Build your future: Top construction stocks to buy in 2024
The world is constantly evolving, and the infrastructure that underpins our lives needs to keep pace. Construction companies are the driving force behind this progress, building the homes, offices, and transportation networks that shape our communities. But beyond the physical structures, these companies offer a compelling opportunity for investors seeking stability and growth.
Investing in top construction stocks can provide exposure to a sector with consistent demand, fueled by urbanization, infrastructure upgrades, and a growing global population. These leading companies are not just building the future – they're innovating with sustainable practices and cutting-edge technologies. From established giants like Caterpillar to niche specialists like Quanta Services, the construction sector boasts a diverse landscape of investment opportunities.
Curious to discover the hidden gems leading the charge in construction innovation? Read on to explore our top picks for best construction stocks to buy in 2024! Unlock the secrets to building a secure and profitable portfolio – your future starts here.
Roboforex R-Trader gives you access to over 10,000 stocks, ETFs, commodities, and crypto. All of the stocks mentioned in this article are available for purchase there.
Before we dive into each company, let`s take a look at how your investment would have performed if you had invested in top 10 stocks mentioned in this article 5 years ago.
Now, let`s take a closer look at each of the companies:
Builders FirstSource (BLDR)
In the bustling realm of construction supplies, where lumber whispers and concrete roars, Builders FirstSource reigns supreme. This building materials and services titan isn't just stocking shelves and delivering drywall; it's orchestrating a symphony of supply chain expertise and customer focus, building the structures that shape our communities. But can this construction maestro translate its industry leadership into rewarding returns for your portfolio? Let's explore the hidden factors propelling Builders FirstSource's rise, alongside the potential cracks to consider before joining this building expedition.
Builders FirstSource financial statements
Analysts recommendation: 1.69
Financial Health
- Return on assets (ROA): 13.54%
- Return on equity (ROE): 30.49%
- Return on investment (ROI): 16.1%
Profitability
- Gross margin: 34.73%
- Operating margin: 12.18%
- Net profit margin: 8.57%
Growth
- EPS (past 5 years): 46.65%
- EPS (current): 11.68
- EPS estimate (next quarter): 3.05
- EPS growth (this year): -14.69%
- EPS growth (next year): 10.89%
- EPS growth (next 5 years): -1.9%
- EPS growth (quarter-over-quarter): -13.02%
- Sales growth (past 5 years): 26.74%
- Sales growth (quarter-over-quarter): 0.21%
💡 Why invest in Builders FirstSource?
Builders FirstSource's robust profile makes it a tempting pick for investors seeking exposure to the ever-evolving construction and building materials sectors. Here's what fuels its formidable construction toolbox:
- Industry Champion: Builders FirstSource boasts the largest presence in the U.S. building materials market, serving new residential construction, repair and remodeling professionals, and non-residential contractors. This leadership in distribution translates to consistent customer relationships and predictable revenue streams, providing a strong foundation for future growth.
- Beyond the Basics: Recognizing the diverse needs of modern builders, Builders FirstSource expands its offerings, developing expertise in prefabricated components, millwork solutions, and value-added services like design assistance and project management. This strategic diversification mitigates risk and unlocks diverse avenues for growth beyond traditional building materials.
- Customer Centric Maestro: Builders FirstSource thrives on its commitment to customer satisfaction, investing in digital tools and personalized service offerings. This customer-centric approach builds loyalty and drives repeat business, contributing to long-term revenue growth.
- Geographic Symphony: With over 550 locations across 40 U.S. states, Builders FirstSource caters to diverse construction needs nationwide and unlocks regional growth potential. This extensive reach provides access to expanding markets and mitigates localized economic fluctuations.
🐌 Key considerations before investing in Builders FirstSource
While Builders FirstSource navigates the construction maze with its diverse offerings and customer focus, there are some potential roadblocks to consider before joining this high-stakes journey:
- Valuation Concerns: Like many established building materials companies, BLDR's stock can be volatile, and the current price might reflect expectations of future housing market trends, interest rate fluctuations, and overall economic conditions. A cautious approach with a patient, long-term perspective is wise.
- Economic Jitters: Global economic downturns can impact housing starts and renovation projects, potentially hitting Builders FirstSource's sales and profitability. Close monitoring of economic trends and their impact on the construction sector is crucial.
- Competition Intensifies: Smaller regional players and online building materials suppliers are vying for market share, challenging Builders FirstSource's dominant position. Stay informed about industry trends and how Builders FirstSource plans to maintain its competitive edge.
- Material Mania: Fluctuations in lumber and other building material prices can impact profitability and project costs. Monitoring commodity prices and Builders FirstSource's hedging strategies is important.
Final thoughts on Builders FirstSource
Builders FirstSource's industry leadership, diversified offerings, customer focus, and geographic reach paint a potentially promising picture for long-term investors seeking exposure to the dynamic construction and building materials sectors. However, the volatile nature of the stock, economic sensitivity, rising competition, and material price fluctuations warrant a measured approach. Thorough research, analysis of Builders FirstSource's future plans and the construction landscape, and a clear understanding of your risk tolerance are crucial before joining this building expedition. Remember, navigating the intricate terrain of building materials stocks requires both a discerning eye for industry trends and a balanced perspective on potential challenges. Choose wisely, and your portfolio might just find itself building a strong foundation alongside the success story of Builders FirstSource.
Sterling Infrastructure Inc. (STRL)
Sterling Infrastructure Inc. isn't your typical construction company. Founded in 1955, this Houston-based leader goes beyond bricks and mortar. They specialize in the heavy civil construction and rehabilitation projects that form the invisible foundation of a healthy economy. Imagine them as the quiet but crucial team behind the scenes, building the highways, bridges, airports, and data centers that keep our nation moving and connected.
Sterling Infrastructure Inc. financial statements
Analysts recommendation: 2
Financial Health
- Return on assets (ROA): 9.24%
- Return on equity (ROE): 26.34%
- Return on investment (ROI): 15.17%
Profitability
- Gross margin: 16.78%
- Operating margin: 10.75%
- Net profit margin: 7.47%
Growth
- EPS (past 5 years): 36.83%
- EPS (current): 4.81
- EPS estimate (next quarter): 1.45
- EPS growth (this year): 17.67%
- EPS growth (next year): 9.51%
- EPS growth (next 5 years): 11%
- EPS growth (quarter-over-quarter): 56%
- Sales growth (past 5 years): 14.19%
- Sales growth (quarter-over-quarter): 9.11%
💡 Why invest in Sterling Infrastructure Inc.?
Sterling Infrastructure's market leadership, diversified service portfolio, and focus on sustainability make them an attractive prospect for investors seeking exposure to the essential infrastructure sector:
- Market Leader: Sterling boasts a dominant market share in heavy civil construction, offering a proven track record and expertise in building critical infrastructure.
- Diversified Services: Their three segments cater to a wide range of infrastructure needs, mitigating risk by not relying solely on a single market.
- Sustainability Focus: Their commitment to environmentally friendly practices aligns with the growing focus on sustainable development within the construction industry.
- Growth Potential: The continued need for infrastructure investment, particularly in transportation and data centers, positions Sterling for potential future growth.
🐌 Key considerations before investing in Sterling Infrastructure Inc.
The infrastructure sector presents challenges:
- Public Funding Reliance: Infrastructure projects often rely on government funding, subject to budgetary constraints and political cycles.
- Competition: Sterling faces competition from other established construction companies vying for projects.
- Project Timelines: Large-scale projects can take years to complete, impacting cash flow and profitability.
- Economic Sensitivity: Economic slowdowns can lead to decreased infrastructure spending, impacting project opportunities.
Final thoughts on Sterling Infrastructure Inc.
Sterling Infrastructure's strong position, diverse portfolio, and focus on sustainability paint a promising picture for long-term investors. However, the reliance on public funding, competition, long project timelines, and economic sensitivity necessitate a cautious approach. Research Sterling's project pipeline and strategies for navigating challenges. Understand your risk tolerance before investing. Remember, a strong infrastructure is the foundation for a thriving economy. Sterling Infrastructure's ability to deliver these vital projects will be key to its continued success. Choose wisely, and your portfolio might find itself well-positioned alongside the Sterling Infrastructure story.
Quanta Services (PWR)
In the vibrant realm where steel sings and concrete conducts power, Quanta Services reigns supreme. This engineering and construction titan isn't just welding pipelines and erecting towers; it's orchestrating a symphony of skilled labor and cutting-edge technology, building the vital infrastructure that connects modern life. But can this infrastructure maestro translate its construction prowess into rewarding returns for your portfolio? Let's explore the hidden currents propelling Quanta's rise, alongside the potential potholes to consider before joining this infrastructure odyssey.
Quanta Services financial statements
Analysts recommendation: 1.73
Financial Health
- Return on assets (ROA): 5.19%
- Return on equity (ROE): 12.94%
- Return on investment (ROI): 7.89%
Profitability
- Gross margin: 12.54%
- Operating margin: 5.38%
- Net profit margin: 3.57%
Growth
- EPS (past 5 years): 21.34%
- EPS (current): 5.16
- EPS estimate (next quarter): 1.93
- EPS growth (this year): 17.81%
- EPS growth (next year): 14.98%
- EPS growth (next 5 years): 17.22%
- EPS growth (quarter-over-quarter): 23.94%
- Sales growth (past 5 years): 14.12%
- Sales growth (quarter-over-quarter): 13.62%
💡 Why invest in Quanta Services?
Quanta's robust profile makes it a tempting pick for investors seeking exposure to the ever-evolving infrastructure and energy sectors. Here's what fuels its formidable construction toolbox:
- Construction Colossus: Quanta boasts the largest skilled-labor force in North America, uniting over 200 operating companies to tackle complex infrastructure projects across utilities, renewables, communications, and pipelines. This leadership in infrastructure solutions translates to consistent contracts and predictable revenue streams, laying a solid foundation for future growth.
- Beyond the Basics: Recognizing the diverse needs of modern infrastructure, Quanta expands its offerings, developing expertise in renewable energy solutions like solar and wind power, as well as digital infrastructure for communication networks. This strategic diversification mitigates risk and unlocks diverse avenues for growth beyond traditional construction.
- Innovation Alchemist: From drone-powered inspections to 3D modeling for project planning, Quanta invests heavily in R&D, striving to stay ahead of the curve with solutions that redefine construction efficiency and safety. This commitment to innovation ensures its offerings remain relevant and future-proofs its operations.
- Global Growth Potential: With operations spanning the United States, Canada, Australia, and select international markets, Quanta caters to diverse infrastructure needs worldwide. This global reach provides access to emerging markets with growing demand for infrastructure development, further bolstering its future prospects.
🐌 Key considerations before investing in Quanta Services
While Quanta navigates the infrastructure maze with its skilled workforce and diverse offerings, there are some potential roadblocks to consider before joining this high-stakes journey:
- Valuation Concerns: Like many established construction companies, PWR's stock can be volatile, and the current price might reflect expectations of future project wins, economic conditions, and overall market trends. A cautious approach with a patient, long-term perspective is wise.
- Economic Jitters: Global economic downturns can impact government spending on infrastructure projects, potentially hitting Quanta's order book and profitability. Close monitoring of economic trends and their impact on the construction sector is crucial.
- Competition Intensifies: Larger established players and agile start-ups are vying for market share in various segments, challenging Quanta's competitive edge. Stay informed about industry trends and how Quanta plans to maintain its leadership position.
- Environmental Headwinds: Evolving environmental regulations and concerns about sustainability can impact project approvals and costs, potentially affecting Quanta's operations and profitability. Monitoring regulatory developments and Quanta's adaptation strategies is important.
Final thoughts on Quanta Services
Quanta's skilled workforce, diversified offerings, commitment to innovation, and global reach paint a potentially promising picture for long-term investors seeking exposure to the dynamic infrastructure and energy sectors. However, the volatile nature of the stock, economic sensitivity, rising competition, and potential environmental challenges warrant a measured approach. Thorough research, analysis of Quanta's future plans and the infrastructure landscape, and a clear understanding of your risk tolerance are crucial before joining this construction expedition. Remember, navigating the intricate terrain of infrastructure stocks requires both a discerning eye for innovative solutions and a balanced perspective on potential challenges. Choose wisely, and your portfolio might just find itself building a strong foundation alongside the success story of Quanta Services.
Lennar Corporation (LEN)
Lennar Corporation is a household name in the world of homebuilding. Founded in 1954 by Gene Fisher and Leonard Miller, this Miami, Florida-based company has transformed from a regional builder to the second-largest home construction company in the United States based on the number of homes sold (as of 2023). Lennar offers a diverse portfolio of communities and floorplans, catering to a wide range of homebuyers across the nation. Lennar's success lies in their focus on efficiency and affordability. They streamline their construction process, leveraging technology and prefabricated components to deliver quality homes at competitive prices. This focus on cost-effectiveness, coupled with a diverse range of communities and floorplans catering to first-time homebuyers, young families, and move-up buyers, positions Lennar as a major player in the American housing market. While single-family homes remain their core business, Lennar recognizes the evolving housing landscape. They are actively expanding into other segments, including multifamily housing developments aimed at renters and active adults. Additionally, Lennar offers financial services through their mortgage lending arm, streamlining the homebuying process for their customers. This diversification positions them to cater to a broader range of housing needs and market dynamics.
Lennar Corporation financial statements
Analysts recommendation: 2
Financial Health
- Return on assets (ROA): 10.63%
- Return on equity (ROE): 15.71%
- Return on investment (ROI): 13.58%
Profitability
- Gross margin: 24.07%
- Operating margin: 15.65%
- Net profit margin: 11.43%
Growth
- EPS (past 5 years): 20.35%
- EPS (current): 14.28
- EPS estimate (next quarter): 3.23
- EPS growth (this year): 6.06%
- EPS growth (next year): 11.5%
- EPS growth (next 5 years): 0.6%
- EPS growth (quarter-over-quarter): 24.97%
- Sales growth (past 5 years): 11.17%
- Sales growth (quarter-over-quarter): 12.5%
💡 Why invest in Lennar Corporation?
Several key factors make Lennar Corporation an attractive prospect for investors seeking exposure to the cyclical housing market:
- Strong Market Position: Lennar's position as the second-largest homebuilder in the US ensures a steady stream of revenue and market influence.
- Focus on Affordability and Efficiency: Their commitment to cost-effective construction methods positions them well to compete in a market where affordability is a key concern for homebuyers.
- Diverse Product Portfolio: Lennar caters to a wide range of homebuyers with various communities, floorplans, and housing options beyond single-family homes.
- Financial Services Integration: Their mortgage lending arm simplifies the homebuying process for Lennar customers, potentially increasing sales conversions.
🐌 Key considerations before investing in Lennar Corporation
While Lennar's strong market position, focus on affordability, and diverse product portfolio are strengths, there are challenges to consider specific to the housing market:
- Vulnerability to Economic Downturns: Economic slowdowns can lead to decreased demand for housing, impacting Lennar's sales and profitability.
- Rising Interest Rates: Increases in interest rates can make mortgages more expensive, potentially dampening homebuyer demand.
- Availability and Cost of Land and Labor: The availability and affordability of land and skilled labor can impact Lennar's construction costs and project timelines.
- Regulatory Environment: The housing market is subject to various regulations, and changes in building codes or permitting processes can affect Lennar's operations.
Final thoughts on Lennar Corporation
Lennar Corporation's strong market position, focus on affordability, and diverse product portfolio paint a potentially promising picture for long-term investors seeking exposure to the housing market. However, the cyclical nature of housing, rising interest rates, availability of resources, and the regulatory environment necessitate a cautious approach. Thorough research, analysis of housing market trends, Lennar's strategies for navigating these challenges, and a clear understanding of your risk tolerance are crucial before adding Lennar Corporation to your portfolio. Remember, the American dream of homeownership is a powerful economic driver. Lennar's ability to deliver quality, affordable housing options will be key to its continued success. Choose wisely, and your portfolio might find itself well-positioned alongside the Lennar story.
AECOM (ACM)
AECOM isn't a household name for most, but when it comes to shaping the physical world around us, it's a titan. This multinational engineering giant isn't known for sleek gadgets or cutting-edge consumer products; its expertise lies in the very foundation of our societies – designing, building, and managing essential infrastructure projects. From towering skyscrapers and sprawling transportation networks to sustainable water systems and resilient energy grids, AECOM's fingerprints are on the infrastructure that underpins modern life. But can this engineering behemoth translate its global reach and established reputation into rewarding returns for your investment portfolio? Let's embark on a virtual construction project and explore the forces propelling AECOM's growth while acknowledging the potential roadblocks that might lie ahead before joining this infrastructure development expedition.
AECOM financial statements
Analysts recommendation: 1.54
Financial Health
- Return on assets (ROA): 1.02%
- Return on equity (ROE): 4.86%
- Return on investment (ROI): -0.29%
Profitability
- Gross margin: 6.56%
- Operating margin: 5.49%
- Net profit margin: -0.09%
Growth
- EPS (past 5 years): -14.03%
- EPS (current): -0.09
- EPS estimate (next quarter): 1.14
- EPS growth (this year): 20.59%
- EPS growth (next year): 12.14%
- EPS growth (next 5 years): 14.85%
- EPS growth (quarter-over-quarter): -98.64%
- Sales growth (past 5 years): -5.32%
- Sales growth (quarter-over-quarter): 13%
💡 Why invest in AECOM?
Several key factors make AECOM an attractive prospect for investors seeking exposure to the ever-evolving infrastructure sector:
- Global Leader in Infrastructure Engineering: AECOM boasts the number three position worldwide in the engineering and construction industry, ensuring a significant share of global infrastructure projects. This dominant position translates into consistent revenue streams.
- Diversified Portfolio: AECOM doesn't limit itself to a single specialty. It offers a comprehensive suite of engineering, design, and consulting services across transportation, buildings, water, energy, and the environment. This diversification mitigates risk by catering to various infrastructure development needs.
- Focus on Sustainability and Resilience: Recognizing the growing importance of sustainable practices and climate change adaptation, AECOM prioritizes designing infrastructure projects with a focus on environmental responsibility and resilience against future challenges.
- Experience and Expertise: With a long and successful history dating back to the 1990s, AECOM boasts a team of seasoned engineers and project managers. This deep well of experience allows them to tackle complex projects and deliver successful outcomes for clients.
🐌 Key considerations before investing in AECOM
While AECOM navigates the dynamic infrastructure landscape with its global footprint, diversified services, and commitment to sustainability, there are some challenges to consider before signing the construction contract on this investment opportunity:
- Cyclicality of the Industry: The demand for infrastructure projects is often tied to economic conditions. During economic downturns, government spending on infrastructure might decrease, impacting AECOM's project opportunities and profitability. Monitoring economic indicators is crucial for understanding potential market fluctuations.
- Competition Heats Up: The engineering and construction sector is a competitive landscape, with established players and emerging companies vying for contracts. Staying informed about industry trends and how AECOM plans to maintain its competitive edge is vital.
- Project Execution Risks: Large-scale infrastructure projects are inherently complex and can be susceptible to delays, cost overruns, and unforeseen challenges. Assessing AECOM's project management expertise and risk mitigation strategies is key.
- Geopolitical Uncertainty: Global political and economic instability can disrupt or delay infrastructure projects, impacting AECOM's international operations. Analyzing the company's geographic diversification and risk management strategies in volatile regions is essential.
Final thoughts on AECOM
AECOM's global presence, diversified infrastructure services, commitment to sustainability, and experienced workforce paint a potentially promising picture for long-term investors seeking exposure to the essential infrastructure sector. However, the cyclical nature of the industry, rising competition, project execution risks, and geopolitical uncertainty necessitate a cautious approach. Thorough research, analysis of AECOM's future plans and the global infrastructure landscape, and a clear understanding of your risk tolerance are crucial before joining this infrastructure development expedition. Remember, navigating the intricate terrain of engineering and construction stocks requires both a discerning eye for market trends and a balanced perspective on potential challenges. Choose wisely, and your portfolio might just find itself building strong foundations alongside the success story of AECOM.
Larsen & Toubro (LT)
Larsen & Toubro, or L&T as it's commonly known, is a household name in India. Founded in 1946, this Mumbai-based conglomerate has grown into a true industrial giant, with a presence across various sectors that shape the Indian economy. Imagine L&T as the invisible hand behind India's infrastructure boom, from constructing airports and metros to building factories and power plants. They're not just builders; they're engineers, technologists, and innovators, driving India's industrial development. L&T's reach extends far beyond traditional construction. Their diverse business segments encompass everything from infrastructure development (transportation, power, water) to engineering and manufacturing (hydrocarbon, heavy machinery, defense). They even offer financial services through their subsidiary, L&T Finance. This diversification positions L&T as a one-stop shop for infrastructure and industrial projects, catering to a wide range of client needs. L&T prioritizes innovation across its businesses. They invest heavily in research and development, constantly seeking ways to improve their construction methods, engineering processes, and technological solutions. This commitment to innovation allows L&T to stay at the forefront of the Indian industrial landscape and tackle complex projects effectively. Furthermore, L&T actively participates in India's "Make in India" initiative, promoting self-reliance and domestic manufacturing capabilities.
💡 Why invest in Larsen & Toubro?
Several key factors make L&T an attractive prospect for investors seeking exposure to the growing Indian economy:
- Dominant Player in Indian Infrastructure: L&T boasts a leadership position in Indian infrastructure development, with a proven track record of delivering complex projects across various sectors.
- Diversified Business Portfolio: Their presence in construction, engineering, manufacturing, and financial services mitigates risk from fluctuations in any single industry.
- Focus on Innovation & Technology: L&T's commitment to R&D ensures they stay ahead of the curve and offer cutting-edge solutions for India's evolving needs.
- Alignment with Make in India Initiative: L&T's focus on domestic manufacturing aligns with the Indian government's economic development goals, potentially positioning them for future support.
🐌 Key considerations before investing in Larsen & Toubro
While L&T's leadership position, diversification, and focus on innovation are strengths, there are challenges to consider specific to the company and the Indian market:
- Reliance on Government Spending: A significant portion of L&T's revenue comes from government contracts, which can be impacted by political cycles and budgetary constraints.
- Competition in the Indian Infrastructure Market: The Indian infrastructure market is competitive, with both domestic and international players vying for projects.
- Economic Sensitivity: L&T's performance is tied to the overall health of the Indian economy, which can be susceptible to global economic slowdowns.
- Regulatory Environment: The Indian regulatory landscape can be complex and subject to change, requiring ongoing compliance efforts.
Final thoughts on Larsen & Toubro
Larsen & Toubro's leadership position, diversified business portfolio, and focus on innovation paint a potentially promising picture for long-term investors seeking exposure to the Indian growth story. However, the reliance on government spending, competition in the market, economic sensitivity, and the evolving regulatory environment necessitate a cautious approach. Thorough research, analysis of L&T's plans for navigating these challenges, and a clear understanding of your risk tolerance are crucial before adding Larsen & Toubro to your portfolio. Remember, India's infrastructure development is vital for its economic future, and L&T's ability to maintain its leadership position will depend on its agility, continued focus on innovation, and ability to adapt to the dynamic Indian market. Choose wisely, and your portfolio might find itself well-built alongside the success story of Larsen & Toubro.