Here Are 5 Construction Stocks to Explore on Increased Spending

Core Insights - Construction activity in the U.S. has been gaining momentum since July 2024, with October data showing increased residential construction spending both month over month and year over year [1][2] - Residential construction rose by 1.5% from September 2024 and 6.4% year over year, driven by homebuilder confidence and easing inflation [2][5] - Non-residential construction spending decreased by 0.4% month over month but increased by 3.9% year over year, supported by growth in sectors like public safety and healthcare [2][9] Construction Sector Overview - Private construction spending increased by 0.7% month over month and 5.1% year over year, with residential construction specifically up by 1.5% and 6.4% respectively [5][6] - Public construction spending saw a slight decline of 0.5% month over month but increased by 4.5% year over year, with both residential and non-residential activities showing growth [6][7] Growth Drivers - The Federal Reserve's recent interest rate cuts, from a benchmark of 5.25% to 5.50%, have positively impacted construction activity, with expectations of further cuts through 2025 [7][8] - The 30-year fixed-rate mortgage rate of 6.08% at the end of September 2024 has contributed to the increase in residential construction despite high inflation [8] Investment Opportunities - The Zacks Construction sector has risen by 29.8% year to date, outperforming the S&P 500 Index's 26.7% increase [11] - Recommended construction stocks include: - EMCOR Group, Inc. (EME): Up 134.4% year to date, with a Zacks Rank of 1 and projected 2025 sales and EPS growth of 6.6% and 7.2% respectively [12][13] - MasTec, Inc. (MTZ): Up 87.6% year to date, with a Zacks Rank of 1 and projected 2025 sales and EPS growth of 8.6% and 45.5% respectively [13][14] - Comfort Systems USA, Inc. (FIX): Up 138% year to date, with a Zacks Rank of 1 and projected 2025 sales and EPS growth of 7.9% and 20.8% respectively [14][15] - Sterling Infrastructure, Inc. (STRL): Up 121% year to date, with a Zacks Rank of 1 and projected 2025 sales and EPS growth of 7.3% and 8.1% respectively [15][16] - Acuity Brands, Inc. (AYI): Up 57.2% year to date, with a Zacks Rank of 2 and projected fiscal 2025 sales and EPS growth of 4.7% and 7.1% respectively [16][17]