Quanta Services Inc
Quanta Services Inc
IBD Stock Analysis
- Quanta Services stock hit a record high, past a 99.62 buy point.
- Shares previously broke a short-term downtrend for an early entry.
- The relative strength line is trending up and near all-time highs.
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at
1:08PM EDT on
Quanta Services (PWR), a service provider in the electric power sector, is the IBD Stock Of The Day after lawmakers reached a deal on infrastructure spending. PWR stock broke out into buy range.
Quanta builds and maintains generating stations, substations, transmission lines and distribution lines nationwide. The company stands to benefit from increased spending by federal and local governments seeking to upgrade the nation’s aging power grids.
On Aug. 24, the House announced it would vote on a trillion-dollar infrastructure bill on Sept. 27. The legislation includes $65 billion to rebuild the electric grid. The funds would go to build thousands of miles of new power lines and expand renewable energy. It also includes $7.5 billion for electric vehicle charging stations.
The bill has already cleared the Senate, and a House vote on a separate budget framework defused a legislative threat to the infrastructure package.
Shares rose 3.2% to close at 102.19 on the stock market today, breaking out past a 99.62 buy point from a cup-with-handle base, according to MarketSmith chart analysis. The buy zone extends to 104.60. PWR stock also hit an all-time high of 102.33 intraday.
Earlier in the week, PWR stock broke a short-term downtrend and reclaimed the 50-day line, representing a potentially safer entry point.
Meanwhile, Quanta’s relative strength line is trending upward and near all-time highs. Its RS Rating is 88 out of a possible 99. Its EPS Rating is 95, as it’s posted five straight quarters of earnings growth.
Similarly, with a Composite Rating of 87, Quanta is ranked first in IBD’s building-heavy construction industry group.
Among other infrastructure plays looking strong today, Martin Marietta Materials (MLM) rose 1.8%, Vulcan Materials (VMC) gained 1.7% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.6%.
On Aug. 5, the Houston-based company reported second-quarter earnings of $1.06 a share, a 43% jump from a year ago. Sales climbed 20% year over year to $3 billion.
“Electrical sales momentum continues to reflect emphasis by utilities in infrastructure upgrades/servicing and larger transmission projects, EV charging infrastructure and renewable generation projects,” said D.A. Davidson analyst Brent Thielman in an Aug. 6 note to clients.
Additionally, Quanta’s total backlog in Q2 was $17 billion, a 22% surge from the same period last year.
CEO Earl Austin said in an earnings call that Quanta’s electric power backlog continues to increase, driven primarily by significant multiyear master service agreements with utilities.
“As an example, one of our largest electric customers in the western United States recently announced a major new multiyear program to underground approximately 10,000 miles of electric distribution, power lines in high fire threat districts in the utility’s service territory,” he said.
Governments and utilities are racing to mitigate the risk of wildfires, which cost billions of dollars and killed dozens of people in the 2020 fire season in the Western U.S. As a result, analyst Theilman expects demand for Quanta’s services to keep growing into 2022.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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