Wednesday's IBD 50 Stocks To Watch pick is engineering play Sterling Infrastructure, which is approaching a new buy point. Sterling stock is trading near a 130.89 entry.
Sterling Infrastructure engages in building and reconstruction projects involving transportation and water infrastructure. It builds highways, roads, airfields, ports and light rail systems. It also builds water, wastewater and storm drainage systems.
On Aug. 5, Sterling announced it earned $1.67 per share on revenue of $582.8 million, for year-over-year increases of 31% and 12%, respectively. That marked an acceleration in sales growth, but a slowdown from prior quarters' profit growth, according to IBD MarketSurge.
CEO Joe Cutillo said in the earnings press release that operating margin expanded to 21.4% in its E-Infrastructure business. "This excellent margin profile reflects our shift toward large mission-critical projects, including data centers and manufacturing, and away from small commercial and warehouse work."
The company's earnings for 2024 are expected to rise 27%, according to IBD MarketSurge, with growth of 7% projected for next year.
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Sterling Eyes Buy Point
Sterling stock is attempting to break out past a 130.89 buy point in a double-bottom base that began in mid-May.
It's worth noting that the current formation undercut the lows of the previous base. That means that the base count reset. The double bottom is a first-stage base, which means a breakout is more likely to succeed than later-stage bases.
Another bullish factor is the stock's relative strength line, which has reached its highest level since late May. That's a positive signal of stock market outperformance, but look for that technical indicator to hit a new high in the near future if the stock is able to decisively break out.
With outstanding price performance since September 2022, Sterling stock boasts a strong 97 IBD Composite Rating, according to IBD Stock Checkup.
Further, market risk has abated in recent weeks and investors should be looking to maintain an exposure level of 60%-80%. And Sterling stock is among the best ideas to consider, especially if it makes a new breakout.
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Other Stocks To Keep An Eye On
Three recent IBD 50 Growth Stocks To Watch picks are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Meta Platforms | 542.81 | Cup base | |
| Taiwan Semiconductor | 175.45 | Cup with handle | |
| Ryan Specialty | 69.03 | Flat base |
Source: IBD Data as of Sept. 11
Follow Scott Lehtonen on X at @IBD_SLehtonen for more on the best stocks to buy and watch and the Dow Jones Industrial Average.
