The construction sector remains robust, fueled by significant investments in infrastructure and manufacturing. This building boom is driven by federal spending initiatives and a persistent housing shortage, which has kept demand strong and prevented a broader economic downturn. These factors underscore the complexity of economic forecasting and highlight the importance of considering multiple indicators to assess the health and trajectory of the economy. Overall, the outlook suggests continued expansion and opportunity across various sectors, boding well for the nation’s economic prosperity in the coming years.

Construction is expected to grow at a CAGR of 9.26%, reaching $21.03 trillion by 2032. This makes it exceedingly clear that investing in this industry is very profitable. The only question remains: where in the industry? Keep on reading to find out our top three picks.

Willdan Group (WLDN)

Willdan Group (NASDAQ:WLDN) is a leading construction company specializing in professional, technical and consulting services, primarily in the United States. WLDN operates in two segments: engineering/consulting and energy. It is up 25.82% YTD, showcasing impressive growth.

While the company isn’t profitable yet, losing $8.45 million in FY2023, it is expected to break even soon with increasing revenue. YoY quarterly revenue growth is at 37.50%. Analysts have set an average growth target of 28.49%, highlighting investor confidence. The profit margin is also 2.14%, well within the sector average. 

The company’s ESP is 47.37%, indicating earnings will surpass expectations, which is essential given that Q1 earnings will be released on May 2. The expansion of utility programs and solid demand in all aspects of this company’s services make revenue and profit growth inevitable. A bright 2024 forecast also sets this stock up for growth.

Institutional confidence in WLDN is relatively high, with firms such as Wedbush, Roth, etc., listing it as an “Outperform” or “Buy” stock. This, combined with a positive outlook on future demand and a diverse array of services offered under the company name, makes WLDN a buy stock.

Caterpillar Inc. (CAT)

Caterpillar Inc. (NYSE:CAT) is a construction company in California that builds various manufacturing tools, from natural gas engines to industrial turbines. The company has had national attention, whether due to its century-old existence or its aid to various humanitarian disasters, like Hurricane Katrina in 2005. CAT’s stock is currently valued around $354, growing 165%  in the past two quarters.   

Despite stagnation in the general construction industry, Caterpillar has grown, averaging 8% dividend growth over the past decade. While the pandemic rattled and caused dramatic drops in the production of many construction companies, Caterpillar recovered quickly and still found growth. Caterpillar’s greatest strength has been its ability to succeed in delivering massive projects, like the U.S. Department of Defense’s tractor plan, which saw Caterpillar deliver over $600 million in goods to the military. 

While it may seem like construction has slowed down since pre-pandemic levels to the general public, the industry has increased in both contracts and stability. Since 2021, there have been over $500 billion dollars worth of major construction projects, an increase when compared to previous years. Between 2022 and 2023, the gross output has also continued to rise, with no signs of slowing down going into the next few years. Caterpillar, an already proven giant, can continue to gain contracts and strengthen their company.

Since its founding in the early 1900s, Caterpillar has experienced nearly every stage of American prosperity and economic turmoil. It is ready to be a construction company you can depend on for the next year and the next century. 

Fluor Corp (FLR)

Fluor Corp (NYSE:FLR) is a multinational construction and engineering firm with oil and gas, government, and infrastructure expertise. It is valued at around $39, a 30% increase from last year. 

FLR’s revenue was $15,474 billion, with Revenue Growth (YoY) of 12.59%, or 115.69% more than the sector median of 5.84%. EBITDA Growth (YoY) was solid at 44.59%, 393.23% more than the sector median of 9.04%. Price / Cash Flow (TTM) was remarkable at 31.47, 138.91% more than the sector median. Overall, these metrics convey FLR’s profitability and its long- and short-term prospects regarding growth. 

FLR has recently been selected for a Global Contingency Services Multiple Award Contract III position by the United States Naval Facilities Engineering Systems Command (NAVFAC) Pacific. The contract pits the company against 5 other competitors with tasks including rebuilding infrastructure during natural disasters. If FLR emerges dominant, with speculation that it will, it will reaffirm its status as a top construction stock. In addition, the fact that it was picked shows that the government trusts Fluor to generate a positive brand image for other clients. FLR is a top construction stock, which will prove this shortly, prompting me to give it a “Buy” rating with complete confidence to see its share price appreciate. 

On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.