While the road for Magnificent Seven stocks like Nvidia, Alphabet, Meta Platforms and Tesla gets bumpy, less glamorous Construction Partners looks to pave the way for a breakout to a record high.
Construction Partners has landed on Investor's Business Daily's Breakout Stocks Index, which gets updated weekly. In recent months, Nvidia, Meta and Google stock have all come on and off this list, but no Mag 7 names currently make the cut.
While Nvidia gains some traction Wednesday but remains below its 50-day line, ROAD stock has shot right past a fresh buy point.
Construction Partners On The Road To 50% Growth
Operating across six southeastern states, Construction Partners focuses on the construction, repair, and maintenance of surface infrastructure. Publicly funded projects make up the majority of its business.
Jobs include local and state roadways, interstate highways, airport runways and bridges. The Alabama-based company also handles private sector projects such as paving and sitework for office and industrial parks, shopping centers, local businesses and residential developments.
Over the last four quarters, Construction Partners has posted earnings growth ranging from 78% to 375%. When the company reports second-quarter numbers on Aug. 9, analysts forecast a 32% gain to 54 cents per share.
Further, after delivering 129% earnings growth to 94 cents a share in 2023, Wall Street expects a 50% gain to $1.41 per share for fiscal 2024. The road ahead for 2025 also looks solid, with analysts predicting 26% growth to $1.78 per share.
Sales growth has ranged from 11% to 21% over the last four quarters. In the first quarter, Construction Partners posted 14% growth to $371.4 million. When the company reports later this month, it is expected to clear the half a billion mark with 19% growth to $503.6 million.
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Riding A Strong Building And Construction Market
With a strong 98 Composite Rating, Construction Partners stands tall in IBD's Building-Heavy Construction industry group. Only Argan and Granite Construction top it with the highest-possible 99 Composite Rating.
The Accumulation/Distribution Ratings for the group leaders also reveals demand. Construction Partners sports a strong B+ rating. Argan and Granite Construction earn an even better A- grade.
Despite some recent bumps, Nvidia still sported a 99 Composite Rating and a spot.alongside construction leader Argan, Nvidia on a list of 18 "perfect" stocks. But the artificial intelligence powerhouse lost its highest-possible 99 Composite Rating Tuesday as NVDA fell to a 97. Nvidia has also seen its Accumulation/Distribution rating slip to a D-.
ROAD Stock Paves Path To Breakout
Construction Partners has been on an upward trajectory since coming off a low in July 2022. Its 10-week moving average has also been on the rise as its stock has crafted multiple bases.
The latest formation is third-stage consolidation with a 62.35 buy point. Construction Partners briefly cleared that entry last week before retreating. While Nvidia hit another pothole Tuesday, sinking 7%, Construction Partners managed to hold a 1.2% gain. On Wednesday, ROAD stock soared over 6% to climb into and beyond its buy zone.
The relative strength line for Construction Partners has spiked to a 52-week high. In another sign of technical strength, ROAD stock's 21-exponential moving average has climbed back above the longer-term 50-day line.
Construction industry peers Argan and Granite Construction continue to build on their impressive moves. Meanwhile, Nvidia is up over 12%. Today's action shows Nvidia may be gaining traction, its recent troubles send a reminder to investors to heed the 8 "secrets" of selling.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
