As the heavy-construction industry bulldozes its way to stock market leadership, Quanta Services is doing its part for investors, rising more than 50% from its April 7 low. The construction stock is the IBD Stock Of The Day.
The Houston-based company provides construction services primarily for utility companies. It also works with cell tower operators, renewable energy providers and other industries.
Surging needs for electricity such as for data centers and reshoring of factories are boosting the company's backlog, which has grown to a record $35.3 billion. After two decades of nearly zero growth, load growth forecasts have been bumped up nearly fivefold in the past two years, Quanta says.
Last year, 74% of the company's $23.7 billion came from utility and power companies. Tech, manufacturing and communications customers accounted for 9% of sales, while the rest was in energy and other industries.
Earnings per share climbed 15%, 21%, 44% and 26% in the past few quarters, with sales growth of 11%, 16%, 13% and 24%. Quanta has a Composite Rating of 97.
Construction Stock Raises Its Outlook
On May 1, Quanta reported first-quarter results that topped analysts' expectations. The company also raised its revenue and profit estimates for the full year.
It forecast revenue of $26.7 billion-$27.2 billion. That would be an increase of 13% to 15% from 2024. It expects adjusted earnings per share of $10.05 to $10.65. It earned $8.97 a share last year.
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The revised outlook took into account tariff risk, which Quanta said is limited under the levies currently in place. But it acknowledged that uncertainty remains, and tariffs could hurt customers' supply chains and increase costs for future projects.
The company said it is adjusting its supply chain, making "strategic advanced purchases" and evaluating additional suppliers.
Quanta Rising Toward Buy Point
Quanta stock is 5% away from a 365.88 buy point of a cup base. It's met resistance below 350 lately. It's on track to form a handle as of Tuesday's close with a buy point at 348.42. A longer pause would help the stock gather itself and set itself up for a new run to new highs.
The relative strength line is right at new highs, which is a positive sign.
The stock more than doubled from an initial breakout more than two years ago, and its previous base in December through January was a late-stage base that failed. The stock undercut that failed pattern, which reset its base count. That removes the risk from a late-stage pattern.
Quanta Services sold off starting in late January as DeepSeek and other news raised concerns about AI spending, hitting everything tied to that theme. Trump tariffs also were a concern. But with AI spending optimism returning and Trump tariffs de-escalating for now, heavy construction firms such as Quanta are rebounding.
Construction stock Quanta has a 21-day average true range (ATR) of 3.77%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
