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 Dec 24/20, Up 28.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with BDT has achieved its objective at $10. To be disciplined, we recommend covering half the position at this time and trailing up the stop (from $6.50) to $8.25. If triggered this would all but guarantee a 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.
It's been a pretty good period to hold it as they transition more to a consulting company. It is not cheap . Hang on to it as there is a lot of infrastructure spending taking place in the world.
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.
Have seen many new highs in stocks in the same group. Will benefit from the trillion dollar infrastructure bill. Pays a 3.2% dividend yield. Cashflow has grown significantly to $110M. Very attractive 12.3x cashflow yield. Sales up 27%, cashflow up 124%. Earnings estimates were bumped up by 9%. (Analysts’ price target is $23.54)
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.
She likes their near- and long-term prospects. WSP shares have done well in the past year. They made key acquisitions in the environmental space. Good balance sheet and strong ESG score. She trimmed her position in recent months, but she still likes this. It's a well-run company in a good business.
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.
Exemplifies growth and cyclicality. Engineering design, natural resources, infrastructure, and other sectors. The economic backdrop is bright for companies like this. Governments want to do infrastructure renewals. Governance and management missteps are being worked on. (Analysts’ price target is $41.07)
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.
This will benefit if/when a US infrastructure plan really happens. Has a great balance sheet and is growing nicely, trading below 20x earnings. They recently bought a 5G infrastructure company, which is another plus.
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,…