As global economies advance and modernize, the demand for robust infrastructure solutions grows in tandem. Investing in infrastructure stocks can be a strategic move for investors seeking to capitalize on this trend.
Key sectors such as transportation and energy are poised for growth, fueled by demand for sustainable energy initiatives. These companies will be crucial in developing and maintaining roads, bridges, airports, data centers and energy grids. Governments worldwide have implemented robust infrastructure spending plans to stimulate their economies. This includes the United States Infrastructure Investments & Jobs Act, committing $1.2 trillion for transportation and infrastructure spending.
Each of these companies brings unique strengths and expertise to the table. This positions them well to benefit from the growing infrastructure development and maintenance demand across North America and abroad.
Here are the top 3 infrastructure stocks to buy to pave your way to profits in 2024 and beyond.
Eaton (ETN)
Eaton (NYSE:ETN) is a diversified power management company and one of the best infrastructure stocks to buy in 2024. Their offerings include electrical components, industrial controls, hydraulic systems and vehicle transmissions.
Eaton’s infrastructure-related products are used in various applications, including power generation, transmission and distribution, data centers and transportation systems. They are currently at the forefront of emerging growth platforms, from artificial intelligence to renewable energy. This has contributed significantly to their robust revenue and earnings growth since their pandemic slump in 2020.
Additionally, more than a century of operational expertise makes them an invaluable partner for companies and governments. In Q1 FY24, revenue increased 8% YOY to $5.94 billion. EPS grew 28% from the year prior, with record segment margins up 340 bps to 23.1%. Their backlog ended in March 2024 at record levels, and they recently announced the acquisition of U.K.-based Exertherm.
Caterpillar (CAT)
Caterpillar (NYSE:CAT), known for its manufacturing prowess in the heavy machinery and construction industry, is a compelling investment choice in 2024. Their products are used in a wide range of industries, including construction, mining, energy and transportation.
Key competitive advantages are Caterpillar’s global presence, strong brand reputation and comprehensive product portfolio. The company’s equipment is known for its durability, reliability and performance, making it a preferred choice for many customers. Furthermore, it can appeal to a wide range of customer segments, making them less reliant on any one industry. After delivering record earnings results in FY23, Caterpillar continues its positive growth trajectory.
Although revenue was flat in the first quarter of 2024, they delivered impressive bottom-line growth. EPS increased 54% YOY to $5.75 per share while generating strong FCF from operations. With a record $5.1 billion for share repurchases and dividends, CAT stock remains among the top infrastructure stocks to buy in May.
Quanta Services (PWR)
Quanta Services (NYSE:PWR) stock provides specialized contracting services for the electric power, pipeline and telecom industries. The company’s services include designing, installing, maintaining and repairing infrastructure assets.
Quanta’s growth over the last several years has truly been remarkable. Their revenue and profits have accelerated rapidly, and the stock has responded favorably. The stock has significantly outperformed the broader market over the last five years, rising 704% compared to the S&P 500’s 92%. Its ability to provide a wide range of services allows it to serve diverse customers.
In Q1 FY24, revenue increased 14% YOY to $5.03 billion. Net income swelled 25% YOY to $118.4 million, or $0.79 per share. Quanta is off to a great start in 2024, delivering record revenue, EPS and FCF. Moreover, their backlog remains at an all-time high. They expect increased demand for utilities across the United States, driven by renewable energy, AI and data center expansions.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
