Back to top

Image: Bigstock

Buy, Hold, or Take Profits in Sterling Infrastructure (STRL) Stock at All-Time Highs?

 As one of the top performers in the industrial products sector, Sterling Infrastructure (STRL - Free Report)  stock has continued to hit new all-time highs over the past few trading sessions.

While several positive catalysts are lifting Sterling Infrastructure stock, it’s certainly a worthy topic of whether it's time to buy, hold, or take profits in STRL at over $240 a share.

To that point, STRL has spiked nearly +100% over the last year, up more than +40% year to date, and is now sitting on gains of nearly +2,400% in the last five years.

Zacks Investment Research
Image Source: Zacks Investment Research

 

CEC Acquisition & AI Boom

Focusing its concentration outside of traditional physical infrastructure projects, Sterling Infrastructure announced in June that it will be acquiring CEC Facilities Group, expanding its reach into mission-critical electrical contracting for semiconductors and data centers.

Pending regulatory approval, the $505 million acquisition of CEC will close during Q3 and is expected to add nearly $400 million to Sterling Infrastructure’s top line this year alone and over $50 million in EBITDA. Benefitting from the AI boom and making the CEC acquisition extremely lucrative, Sterling Infrastructure has secured several AI-related projects, including one with a reward of $100 million for a massive data center development in the Southeastern United States.

 

High Margin Projects & Strong Backlog

Further amplifying the surge in Sterling Infrastructure stock has been the company’s focus on high-margin projects such as its AI endeavors and the Hyundai Engineering America facility in Georgia, which is aimed at boosting EV and hybrid car production. Avoiding low-margin work, Sterling Infrastructure is known for its on-time deliveries, prioritizing complex projects where speed and execution are critical to its clients' needs.

Interestingly enough, Sterling Infrastructure was chosen as my Bull of the Day in early April after securing interstate roadway projects with the Utah and Colorado Departments of Transportation. Since then, STRL has soared over +100% and has added a major highway project in Houston as well. Sterling Infrastructure’s total backlog currently stands at around $2 billion, adding a solid cushion for future revenue.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Tracking Sterling Infrastructure’s Outlook

Following a record year, Sterling Infrastructure’s total sales are expected to dip 1% in fiscal 2025 to $2.09 billion. However, FY26 sales are projected to rebound and rise 8% to a new peak of $2.26 billion.

Zacks Investment Research
Image Source: Zacks Investment Research

More intriguing, Sterling Infrastructure’s bottom line is slated to expand 41% in FY25 to new peaks of $8.61 per share from record EPS of $6.10 last year. Plus, FY26 EPS is projected to spike another 10% to $9.48.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Monitoring Sterling Infrastructure’s P/E Valuation

At current levels, Sterling Infrastructure stock trades at 28.1X forward earnings. This is a slight premium to the benchmark S&P 500’s 24.2X forward earnings multiple and its Zacks Engineering-R and D Services Industry Average of 22.7X, with some noteworthy peers being AECOM (ACM - Free Report)  and Fluor Corporation (FLR - Free Report) .  

Zacks Investment Research
Image Source: Zacks Investment Research

 

Conclusion & Strategic Thoughts

After such an extensive rally, Sterling Infrastructure stock lands a Zacks Rank #3 (Hold). Undoubtedly, Sterling Infrastructure has remained a staple in advancing America’s Infrastructure and is still worth holding in the portfolio, although it’s tempting to take profits with STRL at all-time highs.

However, it’s noteworthy that analysts have become bullish following the announcement of the CEC acquisition, and Sterling Infrastructure stock may eventually serve as a prime buy-the-dip target, which previously led to STRL being my selection for the Bull of the Day.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Fluor Corporation (FLR) - free report >>

AECOM (ACM) - free report >>

Sterling Infrastructure, Inc. (STRL) - free report >>

Published in