7 Best Engineering Stocks to Invest in

5. Emcor Group Inc. (NYSE:EME)

Market Cap as of October 22: $20.95 billion

Number of Hedge Fund Holders: 45

Emcor Group Inc. (NYSE:EME) is a mechanical and electrical construction, industrial and energy infrastructure, and building services company comprising over 100 operating companies, in ~180 locations. Services include electrical construction, mechanical construction, energy solutions, and facility maintenance.

Despite the recent AI data center boom, the company’s strong growth trajectory is primarily attributed to its deep relationships with hyperscale data center customers, domestic semiconductor firms, and clean energy component manufacturers. In the second quarter of this year, the company generated $3.67 billion in revenue, representing a 20.40% year-over-year increase.

Mechanical and Electrical Construction segments are leading this growth, with organic revenue growth exceeding 33% in Mechanical Construction and 18% in Electrical Construction for Q2. The company is strategically positioned in attractive geographies and market sectors, securing a healthy mix of projects and executing them with precision and innovation. It excels in high-demand market sectors like high-tech and traditional manufacturing, network and communications, data centers, institutional, and healthcare, which are benefiting from long-term secular trends.

The Industrial Services segment along with the Building Services segment has demonstrated strong growth, with increased demand for both shop and field services. The Electrical business within this segment has experienced a surge in demand from traditional upstream and midstream customers, as well as renewable fuels projects. The UK business is performing as expected, with progress in pipeline development and business development efforts.

The company’s robust financial position, evidenced by a record-high revenue pipeline of $9.0 billion, coupled with strategic acquisitions totaling $173 million, positions Emcor Group Inc. (NYSE:EME) for continued growth and success in the market. Investments in key segments such as Mechanical Construction, Building Services, and Industrial Services provide a solid foundation for future expansion.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding EMCOR Group, Inc. (NYSE:EME) in its first quarter 2024 investor letter:

Many of our Industrial positions provide necessary business-to-business operational services, highly technical components, automation & efficiency improvements, or essential infrastructure services. EMCOR Group, Inc. (NYSE:EME) supplies electrical, mechanical, and facilities services. The company’s strong results fueled a 62% increase in the stock price. Highlights from the quarter included improved margins and a record level of backlog. We trimmed the position on this strength.