Now might be the greatest time ever to consider which construction stocks to buy. As we move into the second half of 2024, increased urbanization, coupled with rising demand for sustainable and resilient infrastructure continues to spur a global construction boom.
Investors currently have a unique opportunity, given the increased demand for more energy efficient and sustainability led infrastructure projects. Simultaneously, they can capitalize on the upside for both infrastructure development and renewable energy. The stocks discussed below provide the necessary tools and building services to design and maintain a system that can help preserve the earth’s future.
Given these positive developments, the potential for growth is enormous. It can also contribute to a gradual expansion in companies revenues, earnings, and free cash flow. Moreover, lower interest rates in the coming years will significantly reduce borrowing costs and fuel investment and growth through 2025. If you’re an investor with a long-term mindset, these construction stocks are certainly up your alley.
Now, let’s discover the top 3 construction stocks on track to double or more by 2028!
Caterpillar (CAT)
Caterpillar (NYSE:CAT) stands out as one of the top construction stocks to buy in 2024. As the largest construction equipment manufacturer in the world, Caterpillar will play a key role in meeting the demands of global infrastructure investment over the next decade.
Caterpillar is synonymous when it comes to construction projects. Its iconic yellow heavy machinery includes a product line of bulldozers, excavators, engines, generators, and moto graders. While these are only some of its products, they remain integral to meet the needs of various infrastructure development.
However, what truly makes the company stand out is its incredible financial performance and history of returning value to shareholders. Despite navigating a tougher interest rate environment over the last 18 months, Caterpillar delivered record revenue, earnings, and free cash flow in 2023. In FY23, revenue increased 23% year over year to $67.1 billion. Additionally, earnings per share (EPS) rose 59% YoY, with free cash flow hitting a record $10.57 billion. With a recent 8% hike in its dividend to $1.41 per share, CAT remains well positioned to capitalize on the opportunities in 2024 and beyond.
Trane Technologies (TT)
Trane Technologies (NYSE:TT) is another construction stock that offers tremendous growth potential. The company’s focus on climate innovation and sustainability in heating, ventilation, and air conditioning (HVAC) systems perfectly aligns with modern construction development.
Trane Technologies has extensive experience in the industry dating back more than 150 years. After forming through a series of mergers and spin-offs, Trane has led its industry in sustainability practices. Secondly, this created extremely positive outcomes for its financial performance, company culture, and operations. After delivering record revenue, earnings, and free cash flow in 2023, its focus on high growth verticals contributed to impressive backlog growth. In Q1 FY24, revenue increased 15% year over year to $4.22 billion. Additionally, net earnings swelled 42% YoY to $436.3 million, with its adjusted EBITDA margin up 200 basis points. Its also backlog grew 10% YoY to $7.7 billion, with notable strength in the U.S. commercial HVAC segment signaling further growth ahead.
Emcor Group (EME)
Emcor Group (NYSE:EME) is a diversified construction and industrial facilities services company with an impeccable track record of performance and growth. Its broad range of service offerings, which include mechanical and electrical construction, energy infrastructure, and facilities management, makes it a versatile player in the industry.
Emcor Group is a very compelling company to keep a close eye on in 2024. What makes it stand out amongst its peers is that its services appeal to a wide range of companies in emerging industries. This includes high growth sectors from renewable energy projects to data centers for companies looking to capitalize on the AI revolution. Demand for construction and mechanical services in the U.S. has been robust, driving significant increases in revenue, operating income and operating margins. Furthermore, remaining performance obligations are currently at a record high. In the first quarter, revenue increased 19% YoY to $3.43 billion. Operating income hit $260 million, with remaining performance obligations up 16% to a record $9.18 billion. With strong guidance for FY24, EME is among the top construction stocks on track to double by 2028.
On the date of publication, Terel Miles 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
