Top Construction & Engineering Stocks to Buy in 2019
Construction and engineering stocks include companies that build residential and non-residential building construction, contract services and other building, material and infrastructure related companies. Although many analysts believe the global economy is cooling, there has been a secular trend in growth due to increasing economic activities. Office buildings, retail space and housing are at the core of building and engineering companies. With lower interest rates, there is a stimulus to borrow in order to build.
Here are the top construction and engineering companies to consider:
⚒🧱 Construction & Engineering
Bird Construction Income Fund (BDT-T)
The company and management are well liked by analysts. They are mostly focused in the West. The stock price has been under pressure due to low margins and some operational hiccups in the last year. However, this could be a turnaround story.
(A Top Pick Nov 11/21, Down 10.7%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with BDT has triggered its stop at $9.50. To remain disciplined, we recommend covering the position at this time. Combined with our previous buy recommendation, this results in a break even net investment return.
Boyuan Construction Group Inc (BOY-T)
A small cap construction company. It is engaged in residential and commercial building construction as well as municipal infrastructure projects in China. Their book value is far above their current stock price.
This is a funny one. The book value is $4.80. They started a few more projects in China. It is not for him, but he can see why somebody would like it.
Stuart Olson Inc (SOX-T)
The company has disappointed with their fixed contracts going over cost. They have been traditionally based in the West and the economy has slowed down. However, analysts believe it should be worth more and it could see the price take off.
In the construction space his favorite is WSP Global. SOX is similar and he thinks they may be a value trap as there is some concerns about the dividend, the strength of the balance sheet and their ties to the energy sector.
Stantec Inc (STN-T)
An international professional design and consulting industry company. They are based in Edmonton. They recently sold off their construction side of the business where margins were poorer. The company is focusing on their engineering segment.
They went through a time when the multiple was downgraded until they decided to get out of set contracts. With infrastructure spending go up there are a lot of good tailwinds for them. There is a lot of stimulus going into their industry and its fragmented there now, which should create good opportunities.
Aecon Group Inc (ARE-T)
The largest publicly traded Canadian construction company. They have three core segments which are infrastructure, energy and mining. It’s been cited a top pick by many analysts and their chart continues to show a strong uptrend.
Likes infrastructure sector especially with USA "build back better" program. Margins under pressure with Aecon. Believes there are better infrastructure investments out there.
WSP Global Inc. (WSP-T)
A management and consultancy service for buildings. They have been a beneficiary of the SNC Lavalin scandal and their price has gone up. They largely grow by acquisition.
Continues to like it. It's doing well. Buy this only on pullbacks at $170. Likes this space and WSP is well-positioned. Strong balance sheet. They have room to make more strategic buys. They grow organically and through M&A.
SNC-Lavalin Group Inc. (SNC-T)
The scandal ridden company has put pressure on the company’s stock price. There is threat of class-action litigation and official prosecution. The underlying value is more than the current stock price.
A low multiple stock compared to its peers. They are going through a restructuring that is proving more challenging than expected. She thinks it will take another 4-6 quarters to really get things going. Beyond that you need a good track record on execution.
DIRTT Environmental Solutions (DRT-T)
A company that provides technology used in construction and design. Their main activity is in healthcare and office design. Jim Huang has chosen this company as his Top Pick twice recently.
Customized, prefabricated environmental office interior solutions. High net cash position. Significant upside because of their flexible business model. Surge in office reconfiguration taking place across North America. Top management. No dividend. (Analysts’ price target is $3.46)
Mastec Inc (MTZ-N)
An American multinational infrastructure company. A leader in pipelines and wireless network towers. With the growth of 5G, the company is expected to grow.
MTZ vs. PWR Construction engineering services in the US. Rallied on the back of the infrastructure bill. He prefers Quanta Services, with its better quality management team, better track record, and lower risk areas of operation. PWR has better leverage to the bill and US growth. MTZ is not cheap, so probably won't be a…
Quanta Services (PWR-N)
An engineering, procurement and construction services company in the energy sector. The management team is very effective and pays a nice dividend.
PWR vs. MTZ MTZ does construction engineering services in the US. Rallied on the back of the infrastructure bill. He prefers Quanta Services, with its better quality management team, better track record, and lower risk areas of operation. PWR has better leverage to the bill and US growth. MTZ is not cheap, so probably won't…
Jacobs Engineering Group Inc. (JEC-N)
The largest engineering company in the S&P 500. The trend for public construction spending is up. Jon Vialoux chose it as a top pick at the beginning of October.
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%.…
Fluor Corp. (FLR-N)
A multinational engineering and construction firm. The company experienced multiple problems in 2018 and the stock sold off. Analysts still believe the business is good, though management has been ineffective in a couple projects.
re: Biden infrastrcture plan FLR would benefit from Biden's plan, but FLR wouldn't be his first choice. They've had 3 CEOs in the last 2 years and were the subject of an SEC investigation and had to delay their financial statements. They're getting rid of Stock, a subsidiary. Lots of moving parts here. United Rentals,…