After the Election, 7 Major Infrastructure Winners for 2017 and Beyond
Jacobs Engineering Group Inc. (NYSE: JEC) is based in Pasadena, California, and provides about every level of infrastructure planning and consulting. It serves government and private industry. The company had about 48,000 workers in 2013, and that is now closer to 50,000. Much of Jacobs Engineering’s effort is international and it has about 200 offices.
The market value of Jacobs was $5.9 billion early in 2013 and is $6.75 billion now. Its projected revenue for 2013 was roughly $13.1 billion, and it is expected to generate just over $11 billion in sales this year and next.
Shares of Jacobs Engineering managed to not have a third day rally like the sector, closing down 0.5% at $55.62 on Friday. Still, this stock was up 11% since Tuesday’s close. Its 52-week range is $34.76 to $56.69, and it has a consensus analyst target of $53.67. It pays no dividend at this time.
Houston, Texas, is the home of KBR Inc. (NYSE: KBR). For many years KBR was considered to be a war-support and disaster-support company, but if military activity and expansion will come about then it could be yet another win. KBR’s Government and Infrastructure business offers services to civilian authorities and private clients outside of the military. One thing that has helped KBR in the past was that it could mobilize workers for disaster assistance perhaps in a faster manner than any other company.
KBR had about 27,000 employees in 2013, but that was down to 22,000 on last look. The company has a large network of companies and individuals of subcontracting and support that makes the actual headcount harder to pinpoint when major projects are underway.
KBR has a market capitalization of about $2.3 billion now, far less than the $4.4 billion market value in early 2013. The expected sales of about $8.5 billion back in 2013 are now expected to be $4.3 billion in 2016 and $4.6 billion in 2017.
KBR shares closed up 2% at $15.94 on Friday, and they are up a sharp 20% since Tuesday’s close. KBR has a 52-week range of $11.61 to $19.94 and a consensus price target of $17.77. It also pays a dividend yield of 2%.
Shares of Tetra Tech Inc. (NASDAQ: TTEK) have surged over 2016. The company is based in Pasadena, California, and operates in two segments: Water, Environment and Infrastructure; and Resource Management and Energy. Tetra Tech is considered one of the greats when it comes to consulting, engineering, construction, technical services and project management in water infrastructure and resource management. It has about 16,000 employees, compared with 14,000 employees in early 2013.
The company had a market value of $1.8 billion in early 2013 and is valued at $2.3 billion now. Tetra Tech’s expected revenues in 2013 were $2.4 billion, and that is closer to $2.1 billion now.
This focus on water is of course a crucial area of need, and the company is also into remediation and environmental planning, disaster management and sustainability projects around climate change and carbon management. The biggest boost now and ahead has been a snag in the past in that Tetra Tech relies heavily on contracts from federal, state and local government agencies.
Tetra Tech shares closed flat at $39.65 on Friday, and the stock was up 4.3% since Tuesday’s close. While the gain might not be impressive here, a lot of great news has been priced in after a 60% year-to-date rise. Tetra Tech has a 52-week range of $22.85 to $40.10 and a consensus price target of $41.11. It also pays a dividend yield of 0.9%.
Elsewhere in our infrastructure coverage and picks:
- Jefferies identified many infrastructure winners.
- Deutsche Bank liked AECOM and others ahead of the election.
These are not solely the consulting and construction angle on infrastructure, and the materials and equipment players will be covered more in-depth at the start of this week.
As a final reminder, the recovery seen to new highs last week was far from the norm and caught many investors off guard, and it was undoubtedly magnified by short sellers panicking and covering their positions. We could very easily expect that some of these stocks could give back some of their gains in the days or weeks ahead.