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Under-the-Radar Stocks to Buy to Profit from this Wall Street Megatrend

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Today’s episode of Full Court Finance at Zacks dives into the multi-decade infrastructure spending boom that has a chance to become the most dominant trend on Wall Street. The episode then explores two under-the-radar, highly-ranked Zacks stocks—Hubbell and Willdan—that investors might want to buy to ride the new-age infrastructure megatrend, spanning AI data centers, energy efficiency, and beyond.

Infrastructure Spending Boom

The U.S. recently kickstarted a multi-trillion-dollar, multi-decade infrastructure spending boom that has a chance to become the most dominant trend on Wall Street. The new age of infrastructure includes AI data centers, revamped electricity grids, energy efficiency, and much more.

Compounding megatrends across technology, energy, deglobalization, and beyond create a potential once-in-a-lifetime opportunity for investors to ride the wide-ranging infrastructure spending spree.

The U.S. committed nearly $2 trillion to broader spending efforts across energy and infrastructure in the last several years. On top of that, technology giants like Microsoft and big banks like JPMorgan Chase are helping spur the sprawling wave of infrastructure spending.

Why Hubbell is a Worthy Buy-and-Hold Stock

 

Hubbell Incorporated (HUBB - Free Report)  is a leading utility and electrical solutions manufacturer with an established track record and a massive portfolio of products and solutions. Hubbell is growing alongside the rapid expansion of data centers to fuel the AI revolution, electrification, grid modernization, and the broader energy transition.

HUBB grew its revenue by an average of 14% during the past three years. Hubbell's recent stretch is part of a long history of growth only interrupted a few times over the past 25 years.

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Hubbell posted a beat-and-raise second quarter. HUBB’s CEO said once again that strong spending trends across datacenters, renewables, grid modernization, and electrification are fueling its near-term and long-term outlook.

Hubbell’s upbeat EPS outlook helps it earn a Zacks Rank #2 (Buy). Hubbell is projected to grow its earnings by 7% in 2024 and 8% in 2025, driven by 8% and 5%, respective sales expansion.

Hubbell crushed the Zacks Industrial Products sector and the S&P 500 over the past 20 years, up 790% vs. the benchmark’s 420% and its sector’s 160%. The stock has climbed 110% in the past three years, yet HUBB is neck-and-neck with the benchmark during the trailing 12 months.

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Hubbell trades around 6% below its highs. HUBB stock recently found support at its 200-day moving average again. HUBB could be ready to break out of its trading range to new highs.

HUBB trades near its 10-year median and in line with the Zacks Machinery-Electrical Market at 22.8X forward 12-month earnings. On top of that, Hubbell pays a dividend that yields 1.2%.

Buy Small-Cap Willdan Stock for 30% Upside?

 

Willdan Group, Inc. (WLDN - Free Report)  provides professional, technical, and consulting services to utilities, government agencies, and private industry. Willdan’s offerings span from electric grid solutions and energy efficiency to sustainability, engineering, and beyond.

Willdan’s stands to benefit from the attempt to rapidly move away from fossil fuels as energy demand booms. WLDN’s pitch to clients and Wall is that Willdan helps “transitions communities to clean energy and a sustainable future.”

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Willdan reported a blowout beat-and-raise second quarter in early August. Willdan also landed a few key contracts during the period, including with the State of Virginia. WLDN is is also working with Facebook parent Meta to “study emissions related to voluntary clean energy procurement.” Willdan most recently earned a contract to help deliver energy savings for the fifth-largest school district in the U.S.

Willdan’s upward earnings revisions help it earn a Zacks Rank #1 (Strong Buy). The company is projected to expand its adjusted EPS by 20% in 2024 and 12% next year. WLDN has also crushed our bottom-line estimate by an average of 110% in the past three quarters.

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Willdan stock has climbed roughly 1,200% during the past 15 years and 180% in the last 10. Despite Willdan’s surge off its 2022 lows, WLDN stock trades 30% below its 2021 peaks and 32% below its average Zacks price target. Willdan is back above its 50-month moving average and finding support near its 21-day, while trading at neutral RSI levels.

Valuation-wise, Willdan trades near its 10-year median at 19.4X forward 12-month earnings and nearly in line with its industry despite its long-term and near-term outperformance.


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