Canadian infrastructure stocks are some of the most stable investments Canadians can choose from in this volatile market. When it comes to safety, you can be sure that these stocks will keep moving right along, because we need them in our everyday lives.
Infrastructure stocks are the companies that create the roads we drive on, water systems we drink from, and energy we use for every aspect of our lives. So no matter the volatility in the market, there may only be a small period of time when infrastructure stocks wobble, and investors can pick them up.
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How have infrastructure stocks performed over the last two years?
When I say wobble, it’s important to dive into what that means. Over the last two years, the Canadian market went from some of the best highs, to some of the lowest lows, depending on what sector you’re looking at. So let’s see how the global infrastructure market has performed during this time.
To see that, we’ll look at the iShares Global Infrastructure Index ETF (TSX: CIF). In that time, the CIF exchange-traded fund (ETF) has grown by about 12%, as of writing. But before you think, “Oh, that’s great!”, it’s also important to note that shares have moved up and down like a roller coaster.
As for 2023, shares of CIF ETF have increased by 2.8%, as of writing. Certainly not wonderful, and I think we can do better. Which is why we’re going to focus in on the infrastructure stocks topping all the rest.
Up and down, then up again?
Infrastructure stocks climbed as volatility entered the market back in 2021. Investors wanted to protect their cash, and so they chose to put it towards these safer stocks. However, then the market dropped further with fears of a recession. Inflation and interest rates rose, leading to higher costs and poorer performance by top infrastructure companies.
Needing those returns, investors sold their shares of these infrastructure stocks. Yet when they dropped from this movement, investors jumped back in again! This yo-yo effect continues today, but right now, we’re on a high.
That’s why investors should try to get away from this volatility as much as they can by considering this infrastructure stock.
Why Stantec stock could keep growing
There are certainly a lot of infrastructure stocks to consider these days. Many are up over the last two years and year to date, though some went through a major drop before climbing back. Yet, that’s not the case for Stantec (TSX: STN).
The sustainable engineering, architecture, and environmental consulting company released its first-quarter results for 2023, and the crowd went wild. Net revenue increased by 17% to reach $1.2 billion compared to the first quarter of 2022, with adjusted diluted earnings per share up 19.7% to $0.73. Stantec stock now has a backlog of $6.2 billion in projects, a 5.6% increase since the end of 2022, and 14.8% higher than the same time last year. It’s also important to note that while revenue increased to $1.2 billion, 12.2% was from organic growth with just 1.4% from acquisitions. And that’s due for even more growth, as the company recently added Environmental Systems Designs to their portfolio.
Finally, what was perhaps the most exciting part was that Stantec stock reaffirmed its full-year 2023 guidance as other infrastructure stocks continue to sway. It’s looking for net revenue growth between 7% and 11%, with organic growth in the mid-to-high single digits. It also reaffirmed the expectation to reach an adjusted return on invested capital of over 10.5% for the year.
Why Stantec stock could still be a buy
Stantec stock is up 35% year to date, and 55% in the last two years. But the best part is during that time it simply hasn’t had the fluctuation we’ve seen with other infrastructure stocks. Therefore, it’s certainly a great time to consider the stock with more growth on the way. Growth that will remain stable as Stantec and other infrastructure stocks continue to impress investors.
