The 3 Best Construction Stocks To Own Forever

Construction stocks can be defined very widely to include materials companies, home builders, service companies, etc.

However, we think the purest plays on construction relate to equipment and construction services companies and thus, these stocks offer the best way to take advantage of long-term fundamentals we find attractive.

Before we get to our list of stocks, let’s take a look at why we find the construction sector attractive.

Why We Like Construction Long-Term

First, rising global gross domestic product, or GDP, means that construction activities and services will be in demand over the long-term. Data from the World Bank on global and US GDP is below from 2010 through 2018.

GDP Growth

Source: World Bank via Google Public Data

While growth has slowed slightly from 2010’s levels, we have seen global and US GDP very steady in the 2% to 3% range annually. This constant increase in economic activity means office buildings, retail, housing, and other core infrastructure items are being built across the developed world. In order for those things to happen, construction equipment and services are needed, and that is a key reason why we like the construction sector.

Complimentary to the growth of world GDP is the growth of the world’s population. Even in times of economic distress, the world’s population grows at fairly steady rates. Global and US population growth from the World Bank for the same time period as above can be seen below.

Population Growth

Source: World Bank via Google Public Data

The US has seen lower population growth than the rest of the world, but population is still growing. This is a steady, long-term driver for demand for things like residential and shopping space, as well as roads, utilities and other infrastructure items that support the daily lives of the world’s population.

Combined, population and GDP growth create a powerful long-term tailwind for construction stocks. In addition, the many under-deveopled countries around the world offer emerging growth markets for construction companies to capitalize on down the road.

Further, in the US, specifically, existing infrastructure has a poor rating. The American Society of Civil Engineers updates its infrastructure report card on a regular cadence and the most recent update for the US was a D+. That implies billions upon billions of dollars of infrastructure investments and upgrades are needed just in the US over the long-term to fix things like roads and bridges, which will power revenue streams for companies like the ones below.

Three Companies To Profit From Long-Term Construction Demand

Given all of this, we’ve selected three companies we think are best positioned to take advantage of these long-term trends.

We’ll begin with Fluor Corporation (FLR), a construction engineering firm that serves a wide variety of industries including government, energy, chemicals and mining, industrial, as well as infrastructure and power.

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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