Infrastructure is the backbone of any growing economy, and for the United States, the sector is poised for significant expansion heading into 2025. Major legislative initiatives, including the $1.2 trillion bipartisan infrastructure bill, are setting the stage for a wave of modernization projects. This historic investment promises to transform America’s roads, bridges, railways, energy networks, and digital infrastructure, while creating 1.5 million jobs annually over the next seven years.
The Federal Reserve’s recent rate cuts add more momentum to the sector. With interest rates expected to decline further in 2025, borrowing costs for both public and private projects will drop, enabling an acceleration of construction activity. Additionally, declining mortgage rates could reinvigorate residential construction, further boosting the demand for materials and machinery.
Government-backed initiatives like the Infrastructure Investment and Jobs Act and the Inflation Reduction Act are bolstering renewable energy, data centers, and advanced manufacturing-related projects, while falling mortgage rates could revive residential construction. These dynamics make infrastructure stocks a compelling opportunity for long-term investors.
The United States is entering a transformative period of infrastructure development, driven by bipartisan legislation, renewable energy initiatives, and declining interest rates. For investors, the potential in infrastructure stocks is immense.
Companies like Sterling Infrastructure, Inc. STRL, EMCOR Group, Inc. EME and GE Vernova Inc. GEV are uniquely positioned to thrive in this environment, with diverse portfolios that align with the nation’s modernization goals. As projects accelerate, these stocks could see robust revenue and earnings growth well into the next decade.
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Using the Zacks Stock Screener, we have identified three stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold) and are well positioned for success in 2025.
Sterling: This is a premier U.S. service provider specializing in transportation, civil construction, and e-infrastructure solutions. With its focus on transportation and water infrastructure, Sterling is a direct beneficiary of increased government spending. The company’s strategic investments in data center and renewable energy construction also provide growth avenues as these sectors expand rapidly. The E-Infrastructure Solutions segment of STRL, focused on data centers and advanced manufacturing projects, has become the company’s primary revenue generator, significantly boosting operating margins (read more: Sterling Stock Still a Buy for Investors?).
STRL, currently flaunting a Zacks Rank #1, has gained 129.4% in the past year. The 2025 earnings per share (EPS) estimate has increased to $6.45 from $6.02 over the past 60 days. Earnings for 2025 are expected to grow 8.1%. It currently carries a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
EMCOR: EMCOR provides electrical and mechanical construction services, making it integral to large-scale energy and manufacturing projects. With the Inflation Reduction Act driving renewable energy investments, EMCOR is well-positioned to benefit from the growing need for advanced electrical systems and maintenance services.
The company’s domestic construction segments experienced strong project growth in the trailing three years, with total Remaining Performance Obligations or RPOs increasing 18.6%, 33.2% and 22% year over year in 2023, 2022 and 2021, respectively. As of the third-quarter end, the company witnessed record RPOs of $9.8 billion, reflecting growth of 13.3% year over year. EME is benefiting from innovation and high-demand projects, particularly in data centers, semiconductor plants and institutional sectors.
EME, currently sporting a Zacks Rank #1, has gained 121.1% in the past year. The 2025 EPS estimate has increased to $22.24 from $21.50 over the past 60 days. Earnings for 2025 are expected to grow 7.2%. It currently carries a Growth Score of B.
GE Vernova: Headquartered in Cambridge, MA, this energy-focused division of General Electric is set to capitalize on the rapid expansion of renewable energy infrastructure. With its focus on wind power and grid solutions, GEV is aligned with the goals of the Inflation Reduction Act. The company’s advanced technology and deep expertise in power generation make it a standout in the transition to cleaner energy systems.
Recently, the company has raised its multiyear financial outlook, targeting approximately $45 billion in revenues and a 14% adjusted EBITDA margin by 2028. The company’s Power segment is expected to reach a 16% EBITDA margin by 2028, while the Wind segment is targeting profitability with a 10% EBITDA margin by the same year. In Electrification, high-teens revenue growth is projected, with a goal of a 16% segment EBITDA margin by 2028. Also, it plans to generate at least $14 billion in cumulative free cash flow between 2025 and 2028, reflecting a robust financial trajectory supported by strong demand and operational improvements.
GEV — currently carrying a Zacks Rank #3 — has gained 137.1% since its inception on April 2, 2024. The 2025 EPS estimate has increased to $6.65 from $6.13 over the past 30 days. Earnings for 2025 are expected to grow 194.3%.