Portfolio: Zacks Focus List

Arcosa (NYSE: ACA) presents a compelling investment thesis as a diversified infrastructure products company that has successfully transformed itself from a cyclical industrial conglomerate into a focused aggregates and construction materials provider with higher-margin engineered structures capabilities. They make essential products for America’s infrastructure – things like gravel and sand for construction, steel towers for wind farms, and barges for transporting goods on rivers. The company operates in three main areas: construction materials (like the rocks and concrete used to build roads), engineered structures (like the tall towers that hold up power lines and wind turbines), and transportation products (like boats that carry cargo). The company has been growing through smart acquisitions, including a major $1.2 billion purchase in 2024 that significantly expanded its construction materials business, and analysts expect earnings to grow by over 25% this year.

Arcosa benefits from multiple secular tailwinds including increased U.S. infrastructure spending, the energy transition driving wind tower demand, and grid modernization requiring utility structures, while maintaining a substantial project backlog of approximately $1.8 billion that provides revenue visibility. Management focuses more on reinvesting profits into growing the business through acquisitions and new facilities. The stock has performed well recently, gaining significant value as investors recognize the company’s position in benefiting from infrastructure spending and the energy transition.