3 Hard-Hit Engineering & Construction Stocks to Buy Right Now | Entrepreneur (2024)

Amid rising raw material costs, supply chain constraints, and labor shortages, the engineering and construction industry took a hit over the past few months. However, with a steady increase in spending across the construction sector and rising federal investments, the industry is expected to rebound soon. Given this growth prospect, adding hard-hit quality engineering & construction stocks EMCOR (EME), MYR Group (MYRG), and Argan (AGX) could be a good idea.

The engineering and construction industry has been suffering from various headwinds, including surging raw material costs, labor shortages, and deepening supply chain issues aggravated by the Russia-Ukraine war. This has led to major selloffs over the past few months. However, this industry is expected to grow significantly this year, driven by a rise in spending on construction projects.

The engineering and construction industry is preparing for a major shift toward connected construction capabilities by increasing its investments in digital. Furthermore, the Infrastructure Investment and Jobs Act should drive growth for engineering and construction companies over the long run.

Against the backdrop, it could be profitable to buy the dip in fundamentally sound engineering & construction stocks like EMCOR Group, Inc. (EME), MYR Group Inc. (MYRG), and Argan, Inc. (AGX).

EMCOR Group, Inc. (EME)

EME offers electrical and mechanical construction, industrial and energy infrastructure, and building services in the U.S. and the United Kingdom. The company provides design, installation, operation, maintenance services, premises electrical and lighting systems, fire protection and suppression systems, plumbing and high-purity piping systems, controls and filtration systems, crane and rigging, millwright services, and building services.

Last month, EME announced that its Board of Directors had authorized a new share repurchase program to repurchase up to an additional $200 million of its outstanding common stock. The company had nearly $88.70 million remaining under previous share repurchase authorizations on April 22. This new share repurchase program might strengthen the company's shareholder value.

EME's Board of Directors declared a regular quarterly cash dividend of $0.13 per share in the same month. The dividend was paid on April 29 to stockholders. The dividend payment regularly reflects the company's strong capital foundation and consistent cash generation.

In the fiscal 2022 first quarter ended March 31, 2022, EME's revenues grew 12.5% year-over-year to $2.59 billion, while revenues from the total United States operations segment increased 13% year-over-year to $2.46 billion. Its gross profit improved 3.4% from the year-ago value to $352.56 million. In addition, the company's net periodic pension income rose 28.7% year-over-year to $1.17 million.

Analysts expect EME's EPS to grow 7.6% year-over-year to $7.60 for its fiscal year 2022, ending December 2022. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The $10.62 billion consensus revenue estimate for the ongoing year represents a 7.2% rise from the previous year. Furthermore, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.

The stock has declined 20.4% year-to-date and 15.2% over the past year. It closed yesterday's trading session at $101.37.

EME's POWR Ratings reflect this promising outlook. It has an overall grade of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

EME has a grade of B for Value, Stability, and Quality. Within the B-rated Industrial -Services industry, it is ranked #9 of 91 stocks.

To see additional POWR Ratings (Momentum, Growth, and Sentiment) for EME, click here.

MYR Group Inc. (MYRG)

MYRG provides electrical construction services in the U.S. and Canada. The company operates through two segments: Transmission and Distribution; and Commercial and Industrial. The Transmission and Distribution segment provides a wide range of services on electric transmission and distribution networks and substation facilities. Its Commercial and Industrial segment offers a range of services, including design, installation, and repair of industrial wiring, and installation of traffic networks, roadway, bridge, and tunnel lighting.

On May 5, MYRG announced a new share repurchase program that authorizes the company to repurchase up to $75 million of its outstanding shares of common stock. "We are committed to driving value for all MYR Group shareholders and directing capital to investments that generate strong returns. Today's announcement reflects the Board's confidence in the Company's long-term strategy and our belief that our stock represents an attractive long-term investment opportunity," said Rick Swartz, MYRG's President, and CEO.

In January, MYRG's Canadian subsidiary, MYR Group Construction Canada, Ltd. acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate. The Powerline Plus Companies brings a high-quality workforce and strong management team that provides excellent customer service. The addition of Powerline Plus Companies to MYRG will strengthen its Transmission & Distribution segment service offerings and expand the company's market position.

MYRG's contract revenues increased 7.4% year-over-year to $636.62 million in the fiscal 2022 first quarter ended March 31, 2022. Its gross profit improved 4.6% year-over-year to $80.49 million. Its EBITDA amounted to $39.56 million for the first quarter. The company's net income and earnings per share came in at $20.69 million and $1.21, respectively, indicating an increase of 3.8% and 3.4% year-over-year. In addition, net cash flows provided by financing activities came at $37.97 million.

The consensus revenue estimate of $719.07 million for fiscal 2022 third-quarter ending September 2022 represents a growth of 17.8% from the same value in 2021. It's no surprise that MYRG has surpassed the consensus revenue estimates in three of the trailing four quarters. The consensus EPS estimate of $1.44 indicates a 20.3% year-over-year rise for the fourth quarter, ending December 2022. Also, it has surpassed the consensus EPS estimates in each of the trailing four quarters.

Shares of MYRG have lost 23.9% year-to-date and 26.3% over the past six months. It closed yesterday's trading session at $84.10.

MYRG's strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which translates to Buy in our proprietary rating system.

Within the B-rated Industrial - Services industry, it is ranked #32 of 91 stocks. To see additional POWR Ratings (Momentum, Quality, Value, Stability, Sentiment, and Growth) for MYRG, click here.

Argan, Inc. (AGX)

AGX focuses on the engineering, procurement, and construction of natural gas-fired power plants and renewable energy facilities. In addition, it provides commissioning, operations management, maintenance, project development, technical, and consulting services to power generation and renewable energy markets through its Gemma Power Systems and Atlantic Projects Company operations. The company operates through Power Industry Services; Industrial Fabrication and Field Services; and Telecommunications Infrastructure Services.

Last month, AGX announced that its Board of Directors approved an increase in the company's existing share repurchase program, from $50 million to $75 million. The company is committed to an organized capital allocation strategy that balances returning capital to its shareholders and investing in the business to accelerate growth. With this development, AGX is expected to create greater shareholder value.

In the fiscal 2022 fourth quarter ended January 31, 2022, AGX's revenues grew 7.1% year-over-year to $125.57 million. The company's gross profit amounted to $22.23 million for the fourth quarter. Its net other income grew 577.9% year-over-year to $983,000. In addition, its cash and cash equivalents and total current assets came in at $350.47 million and $507.28 million, respectively, as of January 31.

Analysts expect AGX's revenue for the fiscal year 2023 ending January 2023 to come in at $565.15 billion, representing an 11% rise year-over-year. Street expects the company's EPS to come in at $3.48 for fiscal 2024, registering an increase of 32.6% from the last year. The company has an impressive earnings history as it has surpassed the consensus EPS estimates in three of the trailing four quarters.

The stock plunged 20% over the past six months and 24.4% over the past year. It closed yesterday's trading session at $35.86.

AGX's POWR Ratings reflect this strong outlook. It has an overall grade of B, equating to Buy in our proprietary rating system.

AGX has a grade of A for Quality and a B for Sentiment. Within the B-rated Industrial - Building Materials industry, it is ranked #13 of 48 stocks.

To see additional POWR Ratings (Growth, Momentum, Value, and Stability) for AGX, click here.

EME shares were trading at $102.62 per share on Friday morning, up $1.25 (+1.23%). Year-to-date, EME has declined -19.27%, versus a -15.18% rise in the benchmark S&P 500 index during the same period.


About the Author: Mangeet Kaur Bouns

3 Hard-Hit Engineering & Construction Stocks to Buy Right Now | Entrepreneur (1)

Mangeet's keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet's looks to help retail investors understand the underlying factors before making investment decisions.

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3 Hard-Hit Engineering & Construction Stocks to Buy Right Now | Entrepreneur (2024)

FAQs

3 Hard-Hit Engineering & Construction Stocks to Buy Right Now | Entrepreneur? ›

Industry top companies

Construction companies' stocks that seem to outperform the industry are Carrier Global (NYSE:CARR), Masco Corporation (NYSE:MAS), D.R. Horton (NYSE:DHI), Jacobs Engineering (NYSE: J) and Quanta Services.

What is the best performing construction stock? ›

Industry top companies

Construction companies' stocks that seem to outperform the industry are Carrier Global (NYSE:CARR), Masco Corporation (NYSE:MAS), D.R. Horton (NYSE:DHI), Jacobs Engineering (NYSE: J) and Quanta Services.

Should I invest in construction stocks? ›

Bottom line. While it's possible to turn a profit investing in construction stocks, keep in mind that — like any investment — construction stocks are not immune to risk. These stocks are subject to fluctuating conditions — both in the market and in the building industry, so carefully vet your picks before you invest.

How to invest in construction stock? ›

How to invest in construction stocks
  1. Choose an online stock trading platform. ...
  2. Sign up for an account. ...
  3. Set up a funding method to pay for the transaction. ...
  4. Choose the stocks you want to buy. ...
  5. Place your order.

Are there publicly traded construction companies? ›

Premier Pacific Construction, Inc. PulteGroup, Inc. Smith Douglas Homes Corp. Social Detention, Inc.

What is the fastest growing construction market? ›

For example, demand for market research analysts, software developers, logisticians, and financial managers in the construction sector is projected to be robust in the coming years. But construction industry jobs with the greatest projected growth rates are related to renewable energy—including wind and solar.

What is the most profitable stock to buy right now? ›

The 9 Best Stocks To Buy Now
Company (Ticker)Forward P/E Ratio
Citigroup, Inc. (C)8.6
Fidelity National Information Services, Inc. (FIS)13.2
Intuitive Surgical, Inc. (ISRG)52.2
The Kraft Heinz Company (KHC)12.3
5 more rows
3 days ago

What are the best publicly traded construction companies? ›

Caterpillar, Nucor, United Rentals, Vulcan Materials, Fluor, and NV5 Global are notable stocks to consider.

How do you know if a stock is worth buying? ›

Evaluating Stocks
  1. How does the company make money?
  2. Are its products or services in demand, and why?
  3. How has the company performed in the past?
  4. Are talented, experienced managers in charge?
  5. Is the company positioned for growth and profitability?
  6. How much debt does the company have?

Is there a future in construction? ›

Assuming there is an improvement in global economic stability, forecasts suggest output growth will expand by 3% and reach an annual average of 4.2% between 2025 and 2027. Investment in the infrastructure and the energy and utilities sectors is a major driver of overall construction output growth.

How do you pick stocks to make money? ›

Look for strong sectors and industry groups if you want to go long—that is, buy a stock with the expectation that its price will rise—and weak ones if you want to go short—which means borrowing and selling a stock whose price you think is going to fall, and then buying it back later at a lower price should it actually ...

How to invest $1,000 in stock? ›

  1. Invest in ETFs. An ETF is a basket of securities that tracks the performance of an underlying index. ...
  2. Invest with a digital investment platform. ...
  3. Fractional investing in stocks. ...
  4. Invest in dividend stocks. ...
  5. Invest in growth stocks. ...
  6. Use dollar-cost averaging. ...
  7. Use lump-sum investing.

How do I choose a stock to buy? ›

  1. Determine your investing goals.
  2. Find companies you understand.
  3. Determine whether a company has a competitive advantage.
  4. Determine a fair price for the stock.
  5. Buy a stock with a margin of safety.
Nov 13, 2023

Who is the richest construction company in the world? ›

1) China State Construction & Engineering (CSCEC)

Details: The largest construction company in the world by revenue, the structure of CSCEC is suitably complex. It was founded in 1957 as a state company and is a wholly state-owned enterprise.

What is the most profitable construction company in the world? ›

China-based China State Construction Engineering Corp Ltd is the major construction company in the world (by revenue).

What is the biggest construction company in the USA? ›

With revenue figures of about 16 billion U.S. dollars in 2022, the Turner Corporation was ranked the leading construction contractor in the United States. In these rankings, Bechtel ranked second after holding first place until 2019, while Kiewit Corp. ranked third.

What are the best infrastructure stocks to invest in? ›

More Collections >
  • Larsen & Toubro Ltd.
  • Rail Vikas Nigam Ltd.
  • GMR Airports Infrastructure Ltd.
  • IRB Infrastructure Developers Ltd.
  • Waaree Renewables Technologies Ltd.
  • NBCC (India) Ltd.
  • Ircon International Ltd.
  • Rites Ltd.

What construction trade has the highest profit margin? ›

The profit margins of each construction industry are relatively consistent. Land subdivision produces the highest margins.

What is the highest performing stock? ›

Best stocks by one-year performance
CompanyPerformance (Year)
Micron Technology Inc. (MU)94.76%
Howmet Aerospace Inc (HWM)85.30%
Trane Technologies plc (TT)85.30%
Netflix Inc. (NFLX)84.97%
17 more rows
6 days ago

Which construction trades make the most? ›

20 of the highest-paying construction jobs
  1. Concrete laborer. ...
  2. Handyman. ...
  3. Solar installer. ...
  4. Equipment operator. ...
  5. Brickmason. ...
  6. HVAC installer. ...
  7. HVAC technician. ...
  8. Steamfitter.

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