The industrial construction and engineering sector are one of the world’s largest. It’s also a highly fragmented segment, with thousands of stocks trading on various exchanges around the globe. Each company in this industry will likely have a different role and focus within its business. This can make it difficult to know where to begin researching potential investments. Industrial construction and engineering companies are businesses that build industrial sites or buildings for other companies, known as end users and construct equipment for those same end users. Investors can consider adding many types of industrial construction and engineering stocks to their portfolios.
NV5 Global (NVEE)
NVEE is a Singapore-based company that provides engineering, procurement, and construction (EPC) services and integrated project management (IPM) solutions. Founded in 2000, it is one of Asia’s most significant engineering, procurement, and construction management companies, with offices in 12 countries. It operates in the oil & gas, petrochemicals and chemicals, mining, water and power, marine and port, infrastructure, and aviation & aerospace industries. NVEE has delivered more than 420 projects worth more than $38 billion. With a market cap of $3.5 billion, it trades at a price-to-book ratio of 1.0, a price-to-sales ratio of 2.4, and an expected annual dividend yield of 4.4%. This stock could be an excellent long-term investment, especially for investors looking to diversify into the Asian E&E sector. However, NVEE has a high dividend yield and low price-to-book ratio, suggesting it may be undervalued. In addition, its price has been relatively stagnant over the last year, indicating investors are not very bullish on its outlook.
AECOM (ACM)
ACM is a U.S.-based company that provides EPC services in the architecture, engineering, construction (AEC), and infrastructure industries. Founded in 1905, it is one of the largest AEC companies in the world. ACM has more than 200 offices and locations in more than 80 countries. Its services include master planning, engineering, design, environmental, construction, real estate, facilities management, and project management. ACM’s clients include governments, commercial property developers, healthcare providers, and energy companies. ACM has delivered over 100,000 projects worth $100 billion, including the London 2012 Olympic Stadium, Shanghai’s Hongqiao Airport, and the Dubai Metro. With a market cap of $13.9 billion, it trades at a price-to-book ratio of 1.1, a price-to-sales ratio of 1.9, and an expected annual dividend yield of 1.7%. Investors interested in the AEC sector should consider ACM. While it is one of the most extensive AEC stocks, it has a low price-to-book ratio and price-to-sales ratio, suggesting it could be undervalued. Although its dividend yield is low, it has a long track record of increasing dividends.
Lennar (LEN.B)
LEN.B is a U.S.-based company that provides EPC services in the residential, commercial, and industrial real estate, infrastructure, and energy industries. Founded in 1958, it is one of the largest E&E companies in the U.S. LEN.B has more than 1,500 employees, operating in all 50 states as well as Canada, Mexico, and Brazil. It has delivered more than 100,000 projects worth $60 billion. Its services include construction, land development, engineering, design, and green building. LEN.B’s customers include homebuilders, real estate developers, contractors, energy companies, and municipal and state governments. With a market cap of $12.8 billion, it trades at a price-to-book ratio of 0.9, a price-to-sales ratio of 2.4, and an expected annual dividend yield of 3.4%. This stock may be an excellent long-term investment for investors looking to add real estate stocks to their portfolios. LEN.B has a low price-to-book ratio and price-to-sales ratio. However, its dividend yield is low, indicating it is overvalued.
Primoris Services (PRIM)
PRIM is a U.S.-based company that provides EPC services in the oil & gas, real estate, and power industries. Founded in 1986, it is one of the largest EPC companies in the U.S. PRIM has more than 3,100 employees, operating in 24 states and internationally in Canada, Mexico, the Middle East, the Caribbean, Australia, and Southeast Asia. It has delivered more than 8,000 projects worth $30 billion. Its services include engineering, design, construction, maintenance, and operations. PRIM’s clients include homeowners, commercial builders, real estate developers, oil and gas companies, power utilities, and government agencies. PRIM has an excellent track record of growth, delivering more than $9 billion worth of projects in 2018, up from $2 billion in 2013. With a market cap of $6.7 billion, it trades at a price-to-book ratio of 0.9, a price-to-sales ratio of 3.2, and an expected annual dividend yield of 4.6%. PRIM may be an excellent long-term investment, as it has a low price-to-book ratio, price-to-sales ratio, and dividend yield. However, its price has been relatively stagnant over the last year, indicating investors are not very bullish on its outlook.
Conclusion
Investors often overlook industrial construction and engineering stocks, but many great companies operate in this sector. These stocks are less volatile than many other industries and are likely to provide steady income and capital appreciation over the long term, making them excellent additions to any portfolio. Investors can choose from various stocks based on risk tolerance, industry focus, and expected long-term returns.
Read More: Top Industrial Construction & Engineering Stocks You Can Buy Today