Sterling Infrastructure: Buy This Small Cap Growth Stock Even After Earnings Pop (STRL)

Infrastructure companies in the US are experiencing significant growth, with recent earnings reports from companies like Powell Industries (POWL) showing impressive returns for investors. For example, POWL’s stock price surged from $142 on April 30 to $176 on May 1 following a strong fiscal Q2 2024 earnings report, which revealed a nearly 50% increase in year-over-year revenue growth.

Another US-based infrastructure growth stock, Sterling Infrastructure (NASDAQ: STRL), also reported a strong quarter. After the Q1 2024 earnings report, the stock rose by 15%, continuing its upward trend from my previous recommendation in February. The company reported impressive financial highlights, including revenue growth, increased gross margin, and higher net income.

Despite challenges such as bad weather in the first quarter, Sterling CEO Joe Cutillo remains optimistic about the company’s future growth prospects. The company’s backlog increased significantly, providing visibility for future growth opportunities. Additionally, Sterling is actively seeking acquisition targets to further enhance its service offering.

From a technical and fundamental standpoint, STRL has shown strong performance, with a 188% increase in the past year and a forward P/E ratio of about 20. The SA Quant system gives STRL a Strong Buy rating, with solid factor grades in profitability, momentum, and revisions.

Analysts expect continued growth for STRL, with upward revisions in EPS estimates for 2024 and 2025. Most SA analysts are bullish on the stock, despite limited coverage from Wall Street analysts. As a small-cap growth stock, STRL’s price action may be volatile, especially after a stellar earnings report.

Comparing STRL’s price action to peers like POWL, it is evident that infrastructure stocks have the potential to outperform in 2024. PRIM and ROAD are also performing well, further supporting the positive outlook for the sector.

In conclusion, the strong Q1 2024 earnings report and positive outlook for the year make STRL a compelling buy. While there are risks to consider, such as market volatility and potential weather-related delays, the long-term growth potential for STRL remains promising. Investors should consider buying STRL now to capitalize on its momentum and future growth prospects.