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Top Construction & Engineering Stocks to Buy in 2019

Melisa R. H. Posted On October 31, 2019
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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
Bird Construction Income Fund (BDT-T) — Stockchase

Construction and industrials have had a tough share price environment. He owns ARE instead, for its more stable public sector exposure. Likes the space broadly. How can companies pass through inflation? Pandemic labour shortages are, hopefully, in the rearview mirror. See his Top Picks.

stockchase.com 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
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.

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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
Stuart Olson Inc (SOX-T) — Stockchase

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.

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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
Stantec Inc (STN-T) — Stockchase

Data back to 1995 shows valuation high is EBV 5. It went there, and now it's correcting. Model price of $51.21, so still an almost 10% overvaluation today. When it bottoms, it will bottom around $40. Industrials don't do well in a recession.

stockchase.com 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
Aecon Group Inc (ARE-T) — Stockchase

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. They reported a loss of $0.29 vs the expected $0.3. Revenues were up 31% compared to last year at $986 million. Backlog of $6.4B was up nicely from $5.9 a year ago. Saw some good contracts and expansion. Results are fine but cash flows were…

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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
WSP Global Inc. (WSP-T) — Stockchase

She's adding at these levels. WSP has executed well. They have fully integrated an acquisition from a few years ago and bought another company, this one in the environmental side. They always garner the premium multiple vs. other engineering companies. She likes WSP for being in consulting and services, not construction. Shares got ahead of…

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

Large projects might be harder to finance with interest rates shooting up. The group's in a good position to do well over the next number of years. Has come back from its troubled days. Likes exposure to the area, but this one is more expensive than peers.

stockchase.com 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
DIRTT Environmental Solutions (DRT-T) — Stockchase

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)

stockchase.com 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
Mastec Inc (MTZ-N) — Stockchase

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…

stockchase.com 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
Quanta Services (PWR-N) — Stockchase

Believes power companies will benefit in the near, to long term. Charging stations for electric cars will be in high demand going forward. Owning companies that service electric vehicles is better than trying to pick particular car company.

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

An infrastructure company and will benefit from the US infrastructure bill. (Analysts’ price target is $160.38)

stockchase.com 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
Fluor Corp. (FLR-N) — Stockchase

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,…

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