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 KBR Inc. (NYSE:KBR) 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).
An engineer wearing protective gear overlooking a research and development laboratory.
KBR Inc. (NYSE:KBR)
Number of Hedge Fund Holders: 56
KBR Inc. (NYSE:KBR) delivers advanced scientific, technology, and engineering solutions, with a focus on government and commercial projects globally. Its expertise encompasses systems engineering, cyber analytics, and program management for defense and space sectors. It also offers proprietary process technologies and sustainable solutions for the energy and industrial markets.
The company’s Sustainable Technology Solutions (STS) segment experienced growth in 2024, with Q4 revenues increasing by 30% year-over-year and full-year revenues rising by 17%. This was driven by the demand for the company’s ammonia, energy security, and decarbonization offerings, which include LNG projects. Key engineering projects in the past quarter included the deployment of the company’s ammonia process technology in Angola and Kazakhstan. This showcased its expertise in complex chemical plant design and construction.
KBR Inc.’s (NYSE:KBR) involvement in LNG projects like Shell’s Manatee LNG and Oman LNG highlights its proficiency in large-scale energy infrastructure engineering. The partnership with Mura Technology, which uses its Hydro-PRT advanced plastics recycling process, demonstrates the company’s commitment to developing and deploying cutting-edge chemical engineering solutions for sustainability.
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 their 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 their overall profitability. KBR has cleaned up their 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 U.S. army, the company is well positioned to generate cash and return value to shareholders.”
Overall, KBR ranks 3rd on our list of best engineering stocks to invest in now. While we acknowledge the growth potential of KBR, 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 KBR 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.
