A much anticipated $1.9 trillion COVID-19 recovery package has just been passed and the Biden administration has now turned its attention to an infrastructure package that President Biden pitched during his election campaign. The country’s infrastructure has been in need of investment for years, and the passage of a federal package could help build the U.S. economy for the future.
If Biden succeeds in his quest for a $2 trillion infrastructure spending plan, among the biggest beneficiaries will be the companies that provide necessary machinery and supplies for construction. Despite pandemic-led disruptions, investors have been bullish on the infrastructure sector in the United States. This is evident in the Global X Funds Global X U.S. Infrastructure Development ETF’s (PAVE) 71.1% returns over the past year.
Builders FirstSource, Inc. (BLDR), SPX Corporation (SPXC), Primoris Services Corporation (PRIM), and Columbus McKinnon Corporation (CMCO) are companies that we believe may benefit significantly from the prospective federal investment in infrastructure. These companies are expanding their operations through acquisitions, which could drive their future growth.
Click here to check out our Infrastructure Sector Report for 2021
Builders FirstSource, Inc. (BLDR)
BLDR manufactures and markets structural and building products for use in residential construction. The company has operations primarily in the Southern and Eastern United States. BLDR has gained 127.8% over the past year to close Wednesday’s trading session at $47.08.
BLDR recently completed the acquisition of Kansas City Building Supply, which is a leading supplier of windows and doors. The acquisition will help BLDR expand its presence in Kansas City.
For the quarter ended December 31, 2020, the company’s net sales grew 43.5% versus the same period last year. The company’s gross profit increased 40.4% during the same period.
BLDR is expected to see a revenue growth of 105.5% for the quarter ended March 31, 2021 and 69.5% in 2021. Its EPS is estimated to grow 97.1% for the quarter ended March 31, 2021 and at a rate of 18.8% per annum over the next five years.
BLDR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has an A grade for Growth and B for both Value and Momentum. In the A-rated Home Improvement & Goods industry, it is ranked #19 of 63 stocks.
In total, we rate BLDR on eight different levels. Beyond what we’ve stated above we have also given BLDR grades for Stability, Sentiment, and Quality. Get all the BLDR ratings here.
SPX Corporation (SPXC)
SPXC provides specialized engineering products, such as hybrid cooling systems, heat exchangers, and pollution control systems. The company has worldwide operations. SPXC has returned 41.5% over the past year to close yesterday’s trading session at $58.38.
SPXC recently completed the acquisition of Sensors & Software, Inc., a leading manufacturer of Ground Penetrating Radar (GPR) solutions. The company has also acquired ULC Robotics, which is a developer of robotics-based solutions.
For the quarter ended December 31, 2020, the company’s revenue has increased 3% versus the same period last year. The company’s revenue from the detection & measurement segment increased 17.5% during the same period.
SPXC’s revenue is estimated to increase 7.2% for the quarter ended March 31, 2021 and 6.2% in 2021. Its EPS is expected to rise 12.9% in 2021 and 12% per annum over the next five years.
It’s no surprise that SPXC has an overall rating of B, which equates to Buy in our POWR Ratings system. SPXC has a B grade for Value, Stability, and Sentiment. In the A-rated Industrial – Machinery industry, it is ranked #36 out of 88 stocks.
Click here to see the additional POWR Ratings for SPXC (Growth, Quality, and Momentum).
Primoris Services Corporation (PRIM)
PRIM provides a wide range of services, including construction, fabrication, engineering, and maintenance. The company’s clients include large public utilities, energy companies, petrochemical companies, and more. PRIM’s stock has returned 132.7% over the past year, and its last closing price was $39.33.
PRIM recently completed the acquisition of Future Infrastructure Holdings for $620 million. The acquisition should help PRIM expand in higher margin markets and gain better utility services capabilities.
For the quarter ended December 31, 2020, the company’s revenue grew 12% year-over-year. The company’s net income increased 28% during the same period.
PRIM is expected to see a revenue growth of 3.5% for the quarter ended March 31, 2021 and 8.1% in 2021. Its EPS is estimated to grow 13% in 2021 and 10% per annum over the next five years.
The POWR Ratings are also high on PRIM. It has an Overall Rating of A, which translates to a Strong Buy. PRIM also has a B grade for Growth, Value, Momentum, Sentiment, and Quality. In the A-rated Industrial - Services industry, it is ranked #2 of 88 stocks.
Beyond what we’ve stated above we have also given PRIM a grade for Stability. Get all the PRIM ratings here.
Columbus McKinnon Corporation (CMCO)
CMCO is involved in the manufacture and marketing of material handling products. The company’s main products include rigging tools, cranes, and hoists. CMCO’s stock has gained 85.2% over the past year to close the last trading session at $53.49.
CMCO recently executed an agreement to acquire Dorner Manufacturing, which is a leading automations company. The company has also expanded its portfolio with its new Intelli-Guide Auto-Dispatch System that allows operators to transfer goods to a pre-programmed location within a facility at the touch of a button.
For the quarter ended December 31, 2020, the company’s revenue increased 5.5% versus the previous quarter. Its operating income was $10.4 million during the quarter. Its EPS is estimated to grow 614.3% for the quarter ended June 30, 2021 and 20% per annum over the next five years.
It’s no surprise that CMCO has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. CMCO has a B grade for Quality, Stability, and Sentiment. In the A-rated Industrial - Machinery industry, it is ranked #8 of 88 stocks.
Click here to see the additional POWR Ratings for CMCO (Growth, Value, and Momentum).
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Click here to check out our Infrastructure Sector Report for 2021
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BLDR shares were trading at $46.57 per share on Thursday afternoon, down $0.51 (-1.08%). Year-to-date, BLDR has gained 14.11%, versus a 5.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.
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