Infrastructure is the backbone of the global economy, consisting of the roads we drive on and the systems that deliver data and energy to us. Infrastructure stocks are likely to benefit from investments in roads, bridges, utilities and energy, which receive significant government support and offer promising opportunities for investors.
Against this backdrop, it could be a wise decision to invest in fundamentally strong infrastructure stocks such as Johnson Controls International plc (JCI), EMCOR Group, Inc. (EME) and Owens Corning (OC) to build your portfolio this year.
The global economy is currently in a critical situation and lasting solutions to socio-economic problems must be found. With large sums of money being invested in cutting-edge infrastructure technology and renewable energy projects, the trend towards clean energy and smart infrastructure is gaining momentum. This includes projects to improve energy efficiency, develop smarter, more resilient communities and improve transport networks.
In this sense, the Biden-Harris administration recently announced $1.8 billion in grants for 148 infrastructure projects across the United States under the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) program. The spending is expected to impact infrastructure in several states for the foreseeable future.
According to a report by Mordor Intelligence, the infrastructure sector will grow from $2.72 trillion in 2024 to $3.69 trillion in 2029, with a CAGR of 6.3%.
Taking these factors into account, we want to discuss the three Infrastructure selection.
Johnson Controls International plc (JCI)
JCI delivers smart, healthy and sustainable buildings through four segments: Building Solutions North America; Building Solutions EMEA/LA; Building Solutions Asia Pacific and Global Products. The company is engaged in the design, sales, installation and maintenance of heating, ventilation, air conditioning, controls, building management, refrigeration and integrated electronic security systems.
On July 23, JCI announced its definitive agreement to sell its residential and light commercial (R&LC) HVAC business to Bosch Group in an all-cash transaction for $8.1 billion, with the company’s share of the consideration being approximately $6.7 billion. This transaction will enable JCI to enter its next phase of growth to deliver greater, long-term value to shareholders.
On June 18, JCI announced its definitive agreement to sell its Air Distribution Technologies business to Truelink Capital, a middle-market private equity firm. With these sales, JCI intends to simplify its portfolio and advance its transformation into a comprehensive commercial building solutions provider while focusing its resources on more attractive opportunities.
For the third quarter of fiscal year 2024, which ended June 30, Net sales rose 1.4% year-over-year to $7.23 billion. The company’s gross profit increased slightly from the year-ago quarter to $2.49 billion. Adjusted net income attributable to JCI was $769 million, or $1.14 per share, up 8.9% and 10.7% year-over-year, respectively.
Analysts expect JCI’s revenue to rise 6% year-over-year to $7.32 billion in the fourth fiscal quarter ending in September 2024. Earnings per share for the current quarter are also expected to rise 18.3% year-over-year to $1.24.
JCI shares have gained 36.3% over the past nine months and 22.1% over the past year, closing the most recent trading session at $71.45.
JCI’s good prospects are reflected in POWR Reviews. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. POWR ratings are calculated by taking into account 118 different factors, each of which is optimally weighted.
JCI has a B rating for growth and sentiment. It ranks 29th among 80 stocks in the Industry – Services Industry.
Click here to access JCI ratings for value, stability, momentum and quality.
EMCOR Group, Inc. (EME)
EME is a specialty company that provides electrical and mechanical design, construction and industrial services to a variety of clients. With approximately 100 subsidiaries, the company provides services in various sectors including construction, operation, maintenance and management of facilities in the United States, Canada and the United Kingdom.
EME’s revenues increased 20.4% year-over-year to $3.67 billion in the second quarter of fiscal 2024 ended June 30. The company’s gross profit and operating income also came in at $684 million and $322.81 million, respectively, up 39.6% and 69.2% year-over-year. Net income came in at $247.57 million, or $5.25 per share, up 76.1% and 78% year-over-year, respectively.
As of June 30, 2024, EME’s cash and cash equivalents were $807.32 million, compared to $789.75 million as of December 31, 2024.
EME’s consensus revenue estimate of $3.79 billion for the fiscal third quarter ending September 2024 represents an increase of 18.2% year over year. Additionally, earnings per share for the same quarter are expected to increase 37.5% from the year-ago period to $4.97. EME has beaten consensus revenue and earnings per share estimates in all of the last four quarters, which is impressive.
EME shares have risen 37.3% over the past six months and 73% over the past year, closing the most recent trading session at $380.87.
EME’s strong outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
EME has a B grade for growth, sentiment and quality. It ranks 2nd out of 80 stocks in the Industrials & Services sector.
Click here to access EME ratings for stability, value and momentum.
Owens-Corning (OC)
OC is a global manufacturer and seller of building materials. The company operates in three segments: Roofing, Insulation and Composites. Products include laminate and strip asphalt roofing shingles, oxidized asphalt materials, various roofing components for residential and commercial construction, and specialty applications.
On May 15, OC acquired Masonite International Corporation, a global leader in interior and exterior doors and door systems. OC acquired all outstanding shares of Masonite common stock for $133 per share, representing an implied transaction value of approximately $3.9 billion. The acquisition was a significant milestone for OC and strengthened its position as a leader in building and construction materials.
For the second quarter of fiscal 2024, ended June 30, 2024, OC reported net revenue of $2.79 billion, an increase of 8.8% year over year. The company’s adjusted EBITDA increased 11.7% year over year to $742 million. OC’s adjusted earnings were $408 million and $4.64 per share, an increase of 5.2% and 9.2% year over year, respectively.
Analysts forecast OC to generate revenue of $11.03 billion in the fiscal year ending December 2024, representing a year-over-year increase of 13.9%. Earnings per share for that fiscal year are expected to reach $15.40, representing a year-over-year increase of 6.8%. The company has an excellent earnings surprise history; it has beaten consensus earnings per share estimates in each of the last four quarters.
Over the past nine months, OC shares have gained 25.2%, closing the last trading session at $167.22.
OC’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary scoring system.
It has a B grade for momentum. Within the B-rated Industry – Building materials In this industry, OC ranks 14th out of 46 stocks. Click here to access additional ratings for OC (growth, value, sentiment, quality and stability).
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JCI shares were trading at $70.95 per share on Wednesday afternoon, down $0.50 (-0.70%). Year-to-date, JCI has gained 24.47%, while the benchmark S&P 500 index has risen 18.17% over the same period.
About the author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More…
