According to American Institute of Architects’ (AIA) consensus construction forecast based on seven major construction forecasting groups, non-residential building construction is expected to grow 5.8% in 2014 on the back of strengthening U.S. economy. AIA expects that commercial, retail and hotel construction will witness double-digit gains, and offices construction will grow over 9% this year. The recovery is expected continue into 2015, with spending increasing 8% overall. We note that construction projects were stalled during 2013 due to budget sequester, government shutdown and political instability.
According to another recent (Feb 2014) survey conducted by Wells Fargo, the Optimism Quotient which represents high optimism for increased local construction activity grew to all-time-high of 124. The Optimism Quotient was at 106 in 2013 and had reached its all-time low of 42 in 2009. About 55% of 522 respondents to the survey believe that non-residential activity will increase in 2014 compared to 2013.
Ubika Research has shortlisted six non-residential construction stocks which are estimated to report strong growth in 2014. Majority of these stocks have registered growth in sales and EPS during the trailing twelve months and are expected to record strong sales and earnings growth in 2014. Moreover, these stocks are trading at relatively low 1-yr forward PE multiple and provide strong return on equity. We also note these stocks have gained during the past three month with average traded volume in excess of 100,000.
|
Company Name |
Ticker |
Exchange |
Market Cap |
Last Price |
Average Volume |
Price Change (3-Month) |
TTM Sales Growth |
Sales Growth |
TTM EPS Growth |
EPS Growth |
1-Yr Forward PE Ratio |
Return on Equity |
|
Foster Wheeler AG |
FWLT |
NASDAQ |
3,160.9 |
31.91 |
1,767,027 |
2.8% |
-2.8% |
18.3% |
-24.4% |
14.6% |
16.5 |
18.4% |
|
MasTec Inc |
MTZ |
NYSE |
3,215.8 |
41.59 |
836,062 |
34.6% |
16.0% |
8.5% |
24.8% |
21.2% |
18.1 |
15.0% |
|
EMCOR Group Inc |
EME |
NYSE |
3,071.2 |
45.89 |
419,220 |
14.7% |
1.1% |
5.3% |
-15.7% |
15.3% |
17.9 |
9.1% |
|
Dycom Industries Inc |
DY |
NYSE |
988.3 |
29.28 |
247,484 |
5.2% |
39.2% |
13.4% |
2.8% |
0.2% |
24.8 |
8.8% |
|
Tutor Perini Corp |
TPC |
NYSE |
1,233.3 |
25.47 |
237,716 |
2.2% |
1.6% |
11.3% |
NA |
31.3% |
10.8 |
7.3% |
|
Mistras Group Inc |
MG |
NYSE |
627.5 |
22.11 |
127,541 |
12.0% |
18.3% |
14.4% |
-47.0% |
30.3% |
24.2 |
6.0% |
TTM: Trailing Twelve Months
Company Description
Foster Wheeler AG (NASDAQ: FWLT)
Foster Wheeler AG provides design, engineering, construction, manufacturing, project development and management, research, plant operations, and environmental services. The company serves the petrochemical, petroleum and gas, pharmaceutical, chemical processing, and other industries. Foster Wheeler’s products include fired heaters and steam generating units.
MasTec Inc (NYSE: MTZ)
MasTec Inc., is a specialty contractor operating across a range of industries. The company’s activities are the building, installation, maintenance and upgrade of utility and communications infrastructure, including electrical utility transmission and distribution, windfarms, solar farms, other renewable energy and natural gas infrastructure, wireless, wireline, etc.
EMCOR Group Inc (NYSE: EME)
EMCOR Group, Inc. provides mechanical and electrical construction and facilities services around the world. The company specializes in the design, installation, integration, and start-up of distribution systems for electrical power, lighting systems, low-voltage systems such as fire and security alarms, voice and data communication systems, ventilation systems, and plumbing and piping systems.
Dycom Industries Inc (NYSE: DY)
Dycom Industries, Inc. provides engineering, construction, and maintenance services to telecomm providers in the United States. In addition to its primary services,The company performs underground utility locating and electric utility contracting services. Dycom also provides services related to the installation of integrated voice, data, and video networks in office buildings.
Tutor Perini Corp (NYSE: TPC)
Tutor Perini Corporation and its subsidiaries provide general contracting, construction management and design-build services to private clients and public agencies throughout the United States and selected overseas areas.
Mistras Group Inc (NYSE: MG)
Mistras Group, Inc. develops asset protection solutions. The company provides acoustic, ultrasonic, thermography, radiography, non-destructive testing platforms used to evaluate the structural and mechanical integrity of critical energy, industrial and public infrastructure. Mistras Group conducts business worldwide.
