Wednesday's IBD 50 Stocks To Watch pick, infrastructure leader Quanta Services, is one of the best stocks to buy and watch right now, as it eyes a new buy point amid a struggling stock market rally.
The company provides engineering and construction services to the electric power, renewable energy, oil and gas, and communication industries. The company is poised to benefit from a trifecta of industry and government spending initiatives: accelerated capital spending by utilities, the expansion of 5G services and rural broadband, and the 2021 federal infrastructure spending bill.
On Aug. 3, Quanta reported mixed second-quarter earnings and revenue results. The company's earnings climbed 7% to $1.65 a share vs. the year-ago period. EPS was below Wall Street estimates. Sales grew 19% to $5.04 billion.
"Quanta generated record revenues in the second quarter, which exceeded $5 billion for the first time, and ended the quarter with record total backlog of $27.20 billion, which we believe reflects strong demand for our services driven by our customers' multiyear programs designed to modernize and harden utility infrastructure, increase renewable generation and transmission infrastructure and a move toward a reduced-carbon economy," said CEO Duke Austin in the news release.
Austin added, "As a result of our solid year-to-date results ... we are increasing our full-year 2023 financial expectations for revenue, adjusted EBITDA and adjusted EPS."
PWR Stock's IBD Ratings
Boasting a solid long-term fundamental track record, but mixed earnings results in the most recent two quarters, PWR stock shows a solid 88 Earnings Per Share Rating, according to IBD Stock Checkup. This rating takes into account EPS growth and stability of earnings over the past three years. The two most recent quarters are weighted more heavily. Two quarters ago, the company's earnings declined 8% year over year, while they rose just 7% in the latest quarter.
PWR stock displays a near-perfect 97 IBD Composite Rating, with solid long-term fundamentals coinciding with strong stock price performance since February 2022. The IBD Composite Rating is designed to help investors easily gauge the quality of a stock's fundamental and technical metrics.
Quanta Is One Of Best Stocks To Buy And Watch
Infrastructure giant Quanta Services is close to making new highs this week. Shares are trading tightly, offering a 206.43 buy point, per IBD MarketSmith chart analysis. PWR stock edged lower midday in the stock market today.
Meanwhile, PWR stock continues to hold support at its key 50-day moving average lines, where it has found support a number of times since an early-February breakout past a 153.57 cup-with-handle buy point. It's also ridden its 21-day exponential moving average higher for much of that time.
A key technical indicator to watch is the relative strength line. Currently, the RS line is at new highs, a sign of big outperformance compared with the S&P 500. The RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.
Solid fundamentals, along with the tight trade in recent weeks, make PWR one of the best stocks to buy and watch in today's stock market.
With the major stock indexes pulling back from their 2023 highs, the market outlook has been downgraded to an uptrend under pressure, per IBD's The Big Picture. In this climate, investors should be looking for top stocks holding up amid the recent market weakness. And PWR stock certainly qualifies as a stock market leader.
Best Stocks To Buy And Watch
Three recent IBD 50 Stocks To Watch picks, which are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Fluence | N/A | N/A | |
| JPMorgan | 159.38 | Tight area | |
| Pinduoduo | 92.79 | Cup with handle |
Source: IBD Data As Of Aug. 16, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
