2 Infrastructure Stocks to Buy on the Dip Even though the vote on the infrastructure bill has been delayed, analysts remain optimistic about it passing. Moreover, the infrastructure sector is expected to grow significantly in upcoming months as...
By Riddhima Chakraborty •
This story originally appeared on StockNews
Even though the vote on the infrastructure bill has been delayed, analysts remain optimistic about it passing. Moreover, the infrastructure sector is expected to grow significantly in upcoming months as economic activities gradually increase. So, it could be wise to bet on fundamentally sound infrastructure stocks like CRH plc (CRH) and Terex (TEX), which are trading below their 52-week highs but have the potential to generate significant ROI in the near term.
The market reacted quite positively when the Senate passed the infrastructure bill on August 10, 2021. However, House Speaker Nancy Pelosi and her leadership team have delayed the vote on the roughly $1 trillion bipartisan infrastructure bill, as Democrats remain divided over a separate but politically linked larger spending measure. If passed, this spending will significantly boost the infrastructure sector's growth.
On the other hand, as roads, railways and ports, and internet infrastructure need regular maintenance and development, the infrastructure sector is expected to grow in the upcoming months.
CRH plc (CRH) and Terex Corporation (TEX) are two quality infrastructure stocks trading well below their 52-week highs but have solid upsides. So, it could be wise to add these stocks to your portfolio now.
CRH plc (CRH)
Headquartered in Dublin, Ireland, CRH manufactures and distributes building materials. The company's segments include Europe Heavyside, Europe Lightside, Europe Distribution, Americas Materials, Americas Products, and Asia. Also, its products include cement, lime, aggregates, ready-mixed and precast concrete, and asphalt products.
CRH announced on September 30 that it had completed the latest phase of its share buyback program, returning a further $0.3 billion of cash to shareholders. It also announced that it has entered into arrangements with UBS A.G., London Branch, to repurchase ordinary shares on CRH's behalf for a consideration of up to $300 million.
CRH's sales came in at $14.04 billion for the six months that ended June 30, 2021, up 15% year-over-year. The company's gross profit came in at $4.61 billion, up 19.7% year-over-year. Its group profit came in at $815 million, up 100.7% from the prior-year period. Also, its EPS increased 95.1% year-over-year to 99.5 cents.
For fiscal 2021, analysts expect CRH's EPS and revenue to increase 26.3% and 8.9% year-over-year to $3.05 and $29.78 billion, respectively. The stock has soared 29.7% over the past year to close yesterday's trading session at $46.74. It is currently trading 13.4% below its 52-week high of $53.99, which it hit on August 26, 2021.
CRH's strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which indicates a Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CRH has a B grade for Stability, Sentiment, and Quality. Within the Industrial - Building Materials industry, it is ranked #8 out of 55 stocks. Click here to see additional grades for Momentum, Value, and Growth.
Click here to check out our Industrial Sector Report for 2021
Terex Corporation (TEX)
TEX manufactures and sells aerial work platforms and materials processing machinery. It operates through two segments: Aerial Work Platforms (AWP) and Materials Processing (MP). In addition, it offers financing solutions to assist customers in the rental, leasing, and acquisition of its products.
TEX paid a quarterly dividend of $0.12 per share on September 20. Also, the company has been paying dividends consecutively for seven years. So, this represents its financial strength.
For the second quarter that ended June 30, 2021, TEX's net sales increased 50.4% year-over-year to $1.04 billion. The company's gross profit came in at $231.6 million, up 116.2% year-over-year. Its net income came in at $73.90 million compared to a loss of $9.2 million in the prior-year period. Also, its EPS came in at $1.04 compared to a loss per share of $0.13 in the year-ago period.
Analysts expect TEX's EPS to come in at $3.03 in the current year, representing a 2,230.8% year-over-year increase. The company's revenue is expected to rise 27.1% year-over-year to $3.91 billion in fiscal 2021. Over the past year, the stock has gained 117.5% to close yesterday's trading session at $42.10. It is currently trading 24.3% below its 52-week high of $55.60, which it hit on May 10, 2021.
TEX's POWR Ratings reflect solid prospects. The company has an overall grade of B, which equates to a Buy rating in our proprietary ratings system.
In addition, it has an A grade for Growth and Value. TEX is ranked #17 in the same industry. Click here to see additional grades for TEX (Stability, Quality, Sentiment, and Momentum).
Note that TEX is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
CRH shares were trading at $46.91 per share on Friday afternoon, up $0.17 (+0.36%). Year-to-date, CRH has gained 12.92%, versus a 16.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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