We recently published a list of 11 Best Engineering Stocks to Invest in Now. In this article, we are going to take a look at where EMCOR Group Inc. (NYSE:EME) stands against other best engineering stocks to invest in now.
The global engineering services market was valued at $3.26 trillion in 2023, as reported by Grand View Research. It’s projected to grow at a CAGR of 5.5% from 2024 to 2030, due to several driving factors. Technological advancements, particularly the integration of automation, AI, and IoT, are dramatically enhancing productivity and operational efficiency. Simultaneously, rapid urbanization and substantial government investments are driving increased infrastructure development worldwide. Stringent environmental regulations are also forcing an emphasis on sustainable solutions, which further propels this market expansion.
According to ALLPLAN, the architecture, engineering, and construction (AEC) industry collectively is undergoing a fundamental shift, with sustainability transitioning from an optional consideration to an essential imperative. As the urgency of climate change intensifies, the built environment faces increasing pressure to minimize its environmental impact and contribute to global net-zero targets. The engineering industry is actively exploring and implementing innovative sustainable solutions. The adoption of green building materials, such as recycled aggregates and low-carbon concrete, is gaining traction as a means of reducing environmental footprints and promoting circular construction principles. Energy-efficient designs that incorporate passive strategies and renewable energy systems are becoming standard practice. The rise of smart cities, which are powered by IoT and AI, further underscores the industry’s commitment to urban sustainability.
Technology is pivotal for driving sustainable practices. Building Information Modeling (BIM) and Digital Twins empower engineering teams to optimize designs, reduce material waste, and enhance operational efficiency, which leads to more sustainable project outcomes. Automation and prefabrication are reshaping construction methodologies by minimizing both material waste and energy consumption. Real-time monitoring systems, which use IoT and AI, provide critical data for informed decision-making. Achieving sustainability in engineering projects necessitates a proactive and collaborative approach. Lifecycle assessments, localized material sourcing, and robust monitoring systems are essential engineering strategies. By embracing principles of technological innovation and collaborative engineering practices, engineers are mitigating the environmental impact of their projects and creating more resilient and sustainable infrastructure.
Our Methodology
We used the Finviz stock screener to compile an initial list of top engineering stocks. We then selected 11 engineering stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A construction crew working on a modern electrical installation in a commercial building.
EMCOR Group Inc. (NYSE:EME)
Number of Hedge Fund Holders: 55
EMCOR Group Inc. (NYSE:EME) delivers specialized engineering and construction services. With a focus on electrical and mechanical systems, it facilitates maintenance and industrial solutions across the US and the UK. It designs, installs, and maintains complex systems like power generation, HVAC, and communication networks.
The US Mechanical Construction segment at EMCOR Group Inc. (NYSE:EME) generated revenues of $1.66 billion in Q4 2024, which marked a 12.8% year-over-year increase. This growth was driven by the strong demand in the network and communications sector (data centers), high-tech manufacturing, and healthcare. The segment also benefited from increased service work, which reflected the expansion of its mechanical and fire protection maintenance base.
The company is confident in the underlying demand drivers of the manufacturing and industrial sectors, which is supported by a 7% year-over-year increase in manufacturing RPOs (Remaining Performance Obligations). EMCOR Group Inc. (NYSE:EME) is positioned to capitalize on growing markets due to its expertise in complex mechanical and piping systems, VDC (Virtual Design and Construction), and prefabrication capabilities.
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.
Overall, EME ranks 4th on our list of best engineering stocks to invest in now. While we acknowledge the growth potential of EME, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EME but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
