CRH’s share price sits at record highs! Here’s why the FTSE stock is a top buy

The CRH share price has taken off in 2023. Yet on paper the FTSE 100 firm still offers great value. Here’s why I plan to hold its shares for the long term.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young black man looking at phone while on the London Overground

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

So far, 2023 has been a turbulent year for many FTSE 100 stocks. But building materials supplier CRH (LSE:CRH) has had no such problems, and its share price has risen 38% since the start of the year. It is currently trading at record peaks around £45.80 per share.

I’m a big fan of the company myself. In fact I bought it for my Stocks and Shares ISA back in 2021. It is currently the fifth-largest holding in my investment portfolio.

City analysts are also positive on the company’s investment prospects. Of the 21 brokers with ratings on the company, 19 rate it as a ‘buy.’ One has ranked it as a ‘hold’ while another has slapped a ‘sell’ on it, according to stock screener Trading View.

The broad view among analysts is that the CRH share price will rise another 10.4% over the next year, bursting through £50 per share.

Of course brokers don’t always get it right. Signs of a prolonged downturn in the global economy could derail mine and the City’s bullish view. But here is why I think the business remains a top buy right now.

Industry giant

CRH is one of the world’s largest suppliers of products to the construction industry. These include basic materials like cement, asphalt, lime, and aggregates. It also manufactures architectural, infrastructure, and utilities products that make the building process easier and more time-efficient for companies.

The FTSE company does this across a wide geographic footprint. A long-running commitment to growing through acquisitions means it has operations in almost 30 countries across North America, Europe, and Asia.

CRH’s colossal scale gives it obvious advantages. It sources 75% of profits from North America. But its broad territorial footprint reduces risk. If trading conditions worsen in one or two regions the impact on the bottom line can be reduced.

It also gives the company the chance to exploit significant regional opportunities. Rapid urbanisation in emerging markets should boost long-term demand for its products. So should large programmes of infrastructure upgrades in the US and Europe.

Too cheap to miss

CRH has proven that it has what it takes to lead in these marketplaces. In fact it continues to perform strongly even as conditions in its end markets cool.

Sales rose 22% in the first quarter thanks to what it said was “good pricing progress, resilient underlying demand, the positive contribution from prior year acquisitions and the continued delivery of our integrated solutions strategy”.

The company’s excellent cash generation gives it further room to keep growing revenues through acquisitions. CRH has spent €200m to pick up four businesses in the year to date. It also means the company should also keep returning lots of cash to its investors (it’s currently in the middle of a €3bn share repurchase programme).

The CRH share price currently trades on a forward price-to-earnings (P/E) ratio of 14.2 times. This is just ahead of an average of 14 times for FTSE 100 shares. And I think this represents excellent value given its exceptional profits outlook.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Crh Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young black colleagues high-fiving each other at work
Investing Articles

2 FTSE 100 value stocks I’d buy for my Stocks and Shares ISA in March!

Now could be a great time for fans of FTSE 100 value stocks to go investing. Here are a couple…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Looking for value stocks? Here’s 1 I’d buy and 1 I’d avoid!

This Fool delves deeper into two value stocks she’s had her eye on and explains why she’s bullish on one,…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

With the Airtel Africa share price in pennies, is it a bargain?

With the Airtel Africa share price having slumped by a quarter in just one month, this shareholder considers some of…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Are these 2 defensive FTSE 100 stocks shrewd buys after recent updates?

This Fool takes a closer look at these FTSE 100 stocks. She admires their defensive traits -- but does that…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The FTSE 100 closes up after full-year results from leading UK firms – are they buys?

Earnings season brings about a lot of ups and downs for the FTSE 100. Yesterday had some particularly good releases,…

Read more »

artificial intelligence investing algorithms
Investing Articles

Should I buy NVIDIA stock as a British investor?

NVIDIA stock is up two-thirds this year alone. Our writer considers some pros and cons, specifically given that he is…

Read more »

Investing Articles

With £2,000 in excess savings, I’d buy 41 shares in this Warren Buffett dividend stock

Stephen Wright thinks one of the best dividend shares to buy right now might be a Warren Buffett stock that’s…

Read more »

Investing Articles

How many Aviva shares do I need to collect a £100 monthly income?

Aviva shares are well suited for passive income purposes. Our writer works out how many would be needed for a…

Read more »