Core Insights - Sterling Infrastructure, Inc. (STRL) shares have increased by 44.3% over the past three months, significantly outperforming the Zacks Engineering – R&D Services industry's growth of 8.9% and the broader Construction sector and S&P 500, both of which advanced by 12.2% [1] Group 1: Growth Drivers - The company is focusing on high-margin markets such as data centers, e-commerce distribution, and manufacturing facilities, which is driving momentum [2] - Strong demand in transportation projects and geographic expansion are further supporting growth [2] - Strategic acquisitions, including CEC Facilities Group, are expected to enhance service offerings and strengthen customer relationships [2][13] Group 2: Financial Performance - Sterling's gross profit margin expanded by 400 basis points to 23.3%, with adjusted EBITDA rising 35% to $126 million in the second quarter [5] - For 2025, the company projects adjusted EBITDA of $438-$453 million, an increase from the previous estimate of $410-$432 million and up from $320 million reported in 2024 [6] Group 3: Backlog and Guidance - STRL's backlog increased by 24% year-over-year to $2 billion, with E-Infrastructure backlog surging 44% to $1.2 billion [8][9] - The company raised its 2025 revenue guidance to $2.10-$2.15 billion, up from the previous range of $2.05-$2.15 billion, and adjusted diluted EPS is projected between $9.21 and $9.47, rising from $8.40-$8.90 [10] Group 4: Liquidity and Expansion - Sterling maintains a strong liquidity position with $401 million in net cash and $699.4 million in cash and equivalents as of June 30, 2025 [11] - The company is expanding into new geographies, particularly Texas, where bid activity is increasing [12] Group 5: Valuation and Analyst Outlook - STRL shares are trading at a forward P/E ratio of 30.22, a 35.3% premium to the industry average of 22.33 [14] - Despite the high valuation, analysts have revised earnings estimates upward, projecting EPS of $9.57 for 2025 and $10.98 for 2026, indicating year-over-year growth of 56.9% and 14.7%, respectively [17]

Core Idea - The article emphasizes the investment philosophy of Thomas W. Phelps, particularly his book "100 to 1 in the Stock Market," which advocates for buying exceptional companies early, holding them with discipline, and allowing compounding to generate wealth [1][4][6]. Phelps's Investment Framework - Phelps's framework focuses on identifying companies with durable advantages, such as network effects, proprietary know-how, and advantageous cost structures [8]. - The importance of verifying a large addressable market that allows for long-term compounding without hitting a wall is highlighted [8]. - Present-tense profitability is essential; Phelps preferred companies that generate cash rather than speculative ventures [8]. - The article suggests buying companies when their narratives are still forming, favoring modest valuations over those priced for perfection [8]. - A strategy of doing less is recommended, as holding onto winning investments can lead to tax deferral and reduced errors [8]. Current Investment Candidates - The article lists 25 companies that fit Phelps's criteria, categorized by how they create competitive advantages rather than by index labels [9]. - Companies in the construction and infrastructure sector, such as EMCOR Group and Quanta Services, are noted for their execution capabilities and ability to convert backlog into cash [10][11]. - Precision manufacturers like Celestica and Fabrinet are recognized for their high returns on capital and asset-light models [12]. - In network infrastructure, Arista Networks and Super Micro Computer are highlighted for their strong positions in high-speed switching and AI hardware, respectively [13]. - Companies in the materials sector, such as Martin Marietta Materials, are noted for their pricing power and local monopolies [14]. - Engineering firms like WSP Global are recognized for their expertise and customer relationships in regulated markets [15]. - Consumer brands like e.l.f. Beauty and Academy Sports are mentioned for their market share growth and operational efficiency [16]. - Specialty finance companies like FirstCash and software firms like Agilysys are noted for their cash generation and growth potential [17]. - Internationally, utilities like Sabesp and fintechs like StoneCo are highlighted for their governance and profitability improvements [18]. - UK companies like Spectris and Halma are recognized for their consistent acquisition strategies and operational excellence [19]. Conclusion - The article concludes that the focus should be on finding real engines of growth and sizing investments appropriately to endure market volatility, allowing time to enhance value [22].

Core Insights - The article emphasizes the importance of macroeconomic analysis and market trends for informed investment decisions [1] Group 1 - The author expresses a passion for finance and global markets, focusing on economic analysis at a macro level [1] - The goal is to equip investors with tools and knowledge for confident investment decisions [1] - The author is open to feedback and aims to enhance the writing experience for readers [1] Group 2 - The article does not provide specific investment recommendations or advice [2] - It highlights that past performance is not indicative of future results [2] - The views expressed may not represent the opinions of Seeking Alpha as a whole [2]

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, but this can be challenging due to the associated risks and volatility [1] Group 1: Company Overview - Sterling Infrastructure (STRL) is currently highlighted as a recommended growth stock due to its favorable Growth Score and top Zacks Rank [2] - The company has a historical EPS growth rate of 40.8%, with projected EPS growth of 56.8% this year, significantly outperforming the industry average of 11.1% [4] Group 2: Financial Metrics - Sterling Infrastructure's year-over-year cash flow growth stands at 30.6%, exceeding the industry average of 17.2% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 39.7%, compared to the industry average of 7% [6] Group 3: Earnings Estimates - The current-year earnings estimates for Sterling Infrastructure have been revised upward, with a 2.7% increase in the Zacks Consensus Estimate over the past month [7] - The combination of positive earnings estimate revisions and a Zacks Rank 1 positions Sterling Infrastructure favorably for potential outperformance [9]

Group 1 - Sterling Infrastructure (STRL) has an average brokerage recommendation (ABR) of 1.00, indicating a Strong Buy based on recommendations from four brokerage firms, all of which are Strong Buy [2][4] - The Zacks Consensus Estimate for Sterling Infrastructure's earnings has increased by 2.7% over the past month to $9.57, reflecting analysts' growing optimism about the company's earnings prospects [13] - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 1 (Strong Buy) for Sterling Infrastructure, suggesting a potential for stock price appreciation [14] Group 2 - Brokerage recommendations often exhibit a strong positive bias due to the vested interests of brokerage firms, leading to a higher number of Strong Buy ratings compared to Strong Sell ratings [6][10] - The Zacks Rank is a quantitative model based on earnings estimate revisions, which has shown a strong correlation with near-term stock price movements, making it a more reliable indicator than ABR [11][12] - The ABR may not always be up-to-date, while the Zacks Rank reflects timely changes in earnings estimates, providing a more accurate prediction of future stock prices [12]

Core Insights - Sterling Infrastructure, Inc. (STRL) is benefiting from increasing demand for data centers driven by trends in AI solutions, data creation, cloud migration, and sustainability efforts [1][2] - The company has optimistic growth projections based on strong data center demand and is implementing multi-year capital deployment plans to support revenue and profitability [2][3] Financial Performance - STRL reported a 24.2% year-over-year revenue growth in its E-Infrastructure Solutions segment for the first half of 2025, reaching $528.7 million, which constitutes 51% of total revenues [2][8] - The company raised its revenue forecast for 2025 to between $2.1 billion and $2.15 billion and adjusted EPS expectations to between $7.87 and $8.13 [3][8] Market Position - STRL's stock has surged 168.4% over the past six months, outperforming competitors Quanta Services, Inc. (PWR) and AECOM (ACM), which gained 55.7% and 37.1%, respectively [5][9] - The company is currently trading at a forward 12-month P/E ratio of 29.97, indicating a premium valuation compared to industry peers [10][12] Earnings Estimates - Earnings estimates for STRL have increased for 2025 and 2026, now projected at $9.57 and $10.98 per share, reflecting year-over-year growth of 56.9% and 14.7%, respectively [13]

Core Insights - Sterling Infrastructure, Inc. (STRL) is experiencing significant growth in its data center business, with expected earnings growth of 56.9% this year [1][5][7] Company Overview - Sterling is an engineering and construction firm with a market capitalization of $9.2 billion, operating in three segments: E-Infrastructure, Transportation Solutions, and Building Solutions [1][2] - The company focuses on regions including the Southern, Northeastern, Mid-Atlantic, Rocky Mountain areas, and the Pacific Islands [1] E-Infrastructure Segment - The E-Infrastructure segment encompasses data centers, manufacturing, warehouses, and distribution centers [2] - The acquisition of CEC Facilities Group is expected to enhance Sterling's E-Infrastructure capabilities amid strong demand for distribution and data centers [3][4] Recent Acquisition - On September 2, 2025, Sterling completed the acquisition of CEC Facilities Group, a specialty electrical and mechanical contractor, which is projected to add approximately $130 to $138 million in revenue and $0.22 to $0.24 in earnings per share [3][4] Earnings Estimates - Following the acquisition, analysts have raised their earnings estimates for 2025, with the Zacks Consensus Estimate increasing from $9.41 to $9.57, reflecting a 56.9% growth compared to last year's earnings of $6.10 [5][6] - The 2026 Zacks Consensus Estimate has also been revised upward from $10.65 to $10.98, indicating a 14.7% growth [6] Financial Performance - Sterling reported a record second quarter in 2025, with revenue increasing by 21% to $614.5 million, driven by a 29% increase in E-Infrastructure and a 24% rise in Transportation Solutions [8] - The company achieved a gross profit margin of 23.3%, up from 19.3% a year ago, and has a backlog of $2 billion, which is a 24% increase compared to the previous year [8][9] Stock Performance - Sterling's shares have surged by 88.3% in 2025, outperforming NVIDIA, which has gained 28.1% year-to-date [10] Valuation Metrics - Despite no longer being considered a "cheap" stock, Sterling remains attractive with a forward P/E of 31.5 and a PEG ratio of 2.1, indicating potential for growth within the infrastructure sector [13]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the aim of buying high and selling even higher [1] - The Zacks Momentum Style Score helps define momentum characteristics, focusing on price change and earnings estimate revisions [2] Group 2: Sterling Infrastructure (STRL) Performance - Sterling Infrastructure currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy) [3][12] - STRL shares have increased by 2.67% over the past week, while the Zacks Engineering - R and D Services industry remained flat [6] - Over the last three months, STRL shares rose by 34.45%, and by 157.09% over the past year, significantly outperforming the S&P 500 [7] Group 3: Trading Volume and Earnings Outlook - STRL's average 20-day trading volume is 386,243 shares, indicating bullish sentiment with rising stock prices [8] - In the past two months, two earnings estimates for STRL have increased, raising the consensus estimate from $8.72 to $9.57 [10]

Market Overview - U.S. stock markets have experienced a significant bull run since the start of 2023, with major indexes like the Dow, S&P 500, and Nasdaq Composite nearing all-time highs [1] - The S&P 500 and Nasdaq Composite have achieved multiple all-time highs in 2025, while the S&P 400 mid-cap index is up 4.9% year to date, just 4.6% away from its 52-week high [2][9] Mid-Cap Stocks - Investment in mid-cap stocks is recognized as a strong portfolio diversification strategy, combining attributes of both small and large-cap stocks [3] - Mid-cap stocks are less vulnerable to losses during economic downturns due to lower international exposure, and they can outperform small caps in a thriving economy due to established management and market presence [4] Recommended Mid-Cap Stocks - Five mid-cap stocks with favorable Zacks Rank for the remainder of 2025 are Dillard's Inc. (DDS), Sterling Infrastructure Inc. (STRL), StoneX Group Inc. (SNEX), Armstrong World Industries Inc. (AWI), and Watts Water Technologies Inc. (WTS), all rated Zacks Rank 1 (Strong Buy) [5][9] Company Insights Dillard's Inc. (DDS) - Dillard's is enhancing growth through strategic initiatives in both brick-and-mortar and e-commerce, focusing on customer acquisition and retention [8] - The company has a strong financial position with solid liquidity and minimal rent obligations, alongside shareholder-friendly practices like dividends and buybacks [10] - Expected revenue and earnings growth rates for DDS are -0.4% and -15.8%, respectively, for the current year, with a 1.8% improvement in the earnings consensus estimate over the last 30 days [11] Sterling Infrastructure Inc. (STRL) - Sterling Infrastructure provides e-infrastructure, transportation, and building solutions, operating through three segments: E-Infrastructure Solutions, Transportation Solutions, and Building Solutions [12][13][14] - The expected revenue and earnings growth rates for STRL are 6.5% and 56.9%, respectively, for the current year, with a 5.3% improvement in the earnings consensus estimate over the last seven days [15] StoneX Group Inc. (SNEX) - StoneX Group operates a global financial services network, offering execution, post-trade settlement, clearing, and custody services through various segments [16] - The expected revenue and earnings growth rates for SNEX are 4.9% and 21.7%, respectively, for the next year, with a 21.7% improvement in the earnings consensus estimate over the last 60 days [17] Armstrong World Industries Inc. (AWI) - Armstrong World Industries is a leading producer of ceiling systems for construction and renovation, operating in three segments: Mineral Fiber, Architectural Specialties, and Unallocated Corporate [18][19][20] - The expected revenue and earnings growth rates for AWI are 12.2% and 15.1%, respectively, for the current year, with a 0.7% improvement in the earnings consensus estimate over the last 30 days [21] Watts Water Technologies Inc. (WTS) - Watts Water Technologies designs and manufactures water safety and flow control products, reporting under three geographic segments: The Americas, Europe, and APMEA [22] - The expected revenue and earnings growth rates for WTS are 3.9% and 11.3%, respectively, for the current year, with a 0.8% improvement in the earnings consensus estimate over the last seven days [24]

Core Insights - Sterling Infrastructure, Inc. (STRL) has raised its full-year 2025 earnings guidance due to strong profitability and margin expansion in its second-quarter results [2][4][10] Financial Performance - In Q2 2025, adjusted earnings per share (EPS) increased by 41% year over year to $2.69, with gross profit margins expanding by 400 basis points to 23.3%, marking a new high for the company [3][10] - Adjusted EBITDA rose by 35% to $126 million, driven by revenue growth and improved gross margins [3] Strategic Focus - The company's emphasis on high-value projects and a disciplined portfolio mix has been crucial for driving profitability [2][5] - A strategic shift towards higher-margin service offerings, particularly in E-Infrastructure projects like data centers, has contributed to margin expansion [3][5] Guidance and Outlook - The adjusted EPS guidance for 2025 has been raised to a range of $9.21-$9.47, reflecting an 8% increase at the midpoint from previous expectations [4] - Transportation Solutions is also expected to contribute to profitability as resources are reallocated to stronger markets [4][5] Industry Context - Other infrastructure peers, such as EMCOR Group, Inc. and MasTec, Inc., have also reported improved profitability, indicating a broader trend of margin expansion within the industry [6][7][8] - STRL's stock has surged by 40.1% over the past three months, outperforming the Zacks Engineering - R and D Services industry's growth of 6% [9] Valuation Metrics - STRL's stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 30.49, indicating a premium compared to industry peers [12] - Earnings estimates for 2025 and 2026 have trended upward, reflecting year-over-year growth of 50.8% and 12%, respectively [13]