UBS Says to Buy Engineering, Construction and Infrastructure Stocks

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As the economy starts to pick up, major works projects that had been on the drawing board are starting to be initiated. Everything from the construction and installation of oil drilling rigs to large purchases and new orders for rail cars are in the mix. With construction capacity at it tightest in years, prices will head inevitably higher as corporations compete to get their projects done as fast as possible.

This pickup in activity is not lost on the analysts at UBS A.G. (NYSE: UBS). While they expect backlogs to grow over the next 12 to 18 months, the growth may be more concentrated in 2014 than 2013. However, the slower pace of the first half of this year could very well lead to higher demand the rest of the year. Here are the engineering and construction stocks to buy from UBS.

Chicago Bridge & Iron Company N.V. (NYSE: CBI) is a leading energy infrastructure construction company operating in three diverse segments. The Thomson/First Call price target for the stock is $70.50, which represents a 30% move from current trading levels.

McDermott International Inc. (NYSE: MDR) focuses on designing and executing complex offshore oil and gas projects. The consensus estimate for the stock is $14.

KBR Inc. (NYSE: KBR) just received a large design and build contract for a 730,000 square foot aircraft manufacturing facility in Texas. The consensus estimate for this top name is $38. Investors receive a small 1% dividend.

Quanta Services Inc. (NYSE: PWR) posted strong earnings that beat estimates last Friday. The Electric Power Infrastructure Services segment led the way as Quanta reported revenue growth across all of its operating segments. The consensus price objective for the stock is $34.

Foster Wheeler A.G. (NASDAQ: FWLT) is a UBS stock to buy. The company operates in engineering and construction, as well as power generating equipment businesses worldwide. The consensus price target for the stock is $26.

AECOM Technology Corp. (NYSE: ACM) specializes in the design construction of highways, airports, bridges, mass transit systems, government and commercial buildings, water and wastewater facilities, and power transmission and distribution. The consensus price objective for the stock is $32.75.

Tutor Perini Corp. (NYSE: TPC) wraps up the UBS stocks to buy. Last Friday the company posted a first-quarter earnings beat, with net earnings up fourfold from a year ago. The consensus estimate for the stock is $20.

Every stock on this UBS list is trading below Wall Street’s expectations. Now may be the ideal time for investors to carve out some portfolio capital for these top names. Earnings should only improve as the economy does.