Construction Sector's Mixed Performance: Why SPXC and STRL Are Breaking Away

While the broader Construction sector appears to be lagging in 2024, a handful of standout performers are proving that selective stock picking still matters. SPX Technologies (SPXC) and Sterling Infrastructure (STRL) offer compelling examples of how company-specific momentum can defy sector-wide headwinds.

The Construction Group’s Uneven Year

The Construction group, comprising 92 stocks, currently ranks #15 among the Zacks Sector’s 16 industry groups. This middling position reflects a sector that’s underperforming expectations. On average, Construction stocks have delivered just 4.5% returns year-to-date—a lackluster showing that masks significant performance divergence within the group.

The Zacks Sector Rank system, which aggregates individual stock rankings to measure group strength, highlights this inconsistency. While the sector ranks moderately, beneath the surface lies a story of winners and laggards competing for investor attention.

SPXC: Breaking Free from Industry Constraints

SPX Technologies presents a striking contrast to its lagging peers. With a year-to-date return of 43.3%, the company has substantially outpaced its construction counterparts. This outperformance gains additional significance given that SPXC operates within the Building Products - Air Conditioner and Heating industry—a subsector that has lost 3.1% on average this year.

Operating against this headwind, SPXC’s strong gains suggest robust company fundamentals and positive market sentiment. The stock currently holds a Zacks Rank of #2 (Buy), reinforced by improving analyst expectations. Over the past three months, consensus estimates for full-year earnings have climbed 3.3%, signaling that Wall Street is becoming increasingly bullish on the company’s trajectory.

STRL: The Sector’s Top Performer

Sterling Infrastructure takes performance to another level, delivering an 87.9% year-to-date return—nearly double that of SPXC. The company operates in the Engineering - R and D Services industry, which ranks #96 and has advanced 8.4% year-to-date, providing a more supportive backdrop than SPXC’s subsector.

STRL’s momentum is backed by solid fundamentals: consensus earnings estimates for the current year have risen 9.2% over three months. Recognizing this strength, analysts have rewarded the stock with a Zacks Rank of #1 (Strong Buy)—the highest rating available.

Key Takeaway for Construction Investors

The fact that Construction stocks are lagging overall masks an important reality: within the sector’s 92 companies, genuine outperformance opportunities exist for discerning investors. SPXC and STRL demonstrate that improving earnings outlooks and analyst revisions can drive substantial returns even when the broader group struggles.

For those seeking construction exposure, monitoring these stocks’ ability to maintain momentum will be essential as market conditions evolve.