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

Canada Stocks

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.

Bird Construction Income Fund (BDT-T) — Stockchase

This is a tough business to be in as construction and design are low margin businesses. The last couple of quarters showed some operational hiccups. He needs to see these issues turn around before investing. He thinks there are other ways to play the infrastructure wave, such as Brookfield or SNC Lavalin.

stockchase.com

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.

Boyuan Construction Group Inc (BOY-T) — Stockchase

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.

stockchase.com

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.

Stuart Olson Inc (SOX-T) — Stockchase

He has owned this a long time. They cut the dividend by half and then eliminated it. This killed the stock price. The cut will save $14 million in cash flow. They have cut staff and they are getting hurt by events in the energy sector. They have $1.6 billion in back log and refinanced…

stockchase.com

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.

Stantec Inc (STN-T) — Stockchase

Global warming will cause more disasters and there will be a need for infrastructure. They were in the penalty box but have started turning around since the last quarter. The acquisition was written down and got burnt, but now the company has environmental and infrastructure. (Analysts’ price target is $38.41)

stockchase.com

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.

Aecon Group Inc (ARE-T) — Stockchase

Their takeover bid failed in May 2018; the Chinese weren't allowed to buy it. Last quarter, they had slightly weak numbers, but their order book has never been busier for the next 4 years, and the Liberals may spend money on infrastructure going forward. The stock has sold off, so it's worth looking at now.

stockchase.com

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.

WSP Global Inc. (WSP-T) — Stockchase

He owns this and has recommended it in the past. There are rumours there may be a large merger coming for them. He will continue to hold it from here. They have historically taken mergers in the past and tucked them in an accreative way.

stockchase.com

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.

SNC-Lavalin Group Inc. (SNC-T) — Stockchase

Doesn't qualify as a quality stock for him. True, it's recovered strongly lately after it was punished last year. It's hard to predict their earnings, so he's not comfortable owning this for a long term.

stockchase.com

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.

DIRTT Environmental Solutions (DRT-T) — Stockchase

He has their product in his office. The stock is struggling. They lowered guidance twice this year. They have a new management team in place. They are re-vamping their sales strategy. The change of management is taking more time than expected. Watch it as they try to go to a more professional organization. Turnarounds don't…

stockchase.com

U.S.Stocks

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.

Mastec Inc (MTZ-N) — Stockchase

(A Top Pick July 18/17 Up 14%). This is a leader in infrastructure for pipelines and wireless network towers. He sees 5G adding headwinds and thinks the pipeline business will renew its growth. He would still be buying here.

stockchase.com

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.

Quanta Services (PWR-N) — Stockchase

(Top Pick Aug 31/16, Up 16.91%) He has been accumulating more of this. The management team has been pretty astute at picking away at assets. There is some growth as well as the dividend.

stockchase.com

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.

Jacobs Engineering Group Inc. (JEC-N) — Stockchase

(A Top Pick Oct 03/19, Down 2%) Still decent, though hit by bad earnings recently. There could be a giant US infrastructure build next year by Washington. He's concerned that this is underperforming the market and is trading below its 200-day moving average.

stockchase.com

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.

Fluor Corp. (FLR-N) — Stockchase

(A Top Pick Sep 6/17, Up 28%) He does not like it much anymore and sold it. You have to trust the execution of management. The fact was they had an issue and said it was fixed. They had a follow up issue and then another and he felt it was out of control. It…

stockchase.com