisle's steady dividend raises, including a 10% increase to $1.10 per quarterly share in 2025, have kept investors loyal and demonstrate a deep-rooted commitment to continuous cash returns across all phases of the economic cycle. The yield at its current share price is around 1.32%, and its payout ratio of 25% suggests room for additional dividend increases.

Carlisle had a mixed Q1, with revenue falling 4% year over year to $1.05 billion. However, its strong margins led to adjusted EPS rising 1% to $3.63 compared with Q1 2025.

The company's 2026 guidance predicts revenue growth in the low single digits, with full-year adjusted EBITDA increasing by 50 basis points.

Making a solid choice

Both of these stocks are good buys right now. Compared to their peers, they are undervalued, trading below 23 times earnings, with superior return on equity and profit margins.

The market has lumped both of these stocks with companies that specialize in materials for new construction, but both have a majority of their business tied to recurring maintenance. They are also shareholder-friendly, and each recently increased its dividend by 10%. Being overlooked means that now is still a good time to buy these stocks before they rise.

James Halley has positions in Carlisle Companies. The Motley Fool has positions in and recommends Carlisle Companies. The Motley Fool has a disclosure policy.