10 Best Engineering Stocks to Buy for 2025

2. KBR Inc. (NYSE:KBR)

Number of Hedge Fund Holders: 53

KBR, Inc. (NYSE:KBR) delivers engineering, science, and technology solutions to companies and governments worldwide. Its Government Solutions segment provides solutions to intelligence, defense, aviation, space, and other missions for military and other government agencies, primarily in the US, UK, and Australia. In addition, its Sustainable Technology Solutions segment operates a portfolio of over 80 sustainability-focused process technologies.

KBR Inc. (NYSE:KBR) is running on a strong profitability model. Its fiscal Q3 2024 reported double-digital year-over-year growth across all its key metrics, with group revenue up 10% year-over-year. The company closed on its LinQuest acquisition and is carrying out the integration process. LinQuest has performed profitably since closing, winning over $60 million of new work and delivering solid results.

On December 16, the company announced that it had been awarded around $445 million cost-plus-fixed-fee contract under the Department of Defense Information Analysis Center’s (DoD IAC) multiple-award contract (MAC) vehicle. Awarded by the US Air Force’s 774th Enterprise Sourcing Squadron, the DoD IAC MAC task orders aim to develop and create new knowledge to enhance the DTIC repository and the R&D and S&T community. The work is expected to be performed across various DoD locations over five years.

Cove Street Capital Small Cap Value Fund stated the following regarding KBR, Inc. (NYSE:KBR) in its Q2 2024 investor letter:

“On the plus side, KBR, Inc. (NYSE:KBR) has been a strong performer so far YTD on the back of an investor day in the second quarter that highlighted the success of the last four-year plan (2020-2023) before laying out ambitious but credible targets for the next 4 years (2024- 2027). Since 2020, KBR has pivoted its commercial business away from high-risk EPC projects to a more differentiated IP-first consulting approach that now sees 20% EBIT margins and contributes 40% of its overall profitability. KBR has cleaned up its balance sheet by settling convertible notes and warrants and now sits at a healthy 2x net leverage. With the upcoming ramp of a $20B government services contract with the US army, the company is well positioned to generate cash and return value to shareholders.”