Daily Stock Pick for August 23, 2023

Tech stocks are some of the most popular stocks out there – absolute darlings of the media. 

People love reading about tech – and with AI the hot topic of the year, that’s only accelerated.

But this means some sectors – even if they’re worth trillions – almost seem to not exist if all you go by is the financial news.

And that means investors could be missing out on a lot of opportunities from these “boring” non-media friendly sectors.

Today’s stock is from one such boring sector – construction (which also happens to be a nearly $2 trillion-a-year industry just in the U.S. alone).

Its stock is up 55% over the past year and 33% this year. Its earnings have been solidly growing.

But because of the broader market pullback, its stock has slipped by almost 10% in the past month – giving us an attractive entry opportunity.

Its current P/E ratio also is below its industry average, solidifying the case that now may be a good time to get in on this stock.

Terex Corporation (TEX)

Terex Corporation manufactures heavy-duty construction equipment such as cranes, crushers, and conveyors. In early August, the company released its second-quarter earnings – which revealed strong confidence in near-term demand, with full-year guidance being raised for both sales and margins.

Considering that U.S construction spending has already hit $917 billion in the first six months of 2023 (compared to $890 billion for the first half of 2022), macro conditions appear to be supportive of the industry as a whole.

Yet, Terex now expects earnings-per-share to grow by 58% this year – compared to the industry average of 33%. But its P/E ratio is currently only standing at 8.6x – compared to about 12x for the construction services industry.

In sum, with a near-term pullback in its price and a P/E ratio below its peers – but with expected earnings growth way ahead of its peers – now could be a good time to take a stake in this solid construction stock.

To your wealth,
Felix @ Ace of Investing