Infrastructure stocks present a unique opportunity for investors to capitalize on the growth of the U.S. economy. With governments and the private sector investing billions in modern infrastructure expansion, there are a number of companies set to be the major beneficiaries.
The largest tailwind going into the end of the decade is the Biden administration’s recent bi-partisan infrastructure bill. This groundbreaking deal will rebuild and modernize America’s roads, bridges, railways, networks and energy infrastructure. Furthermore, the $1.2 trillion infrastructure deal will create 1.5 million new jobs per year over the next 7 years. With interest rates anticipated to fall going into 2025, these standout companies are in a unique position to expand their revenue, earnings and cash flow.
Now, let’s discover the top infrastructure stocks to put on your buy list for August 2024!
Eaton (ETN)
Eaton (NYSE:ETN), a diversified power management company, stands as one of the best infrastructure stocks to buy in August. After an incredible start to 2024, the company continued to build on its momentum.
Eaton’s infrastructure products are strategically positioned to benefit from the increased demand for green energy solutions. The company’s specialization in electrical, hydraulic and industrial control systems are key components to power modern infrastructure. These markets are growing rapidly, and Eaton’s backlog growth reflects the strong demand.
In the 2024 fiscal year, Eaton expanded into new markets with the acquisition of U.K.-based Exertherm. By the same token, the electrical segment in America is growing by double digits, and the new addition strengthened key markets like data centers. In the second quarter, revenue increased 8% year-over-year (YOY) to $6.35 billion. Additionally, net earnings rose 33% YOY to $993 million, including record segment margins up 210 basis points to 23.7%. With raised full-year guidance for the second time, investors should keep a close eye going into the end of the year.
Emcor Group (EME)
Emcor Group (NYSE:EME), a leading company in mechanical and electrical construction, is another company with tremendous growth potential. The company’s services are integral to modern infrastructure development, which aligns well with the LEED global green building standard.
Emcor Group is currently executing on all cylinders in 2024 after coming off a record year in revenue, earnings and free cash flow. Its backlog is also growing handsomely, driven by the strong demand for large infrastructure projects in building and industrial service segments. The increasingly challenging macroeconomic environment has not affected the company’s outlook in the slightest. Additionally, management has continued to issue strong forward guidance, with its remaining performance obligations sitting near record highs.
In its latest quarterly results, revenue increased 20% YOY to $3.67 billion. Net earnings swelled 76% YOY to $248 million, with its electrical and mechanical construction segments reporting record operating income and margin. Furthermore, the remaining performance obligations of $9 billion instill significant confidence in the business moving forward. This makes EME stock one of the top infrastructure stocks to watch in 2024.
Sterling Infrastructure (STRL)
Sterling Infrastructure (NASDAQ:STRL), an American company that specializes in e-infrastructure, transportation and building solutions is the final pick on the list. Its focus on critical infrastructure projects as a part of the bipartisan infrastructure deal makes it a noteworthy candidate with incredible growth potential.
Sterling Infrastructure is a much smaller company than its counterparts but has become an emerging player since the 2020 COVID-19 pandemic. The company has seen a substantial increase in revenue, earnings and free cash flow, which has translated to robust share price gains.
Over the last 5 years, the stock has returned 854% to shareholders, as compared to the S&P 500’s 84%. Despite this unprecedented surge, the stock still looks cheap at the current levels. That is due to its ongoing margin expansion and backlog growth, driven by data center demand and artificial intelligence. In the second quarter, revenue increased 12% YOY to $583 million. Additionally, net earnings rose 31% to $52 million, or $1.67 per share. After a strong first half of the year, CEO Joe Cutillo raised the company’s revenue, net earnings and EBITDA guidance for FY24.
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.
