Best Publicly Traded Construction Companies for Investors

The construction industry covers everything from the initial planning of the project to painting the walls. There are several publicly traded construction companies in which you can invest. Here are some of the best construction stocks that you can buy in September.

When we talk about construction, there are equipment and materials manufacturers and residential homebuilders, among others.

Caterpillar (CAT) is a global leader in manufacturing heavy-duty construction and mining equipment, industrial gas turbines, diesel and natural gas engines, as well as diesel-electric locomotives. The company operates through four business segments—Construction, Resource, Energy and Transportation, and Financial Services.

Caterpillar is well-positioned to gain from the recently approved $1 trillion infrastructure bill. The bill is expected to increase spending on construction machinery, which should increase Caterpillar’s revenues since it's the leading player in this market. The analysts polled by TIKR expect Caterpillar’s revenues to rise 21 percent and 12 percent, respectively, in 2021 and 2022.

Caterpillar has a long history of growing its dividend nearly every year. Dividend increases have been confident lately, with the most recent two raising the dividend per share by 19.8 percent and 7.8 percent, respectively. Caterpillar is expected to continue rewarding shareholders significantly in terms of future dividend growth. CAT stock is trading at the NTM EV-to-sales multiple of 2.6x and a PE multiple of 18.4x. The stock has gained 37 percent over the last year.

With over 27 million tons of steel capacity, Nucor (NUE) is the leading steel producer in the U.S. It mainly serves the commercial, industrial, and municipal construction markets. Nucor is also North America's largest recycler. The company acquired The David J. Joseph Company in 2008. Nucor operates through three segments—steel mills, steel products, and raw materials. The company’s business is thriving because steel prices have skyrocketed over the pre-pandemic levels.

Nucor plans to return nearly 40 percent of its profits to shareholders in the form of share repurchases and dividends. NUE stock is trading at the NTM EV-to-sales multiple of 0.9x and a PE multiple of 4.2x. The stock has nearly doubled so far this year.

D.R. Horton (DHI), the largest residential homebuilder in the U.S. by the number of units sold, has several attributes that investors should look for in a construction stock. First, the company has a solid reputation. D.R. Horton has operations in 90 markets in 29 states across the U.S. The company’s debt level is low compared to its peers due to its conservative management approach.

D.R. Horton is one of the few homebuilders that distributes dividends, which it has raised consistently during periods of economic growth. The analysts polled by TIKR expect DHI’s revenues to rise 37 percent and 15 percent, respectively, in fiscal 2021 and 2022. DHI stock trades at the NTM PE multiple of 7.0x. The stock has gained 23 percent over the last year. Overall, DHI stock is a good buy if you want to invest in the U.S. residential construction industry.