With the busy spring home-buying season approaching, the Zacks Construction sector is now ranked second out of 16 Zacks sectors. Nestled within this bustling sector are numerous bright lights of potential, benefiting from robust operating environments.
Shining Stars in the Building Products-Home Builders Industry
Toll Brothers has been a beacon in the home building landscape, maintaining significant growth amidst high post-pandemic demand. Acknowledged by Fortune Magazine as the world’s most admired homebuilder for three consecutive years, Toll Brothers has seen its earnings skyrocket by 207% over the past five years. This surge, from $4.03 per share in 2019 to $12.36 per share in 2023, surpasses the industry’s historical EPS growth rate of 35%. With an additional 8% earnings growth projected for fiscal 2024, Toll Brothers remains an attractive option, trading at an appealing 8.7X forward earnings.
Dream Finder Homes and Century Communities are also poised for significant growth in the coming year, with double-digit expansions anticipated in fiscal year 2024. Dream Finder Homes, with a soaring stock value of +213% over the past year, trades at a modest 12.2X forward earnings. Similarly, Century Communities, with a 47% rise in shares, retains a compelling valuation at 8.6X.
EMCOR Group and Sterling Infrastructure on the Rise
EMCOR Group and Sterling Infrastructure are making waves within the Building Products-Heavy Construction Industry and the Engineering-R&D Services Industry, respectively. EMCOR Group, a leading player in mechanical and electrical construction, showcases robust growth, with shares climbing by 97% in the past year. Despite a reasonable 24X forward earnings multiple, EMCOR’s impressive 132% EPS growth over the last five years sets a strong precedent. Annual earnings, projected to remain steady in fiscal year 2024, are expected to rise by 4% in fiscal year 2025, reaching $13.91 per share.
Meanwhile, Sterling Infrastructure is charting its growth path as an E-Infrastructure provider, witnessing a remarkable stock surge of +175% in the last year. With projected annual earnings and sales upticks of 11% to $4.98 per share and $2.2 billion, respectively, Sterling Infrastructure is slated for double-digit growth on all fronts in fiscal year 2025, trading at 22.2X forward earnings and 1.7X sales.
Seizing the Opportunities
The ongoing upward trend in earnings estimate revisions for fiscal years 2024 and 2025 for these Construction sector favorites indicates a promising trajectory ahead. It may be an opportune moment for investors to consider these flourishing stocks.