The COVID-19 pandemic highlighted the importance of infrastructure worldwide. Governments are now making huge investments to revamp their countries’ infrastructure. Wall Street analysts believe that President Biden’s nearly $2 trillion Build Back Better plan—on top of the $1 trillion-plus infrastructure spending bill he signed this fall—will significantly boost the infrastructure sector’s growth. Economists at Goldman Sachs, Evercore ISI, Morgan Stanley, and J.P. Morgan believe there are signs of a massive forthcoming boom in the overall infrastructure segment.
Investor interest in the infrastructure industry is evident in the Global X U.S. Infrastructure Development ETF’s (PAVE) 7% gains over the past three months versus the SPDR S&P 500 ETF Trust’s (SPY) 4.2% returns. And infrastructure-related construction activities continue to surge with the reopening of the economy. According to a Research and Markets report, the global infrastructure construction industry is expected to witness a sharp 6.2% increase in output in 2021.
Therefore, we think it could be wise to bet now on quality infrastructure stocks Eaton Corporation plc (ETN), Tetra Tech, Inc. (TTEK), CEMEX, S.A.B. de C.V. (CX), and United States Steel Corporation (X).
Click here to check out our Infrastructure Sector Report for 2021
Eaton Corporation plc (ETN)
Based in Dublin, Ireland, ETN operates as a power management company. Its segments are Electrical Americas and Electrical Global; Hydraulics; Aerospace; and Vehicle. On December 1, 2021, ETN and Tenable, Inc. announced a cybersecurity partnership to help customers secure critical power systems and industrial control environments. Reid Vance, director of the power system automation and cybersecurity services at Eaton, said, “By partnering with Tenable, we’re able to pair Eaton’s 100-year plus experience in power systems with Tenable’s deep expertise in securing converged IT/OT environments to give customers a single pane of glass to view their critical power environments and industrial control systems.”
ETN’s net sales increased 8.8% year-over-year to $4.92 billion for its fiscal third quarter, ended September 30, 2021. Its net income increased 41% from last year to $629 million. Also, its EPS came in at $1.57, up 41.4% year-over-year.
For its fiscal year 2021, analysts expect ETN’s revenue to be $19.80 billion, representing a 10.9% year-over-year rise. In addition, the company’s EPS is expected to increase 55% year-over-year to $6.57 in the current year. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 44.2% in price to close yesterday’s trading session at $169.92.
ETN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its weighting.
The stock has a B grade for Stability and Quality. It is ranked #31 of 78 stocks within the Industrial - Machinery industry. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for ETN.
Click here to check out our Industrial Sector Report for 2021
Tetra Tech, Inc. (TTEK)
Pasadena, Calif.-based TTEK provides consulting and engineering services worldwide. The company operates through two segments–its Government Services Group and Commercial/International Services Group.
On October 27, TTEK acquired Enterprise Automation. Dan Batrack, Tetra Tech Chairman and CEO, said, “The addition of EA enables us to further expand our high-end digital water consulting practice by adding EA’s talented team of digital automation and advanced data analytics consultants.”
TTEK’s revenue increased 18.4% year-over-year to $892.01 million for the fourth quarter, ended October 3, 2021. Its net income increased 85.8% year-over-year to $82.95 million. Also, its adjusted EPS increased 15.4% year-over-year to $1.05.
For its fiscal year 2022, TTEK’s revenue is expected to grow 6.2% year-over-year to $2.71 billion. Its EPS is expected to grow 9.9% year-over-year to $4.55 in the next year. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 58.4% in price to close yesterday’s trading session at $188.76.
It is no surprise that TTEK has an overall B rating, which equates to a Buy in our POWR Rating system. In addition, it has a B grade for Momentum, Stability, Sentiment, and Quality.
TTEK is ranked #5 of 14 stocks in the Waste Disposal industry. Click here to see the additional POWR Ratings for TTEK (Growth and Value).
CEMEX, S.A.B. de C.V. (CX)
Headquartered in San Pedro Garza GarcÃa, Mexico, CX, together with its subsidiaries, produces, markets, distributes, and sells cement, ready-mix concrete, aggregates, clinker, and other construction materials worldwide.
On October 21, CX subsidiary, CEMEX Ventures, and Taronga Ventures announced their investment in Voyage Control to facilitate construction logistics and on-site coordination. Gonzalo Galindo, the head of CEMEX Ventures, said, “The investment from CEMEX Ventures aims to integrate Voyage Control with CEMEX’s digital assets, allowing us to provide a better and more complete service to our clients.”
CX’s net sales increased 10% year-over-year to $3.77 billion in the third quarter, ended September 30, 2021. Its operating EBITDA increased 1.8% year-over-year to $739.66 million. Furthermore, its consolidated net loss came in at $377.97 million, compared to $1.53 billion in the year-ago period.
Analysts expect CX’s revenue and EPS to grow 12.9% and 193.3%, respectively, year-over-year to $14.64 billion and $0.84 in fiscal 2021. Over the past year, the stock has gained 10.5% in price to close yesterday’s trading session at $6.13.
CX’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which translates to a Buy in our proprietary rating system.
In addition, it has a grade of B for Value, Momentum, and Quality. It is ranked #11 of 52 stocks in the Industrial - Building Materials industry. Click here to see the additional POWR Ratings for CX (Growth, Stability, and Sentiment).
Click here to check out our Industrial Sector Report for 2021
United States Steel Corporation (X)
X produces and sells flat-rolled and tubular steel products primarily in North America and Europe. The Pittsburgh, Pa.-based company operates through three segments: North American Flat-Rolled (Flat-Rolled); U. S. Steel Europe (USSE); and Tubular Products (Tubular).
X’s net sales for the third quarter, ended September 30, 2021, came in at $5.62 billion, up 171.4% year-over-year. Its net earnings were $2 billion, compared to a $234 million loss in the previous period. Also, its EPS came in at $6.97, versus a $1.06 loss in the year-ago period.
ETN shares were unchanged in premarket trading Thursday. Year-to-date, ETN has gained 44.24%, versus a 26.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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