EMCOR GROUP (EME) = My Favorite “Buy the Dip” Stock

EMCOR Group (EME) is one of my favorite stocks because it plays at the intersection of many hot trends. 

I am talking about them being a leading specialty construction firm with expertise in power transmission, voice & data communications and fiber optics. 

Yes, this also means they are riding the wave of AI growth as they help build out more data centers. Plus their expertise in power transmission has them lined up for what is believed to be a 160% increase in power demand the next 10 years in the US alone (thanks to AI). 

This explains why they have produced 10 straight beat and raise quarters that propelled shares 260% higher since mid-2022 (and up 10X in the past five years as seen in this chart below):

What this chart shows is 5 years of serious earnings momentum with only a modest blip in early 2022 that paved the way for tremendous share price gains. 

Gladly the pace of earnings growth is only getting more impressive with 2024 earnings expected to be 57% above the previous year levels. Just as captivating is to find that the average earnings beat of late has been 41%...meaning that actual growth may likely be better than expected which is a great catalyst for future share price gains. 

Our Zen Ratings model, analyzing 115 unique factors for every stock, is fawning over EME shares with an overall A “Strong Buy” rating (actually in the top 1.5% of all stocks reviewed by this proven quant model).  

What jumps off the charts is the top 4% score for Financials. In total we measure 26 different financial factors in the model. 

Why? The short answer is that companies with healthier financials typically have healthier earnings and healthier share price gains. 

The longer version of the story is spelled out in this recent article: Boring Financials Point the Way to Exciting Stock Gains!

Beyond that EME scores an impressive B rating for Value, Growth, and Sentiment (which leans into what the Smart Money thinks of the stock).

Get full Zen Ratings analysis on EME here > 

If I ended the article here you would think that EME is a serious momentum play pushing to new 52 week highs. Indeed that was the case just a few short weeks ago. 

Next thing you know news comes out on DeepSeek (the new Chinese competitor to OpenAI) and all the AI stocks took it on the chin. That includes EME and its closest peers in the specialty construction space. 

Here is what is so crazy about this…DeepSeek doesn’t change the demand for EMCORS services. 

For example, a company in Cleveland who switches from licensing OpenAI to DeepSeek still will want their data center in Cleveland (not China). And the increase in electrical demand from their AI solutions will still take place locally. 

Thus, the high demand for EME’s services are unchanged. The only thing that has changed is shares falling 23% from their 52 week high to where they stand today. 

If that doesn’t scream “buy the dip” then I don’t know what does. 

Yes, there is a little risk in buying shares now before their next earnings report the morning of 2/26. However, the earnings momentum from the last 10 beats (the last 4 of which averaging a 41% beat) is still in place.

So I like the odds of buying now on the dip to enjoy the likely catalyst of a beat soon on the way with shares likely making it back to the previous high…and even higher.  

2 Next Steps

First, join my upcoming webinar Wednesday 2/26 entitled: Unlocking the Zen Ratings. 

I am going to show you a suite of new tools on WallStreetZen to more easily find, analyze and track stocks with the Zen Ratings. 

The goal is to help you enjoy more of the alpha packed inside the Zen Ratings average annual return of +32.52%.

Register Here >  

Second, discover more stocks like EMCOR Group (EME) in my Zen Investor portfolio.

I am harnessing the power of the Zen Ratings model as well as top Wall Street analyst recommendations to find more stocks with 100%+ upside potential. 

That has led to my selection of 17 stellar stocks in my Zen Investor portfolio. 

If that is of interest to you, then please click below…

Discover the Zen Investor portfolio & top stocks now > 

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor-in-Chief of WallStreetZen

What to Do Next?

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