Reading time approx. 6 min.
Last weekend I had to go to Stuttgart for business reasons. After my appointments were over, I had one or two days to explore Baden Württemberg. One of the places I visited was Heidelberg.
Since I Heidelberg Materials $HEI (-0,2%) had been on my watch list for some time, I took the opportunity to take a look at the company on site. (see pictures). On the way back, I couldn't stop thinking about the company. I took a closer look at the company, did some more research and took my time to think about it.
In the end, I came to the decision to make my first investment. It was precisely these considerations that led to this article.
For many people, Heidelberg Materials is "boring" at first - cement, concrete, building materials. But that's exactly the point. Without these materials, neither residential construction nor infrastructure can function, regardless of whether times are good or bad.
The company is one of the largest manufacturers of building materials in the world and has a very strong presence in many regions 🌍. Production is mostly organized locally, which gives it pricing power and protects it from international competitive pressure. For me, this is a solid foundation for a long-term investment 🧱📈.
📉 Falling interest rates as an important driver
A key issue for the coming years will be interest rates. The high-interest phase has hit the construction sector hard and many projects have been postponed or stopped altogether. This is exactly where I now see the turning point.
Falling interest rates mean:
📌 Construction projects are becoming affordable again
📌 Investors and local authorities are planning more long-term again
📌 Infrastructure programs are becoming more attractive
As soon as construction activity picks up again, companies like Heidelberg Materials benefit relatively directly. More construction, more cement, concrete and aggregates 🏗️. Historically, the interest rate environment has always been a decisive factor for the industry.
🌍 Infrastructure remains an ongoing issue
Irrespective of short-term economic cycles, there is a huge investment backlog:
🏗️ dilapidated roads and bridges
🏠 Lack of living space
⚡ Energy transition
🌱 Adaptation to climate change
These are not issues for one year, but for decades. Heidelberg Materials is right at the source here and is well positioned to benefit from these developments.
🇺🇦 Reconstruction of Ukraine as an additional long-term opportunity
Another point that is often discussed is the future future reconstruction of Ukraine. As soon as the conflict ends, massive investments will have to be made in housing, infrastructure and industry for many years to come.
This is not a short-term price driver, but it is an interesting prospect for long-term investors. Heidelberg Materials is present in Eastern Europe and has the necessary experience to play a role in such a reconstruction. For me, this is an additional upside option that should not be ignored 📈.
💰 Solid company with a focus on shareholders
What I also like:
💵 Stable cash flows
💶 regular dividend
⚙️ disciplined cost management
📊 Focus on profitability instead of blind growth
Overall, Heidelberg Materials appears to be very well managed and shows that it is possible to operate reliably even in a cyclical industry.
✅ Conclusion
For me, Heidelberg Materials is not a short-term gamble, but a calm, solid investment with good prospects for the coming years. Falling interest rates, rising construction activity, long-term infrastructure projects and the possible reconstruction of Ukraine together form an attractive overall picture 🧠📈.
With an investment horizon of 3 years or more I still consider the share to be exciting.
