The Zacks Building Products - Heavy Construction industry stands on a strong growth trajectory, supported by favorable long-term trends despite near-term headwinds such as elevated interest rates, project timing uncertainties, and labor market pressures.
The outlook is especially bright, thanks to a robust federal infrastructure agenda that continues to unlock substantial investments in transportation, broadband, and energy networks. This surge in spending is fueling rising demand across high-growth sectors like communications, power transmission, and large-scale civil projects. Additionally, the accelerating expansion of the data center market is opening new avenues for heavy construction companies, as demand for sophisticated, large-scale infrastructure solutions climbs rapidly. Industry leaders such as EMCOR Group Inc. EME, MasTec, Inc. MTZ, Granite Construction GVA, and Orion Group Holdings, Inc. ORN are particularly well-positioned to capitalize on these trends, driven by their technical capabilities, diversified portfolios, and strategic focus.
Industry Description
The Zacks Building Products - Heavy Construction industry consists of mechanical and electrical construction, industrial and energy infrastructure as well as building service providers. This industry comprises heavy civil construction companies that specialize in the building and reconstruction of transportation projects, including highways, roads, bridges, airfields, ports and light rail. The companies serve commercial, industrial, utility and institutional clients. The industry players are engaged in the engineering, construction and maintenance of communications infrastructure, oil and natural gas pipelines, as well as processing facilities for energy and utility industries. These firms are also engaged in mining and dredging services in the United States and internationally.
4 Trends Shaping the Future of the Heavy Construction Industry
U.S. Administration’s Infrastructural Endeavor: The U.S. administration’s ambitious infrastructure plan, aimed at creating modern, sustainable infrastructure and a cleaner future, is set to have significant implications for the economy and the construction industry over the next five years. This comprehensive initiative includes accelerated investments across diverse areas such as roads, bridges, green spaces, water systems, electricity grids, and universal broadband. By laying the groundwork for sustainable growth, the plan seeks to mitigate the effects of climate change and enhance public health, ensuring access to clean air and water. This expansive infrastructure agenda could be a major boost for companies involved in construction and related sectors.
The data center boom is fueling growth for U.S. heavy construction firms by driving demand for large-scale site development, power infrastructure, and specialized mechanical systems. These long-term, high-value projects enhance backlog visibility, regional expansion, and margin performance, particularly for companies with technical expertise and national execution capabilities. Overall, the data center boom, fueled by AI and digital infrastructure needs, is reshaping the U.S. heavy construction landscape, favoring firms with technical expertise, national reach, and the ability to execute high-value, mission-critical infrastructure.
Strong Prospects in Telecommunication: The ramp-up of projects related to 5G has been a silver lining for the industry players. The increased demand from telecom customers for wireline networks, wireless/wireline converged networks and wireless networks using 5G technologies has been benefiting industry players. Construction work for communications is expected to pick up on huge investments in network expansion. Also, the industry is poised to gain from a significant number of project awards across multiple segments, including communications, health care, transmission and power, along with infrastructural projects in domestic and international markets.
Solid Inorganic Moves & Renewable Business Prospects: Acquisitions have been companies’ preferred mode of solidifying product portfolios and leveraging new business opportunities. Again, due to increased renewable project activity and the expansion of services in biomass and other smaller production facilities, the power generation and industrial construction market is poised to see sizable growth. The companies are well-positioned to gain from the renewable energy drive of the pro-environmental Biden administration. The development and deployment of technology solutions across the full spectrum of decarbonization efforts, comprising all facets of infrastructure for providing carbon-free energy solutions, should benefit the companies going forward.
Macroeconomic Challenges: The biggest headwinds for the industry players are centered around macroeconomic challenges and labor availability. In addition to a tight labor market, a rise in raw material costs is a concern. Meanwhile, the businesses of the industry players are susceptible to the cyclical nature of the markets in which clients operate and are dependent on the timing and funding of new awards. Hence, volatility in credits and operating risks associated with economic down cycles are pressing concerns. Macroeconomic effects may dampen the near-term execution of some customer plans.
A high-interest rate environment could challenge the U.S. heavy construction industry in 2025 by increasing borrowing costs, slowing private sector projects, and dampening demand for commercial and residential construction.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Building Products - Heavy Construction industry is a nine-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #10, which places it in the top 4% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a higher earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since January 2025, the industry’s earnings estimates for 2025 have increased to $5.76 per share from $5.61.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector & the S&P 500
The Zacks Building Products - Heavy Construction industry has performed better than the broader Zacks Construction sector and the Zacks S&P 500 Composite over the past year.
Stocks in this industry have collectively gained 12.3% against the broader sector’s 7.9% decline. Meanwhile, the S&P 500 has jumped 7.7% in the said period.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings ratio, which is a commonly used multiple for valuing heavy construction stocks, the industry is currently trading at 17.43 versus the S&P 500’s 20.43 and the sector’s 17.15.
Over the past five years, the industry has traded as high as 22.98X, as low as 9.67X and at a median of 15.82X, as the chart below shows.
Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500
Industry’s P/E Ratio (Forward 12-Month) Versus Sector
4 Heavy Construction Stocks to Buy Now
Here, we have discussed four stocks from the industry that have solid growth potential.
Granite Construction: Based in Watsonville, CA, this is an infrastructure contractor. Granite Construction has been benefiting from robust public-sector demand, improved project execution, and strategic business realignment. The company’s first quarter benefited from a strong bidding environment supported by federal and state infrastructure funding, resulting in a record-high CAP of $5.7 billion. Additionally, the company remains focused on strategic acquisitions, particularly vertically integrated material businesses, to expand its geographic reach and reinforce its long-term growth trajectory.
Granite Construction, a Zacks Rank #1 (Strong Buy) stock, has rallied 32.8% over the past year. Also, the 2025 earnings per share (EPS) estimate has increased to $5.94 from $5.49 over the past seven days. Earnings for 2025 are expected to grow 23.2% from a year ago. This company surpassed earnings estimates in two of the trailing four quarters, with the average surprise being 25.4%. Again, it carries an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: GVA
Orion Group: This company, based in Houston, TX, specializes in providing services for the marine, industrial, and infrastructure concrete industries. This specialty construction company is well-positioned to capitalize on rising market demand for its specialized marine and concrete services, driven by government and private sector funding. Additionally, strong relationships with key contractors enhance its ability to secure contracts, supporting revenue growth. The company's commitment to debt reduction and margin expansion through operational efficiency further strengthens its financial outlook.
Orion Group, currently sporting a Zacks Rank #1, has lost 9.6% over the past year. Nonetheless, the 2025 EPS estimate has increased to 16 cents from 7 cents over the past seven days. Earnings for 2025 are expected to grow 6.7% from a year ago. ORN surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, with the average negative surprise being 104.4%. Yet, its three-to-five-year expected EPS growth rate is currently pegged at 25%. Again, it carries an impressive VGM Score of A.
Price and Consensus: ORN
MasTec: Based in Coral Gables, FL, this is a leading infrastructure construction company operating mainly throughout North America. MasTec’s growth outlook is underpinned by a robust backlog, prudent financial management, and a strategic focus on high-growth sectors such as clean energy and communications. The company continues to benefit from its diversified business structure, the ongoing expansion of its non-pipeline operations, and targeted acquisitions. As of March 31, 2025, MasTec reported an 18-month backlog of $15.88 billion, marking a 23.7% increase year over year and an 11% rise from the previous quarter. This growth was broad-based across all four segments, with Pipeline Infrastructure contributing the most significant boost, having more than doubled its backlog since year-end.
MasTec, currently carrying a Zacks Rank #2 (Buy), has gained 36.6% over the past year. Earnings estimates for 2025 have increased to $6.12 per share from $5.55 over the past seven days. Earnings for 2025 are expected to grow 54.9% from a year ago. MTZ surpassed earnings estimates in all the trailing four quarters, with the average surprise being 26%. Again, it carries an impressive VGM Score of A.
Price and Consensus: MTZ
EMCOR Group: Headquartered in Norwalk, CT, this company provides electrical and mechanical construction and facilities services in the United States. EMCOR has been benefiting from surging demand in data centers, healthcare, and infrastructure markets. The successful integration of Miller Electric further boosted backlog and scale. The company's backlog rose to $11.8 billion at the first-quarter end, reflecting broad-based strength and confidence in long-term demand, particularly in reshoring-driven sectors like semiconductors and biopharma. Operational excellence, including disciplined execution, prefabrication, and strong labor management, has been helping it to deliver record margins.
EMCOR, currently carrying a Zacks Rank #2, has surged 15.8% over the past year. Earnings estimates for 2025 have increased to $23.62 per share from $23.58 over the past seven days. Earnings for 2025 are expected to grow 9.8%. EME surpassed earnings estimates in all the trailing four quarters, with the average surprise being 22.8%. It carries an impressive VGM Score of A.
Price and Consensus: EME
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