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4 Construction Stocks to Buy in Trump's First Year in Office

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Despite a weak start to 2016 amid equity market volatility and global concerns, the construction sector recovered in the latter half of the year on the back of strong housing fundamentals. Moreover, optimism surrounding the sector's outlook is growing manifold, thanks to Donald Trump's victory.

It is to be noted that while on the campaign trail, both Democratic nominee Hilary Clinton and President-elect Trump had been calling for a push up in infrastructure investment.

In fact, just after winning the election, Trump outlined his priorities as President and promised to step up economic growth and build the U.S. into the strongest economy in the world.

He particularly pledged to rebuild highways, and other critical infrastructure like bridges, tunnels, airports, schools and hospitals. Such strong emphasis on building up infrastructure has put the spotlight squarely on stocks related to the sector.

Huge Boost to Infrastructure

Notably, Donald Trump is in favor of escalating public spending on infrastructure by a trillion dollar, over the next 10 years.

Per the Trump plan, such spending would be financed by private investors. These investments would be made in lieu of tax credits, which would make up nearly 82% of the total amount of equity invested. Lost revenues would be recuperated through a higher quantum of income taxes paid by construction workers and business taxes levied on contractors.

In fact, he is expected to offer $137 billion in tax credits to private construction companies pursuing infrastructure projects.

Top 4 Construction Stocks to Buy Now

Renewed emphasis on infrastructure has been driving the sector's stocks post the election results. Ever since the elections, the Zacks categorized Construction sector has outperformed the S&P 500 index. While the sector gained over 9%, the broader market grew just over 5%.

Given the President-elect's strong emphasis in this direction, stocks from this sector are likely to gain in the future as well under his presidency. Donald Trump's first year in office thus makes it a good time to add some of the better options from this area to your portfolio.

With the help of the Zacks Stock Screener , we have zeroed in on four stocks from the Construction sector with solid prospects and a VGM Score of 'A' or 'B' along with a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

The VGM Style Score can be a valuable tool for investors allowing them to get a clearer insight into a stock's strengths and weaknesses.

Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Our research shows that stocks with VGM Scores of 'A' or 'B' when combined with a Zacks Rank #1 or 2 make solid investment choices.

Based in Elkhart, IN, Thor Industries Inc.THO , through its subsidiaries, designs, manufactures, and sells a range of recreational vehicles, and related parts and accessories primarily in the U.S. and Canada. Thor Industries got off to a strong start in the first quarter of fiscal 2017 and expects modest Recreational Vehicle (RV) growth in the rest of the year. The company expects to expand its business in the coming years through acquisitions, new capacity, product innovation and continued dividend payments.

Thor Industries has a Zacks Rank #1 and a VGM Score of 'B'. Moreover, analysts are quite bullish on the stock, leading to a 7.4% and 6.8% increase in the Zacks Consensus Estimate for fiscal 2017 and 2018 earnings, over the past 60 days. What's more, for fiscal 2017, sales and earnings per share (EPS) are projected to grow a respective 45.7% and 24.4%.

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Headquartered in Buffalo, NY, Gibraltar Industries, Inc.ROCK manufactures and distributes products in the industrial and buildings market. The company is steadily reinforcing its business on the back of its productive value-creating growth strategy. Moreover, the acquired RBI business has been thriving on the back of increasing demand for solar racking products, in turn, adding to the company's overall financial health. Also, restructuring programs and capital-deployment plans have been bolstering near-term growth.

Gibraltar Industries has a Zacks Rank #1 and a VGM Score of 'B'. The Zacks Consensus Estimate for 2016 and 2017 climbed nearly 1% and 11%, respectively, over the last 60 days. Additionally, for 2016, EPS is likely to improve nearly 45%, further underlining its potential.

Headquartered in Houston, TX, NCI Building Systems, Inc.NCS , is one of the major integrated manufacturers of metal products for the North American non-residential construction industry. The company is expected to fare better in fiscal 2017 than fiscal 2016 primarily backed by the company's ability to leverage expected market growth, the ongoing cost savings initiatives and opportunities to expand the IMP businesses.

This Zacks Rank #2 company has a VGM Score of 'A'. The Zacks Consensus Estimate for fiscal 2017 earnings has increased 1.1%, over the last 60 days, adding to the optimism over the stock. Further, for fiscal 2017, projected sales growth is 4.4% while EPS is expected to grow 26.8%.

Headquartered in Coral Gables, FL, MasTec, Inc.MTZ is a leading infrastructure construction company operating throughout the U.S. The company engages in the building, installation, maintenance and upgrade of energy, communication and utility infrastructure. MasTec is poised to benefit from full ramp-up on several large oil and gas projects along with a strong backlog. Notably, ample liquidity, improved leverage ratios and excellent working capital metrics enable MasTec to invest in growth.

This Zacks Rank #2 company has a VGM Score of 'B'. Also, upward estimate revisions reinstate hope on the stock's prospects. The Zacks Consensus Estimate for 2016 and 2017 earnings has increased 9.5% and 7.7%, respectively, over the last 60 days. Further, for full-year 2016, sales is poised to grow significantly while EPS is expected to grow a solid 21.4%.

Zacks' Top 10 Stocks for 2017

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NCI BLDG SYSTEM (NCS): Free Stock Analysis Report

MASTEC INC (MTZ): Free Stock Analysis Report

THOR INDS INC (THO): Free Stock Analysis Report

GIBRALTAR INDUS (ROCK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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