Opinions Gordon Reid
Jacobs Engineering Group Inc.JECTOP PICKSep 22, 2023
Gordon ReidOwned
$85.84
Stock price when the opinion was issued
$85.83
As of Dec 09, 2019. Market Open.
contractors
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BUY
Infrastructure Bill of late 2021 money is only trickling out now
A general contractor that oversees the construction of a project and will directly benefit from the bill. Their new digital platform will help speed and accuracy of projects. Shares are barely up for the year, so this is an opportunity. There's a lot of room to run.
contractors
PAST TOP PICK
(A Top Pick May 03/22, Down 18%)
Unsure why stock price down - business is still strong.
Engineering & infrastructure business solid.
Will continue to hold.
Expecting large growth going forward.
Business growing faster than the market.
Gordon ReidOwned
contractors
BUY
Owns shares in company and believes excellent long term investment.
Infrastructure company.
Lots of unspent tax money (~1 Trillion) from US government.
Expecting demand for building to increase.
Gordon ReidOwned
contractors
PAST TOP PICK
(A Top Pick Dec 16/21, Down 9%) Is now Jacobs Solutions. Trades at 18-19x earnings. Deeply involved in the US infrastructure spend, the $1 trillion infra bill. 95% of that spend is in Jacobs' wheelhouse. Well-run and supports a PE around 19x.
Gordon ReidOwned
contractors
BUY
Washington has passed two infrastructure bill, meaning a ton of spending. So how do you play this? Jacobs is a major player in construction and engineering, not sexy and boring, but they lead in this space and can be lucrative in the coming year. Sure, government infra spending can take time and Jacobs shares fell today, which makes it an opportunity. From 2019-2021, they boasted strong, steady revenue. That's why shares rose, though it's been in a trading range in the past year. Share are up 31% over three years. The CEO is looking ahead and sees acceleration in 2023. Be patient with infrastructure spending. jacobs has a lot of overseas exposure and has been hurt by the strong USD. 2023 projected sales and earnings are 6% if the USD remains at these levels, but 10% if the USD relaxes. The latest numbers saw light a backlog, due to currency fluctuations, but the CEO says that the huge federal government spending is starting to work its way through. Trades at only 16x 2023 earnings. Will perform well even in the face of inflation.
contractors
TOP PICK
An infrastructure company and will benefit from the US infrastructure bill. (Analysts’ price target is $160.38)
Gordon ReidOwned
contractors
DON'T BUY
They help build the infrastructure, but then they leave. He prefers to own the companies that build the assets with JEC, but then collect the cashflows from the infrastructure project over the next 20-40 years. If he were going to choose one, it would be WSP, a higher quality player than JEC.
contractors
PAST TOP PICK
(A Top Pick Feb 18/21, Up 16%) The recent US infrastructure bill plays right into their business. Their backlog extends into 2023 and order books will be quite full. They're also into big data after recently buying a data analytics company; this tech will help manage traffic flow into urban areas.
Gordon ReidOwned
contractors
TOP PICK
One of the largest in the States. Infrastructure bill is almost 100% guaranteed to be enacted, so we're going to see a lot of construction over many years. Trades at 19x earnings, not excessive. Recent acquisition puts their finger in the 5G pie. Well positioned to do well in the current environment. Yield is 0.60%. (Analysts’ price target is $160.86)
Gordon ReidOwned
contractors
TOP PICK
A new position for him. Small cap. 19x earnings, good balance sheet. Debt to total capital is 22%, relatively low. Recent acquisition gives them entry into 5G. Will benefit from infrastructure build. Backlog is about 2x annual sales. Yield is 0.76%. (Analysts’ price target is $127.50)
Gordon ReidOwned
contractors
US Infrastructure Spending Bill will be good for the company.
Rumors of divestitures of smaller business units.
Excellent share price for long term investors.
Expecting consistent growth.