4 Heavy Construction Stocks Benefiting From Infrastructure Upswing

Core Insights - The Zacks Building Products - Heavy Construction industry is experiencing strong growth driven by favorable long-term trends, despite facing near-term challenges such as inflation and elevated interest rates [1][8]. Industry Overview - The industry encompasses mechanical and electrical construction, industrial and energy infrastructure, and building service providers, focusing on heavy civil construction projects like highways, bridges, and ports [3]. - Companies in this sector are engaged in engineering, construction, and maintenance of communications infrastructure, oil and gas pipelines, and energy processing facilities [3]. Growth Drivers - A robust federal infrastructure agenda is unlocking significant investments in transportation, broadband, and energy networks, leading to increased demand in high-growth sectors [2]. - The data center market's expansion is creating new opportunities for heavy construction firms, driven by the need for large-scale infrastructure solutions [2][5]. - The ramp-up of 5G projects is benefiting industry players, with increased demand for wireline and wireless networks [6]. Trends Impacting the Industry - The U.S. administration's infrastructure plan aims to create sustainable infrastructure, which is expected to significantly impact the construction industry over the next five years [4]. - Acquisitions are being utilized by companies to solidify product portfolios and leverage new business opportunities, particularly in renewable energy projects [7]. Financial Performance - The Zacks Building Products - Heavy Construction industry has outperformed the broader Zacks Construction sector and the S&P 500, with a collective gain of 49.8% over the past year compared to 0.3% for the sector and 16.1% for the S&P 500 [13]. - The industry's forward 12-month price-to-earnings ratio is currently at 22.94, slightly above the S&P 500's 22.87 [17]. Company Highlights - MasTec, Inc. (MTZ): Reports an 18-month backlog of $15.88 billion, a 23.7% year-over-year increase, with a growth outlook supported by diversified operations and strategic focus on clean energy [20][21]. - Orion Group Holdings, Inc. (ORN): Positioned to benefit from rising demand for specialized marine and concrete services, with a focus on operational efficiency and debt reduction [25][26]. - Primoris Services Corporation (PRIM): Gaining from increased activity in power delivery and renewable energy projects, with a robust backlog of $11.4 billion [29][30]. - Dycom Industries, Inc. (DY): Leveraging demand for telecommunications infrastructure, particularly in 5G and fiber-optic deployment, with a strong financial performance reflected in recent earnings [34][35].