UK Construction Stocks That Could Benefit From The New Public Contracts Rules
UK construction and infrastructure stocks are back in the spotlight after the government shifted £90b of public contracts toward job creation and skills, especially for young workers. Weightings for local employment and training in big contract bids are set to double, while environmental and diversity metrics lose some influence. For investors, this is a clear policy signal that could reshape where large projects and long term cash flows go. This article looks at 3 stocks from our UK Construction and Infrastructure Companies screener that appear well placed to benefit from the new rules, and explains what to watch in each case.
Eurocell (LSE:ECEL)
Overview: Eurocell is a UK based manufacturer, distributor, and recycler of PVC and aluminium building products, supplying windows, doors, roofline, cladding, roofing, and outdoor living solutions to trade installers, housebuilders, and homeowners.
Operations: Eurocell generates most of its revenue from Building Plastics at £210.5m and Profiles at £208.2m, with Alunet contributing £46.7m, primarily in the United Kingdom at £401.3m.
Market Cap: £114.9m
Eurocell stands out in the current public contracts shift because it already supplies core materials and systems for housing and infrastructure projects that rely heavily on local installers and fabricators. Analysts expect earnings growth and see room for upside, yet the company trades on a lower P/E than many European building peers, which may interest value focused investors. At the same time, margins have been under pressure and funding leans on external borrowing, so higher labour costs or weaker demand could be challenging. With the new UK rules rewarding local employment and skills, Eurocell’s branch network, recycling operations, and Alunet acquisition provide it with tools to compete for work that others may struggle to service efficiently.
Eurocell’s lower P/E and pressure on margins suggest the story is more complex than it looks. Get the full picture with the 3 key rewards and 1 important warning sign and see what might be hiding in plain sight.
Genuit Group (LSE:GEN)
Overview: Genuit Group is a UK based construction supplier that focuses on water, climate, and ventilation management, providing products like plastic piping, underfloor heating, heat pump related systems, and ventilation units for homes and infrastructure projects in the UK, Europe, and other international markets.
Operations: Genuit Group generates most of its revenue from Sustainable Building Solutions at £267.4m, followed by Water Management Solutions at £188.1m and Climate Management Solutions at £180.2m, with the United Kingdom contributing £536.4m of sales.
Market Cap: £739.6m
Genuit Group may appeal to investors seeking exposure to large UK public contracts tied to jobs and skills, combined with products that address issues such as flooding, air quality, and more efficient heating. Recent earnings growth has been strong and analyst estimates currently point to double digit earnings growth, while the stock trades on a lower P/E than many European building peers and sits below one published estimate of fair value. However, Genuit relies heavily on the UK market, uses higher risk external borrowing, and has an uneven dividend record, so setbacks in UK construction or challenges in integrating smaller acquisitions could be significant. The company’s progress on training, recycled materials, and product development could be an important factor under the new procurement rules.
Genuit Group’s strong recent earnings and current P/E gap to European peers hint that the market might be missing something. See how the full story looks in the analyst forecasts for Genuit Group and what could shift sentiment next.
Alumasc Group (AIM:ALU)
Overview: Alumasc Group is a UK based manufacturer of building products and solutions, supplying water management systems, roofing and building envelope materials, and housebuilding components to customers across the UK and a range of international markets.
Operations: Alumasc Group generates most of its revenue from Water Management at £48.6m, followed by Building Envelope at £40.6m and Housebuilding Products at £17.2m.
Market Cap: £80.0m
Alumasc Group may catch your eye if you are looking for a smaller UK construction stock with exposure to public contracts and specialist products like water management and roofing systems. Forecast earnings growth of around 15.8% a year and a P/E that sits well below many building peers suggest the stock could offer value. Its focus on sustainability and eco friendly solutions fits longer term construction trends. At the same time, recent CEO suspension, a newer management team, pressure on margins and reliance on external borrowing raise governance and financial risk questions. With the UK now rewarding bidders that create and train local workers, Alumasc’s ability to grow its workforce and win work without stretching its balance sheet will be a key test for investors to watch.
Alumasc Group’s projected 15.8% earnings growth and low P/E hint at a story investors may be underpricing. See how the analyst forecasts for Alumasc Group stacks up against governance questions that could completely change the picture.
The three UK construction and infrastructure stocks in this article are only a starting point. The full UK Construction and Infrastructure Companies screener surfaces 9 more companies with equally compelling fundamentals and narratives to compare. Use Simply Wall St to identify, filter, and analyze the specific catalysts and stories that matter most to you so you can focus on the highest conviction opportunities in this theme.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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