One small corner of the materials sector is flying high.
The materials stocks have tumbled more than 12 percent year to date, hit by falling commodity prices and concerns about global growth.
Stifel analyst Stanley Elliott said the performance of such companies is exclusively focused on domestic growth, which is one reason why these stocks have been on the rise. Construction materials stocks won't see the same impact as the rest of the materials sector from global markets, currencies and commodities, Elliott said.
Additionally, infrastructure spending in both the public and private sectors are growing, he said.
"There hasn't been a silver bullet, if you well, but there have been several things all trending in the right direction," Elliott said Thursday in a phone interview.
According to Elliott, state and local infrastructure funds are seeing a boost in revenue streams from healthier budgets, gas and sales taxes and public-private partnerships in the form of toll roads.
Elliott is also watching the process of a six-year highway bill that was passed by the Senate this summer, which would aid visibility and planning in construction projects, as well as improve confidence. Although the bill has yet to pass in the House, the prospect of a more long-term plan is "at least encouraging," he said.
Growth has been even better on the private side, Elliott said, which has seen increased construction of residential properties, commercial properties, hospitals and other buildings.
However, Elliott said much of the growth has been recovery from a post-recession plunge.
"This is an industry that has fallen from peak 40 percent in some markets [since the recession]," Elliott said. "What we've seen so far has been an inflection, as opposed to growth above a normal trend."
But Erin Gibbs of S&P Capital IQ said there should be plenty of room left to run for Martin Marietta and Vulcan in particular, which expect to see earnings growth in the mid-teens by next year.
"These guys look good both from a valuation perspective, and they're fundamentally growing," Gibbs said Wednesday on CNBC's "Trading Nation." "Valuations are trading below their historical averages, they're below the analyst consensus target prices."
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