This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
Did you watch the National Day Parade?
Where did you watch it from?
Over the past few weekends, roads leading to the City Hall area were blocked for the rehearsals and the actual parade. With the help of traffic controllers, navigating around the area was easy.
Having visited and toured many countries in the region, I’m particularly grateful for the quality of our roads.
In some countries (just a short distance away from the city center), I must have my meal at least 40 minutes before my commute. Otherwise, I will turn into a Merlion.
Coming back to the stock market, this week’s stock selection builds world-class roads and maintains them. This is none other than Construction Partners.
Let’s analyze its shares and find out whether they are worthy of your hard-earned money.
Brief History of Construction Partners
Source: constructionpartners.net
Construction Partners was founded in 1999 as a road construction and maintenance company. It also constructs and maintains bridges.
Their projects serve the people in America, operating out of many states such as Alabama and Florida.
Despite its size, the management team has also been on the lookout for deals and acquisitions. The company has completed 18 acquisitions to date, expanding its business within the US.
Today, the company enjoys a healthy backlog of projects.
But, is its financials strong and healthy?
Business Model and Financials
Source: tradingview.com
To know whether Construction Partners’ financials is strong and healthy, let’s look at 2 key metrics from the image above – total revenue (in blue) and net income (in purple).
Did you notice that the total revenue of Construction Partners grew every year from $681m in 2018 to $1.82b in 2024? That’s a staggering 267% increase in 6 years!
This piece of statistics is highly welcomed.
Let’s look at another important fundamental metric – net income.
The same cannot be said for its net income. Its net income fell from 2018 to 2021. A turn occurred, and its net income began growing from 2022 to 2024.
Is this a concern?
Because its net income has been growing in recent years, I don’t think we should be too concerned.
The financials of this company is strong. What’s left is to analyze its stock chart to uncover a buying opportunity.
Technical Analysis on Construction Partners (NASDAQ: ROAD)
Here’s the chart of Construction Partners.
Can you tell that the bulls love its stock?
How?
Its shares have been rising in a strong uptrend. Without the need of trendlines and other technical indicators such as moving average, you can tell that its shares are in a strong uptrend by simply comparing the number of blue (outlined and solid) candles to those in red (outlined and solid).
Overall, there are more blue candles than red. With that observation, you’ll want to look for a buying opportunity for a position trade.
At this stage, there’s also no need to plot support and resistance lines, or slap on technical indicators such as RSI or MACD to help you evaluate this stock.
All you need to do is to refer to the proprietary indicators – arrow and Trend Impulse Factor.
Do you see a green arrow under the latest candle of Construction Partners?
That tells me that a fresh bullish move is here.
Next, let’s look at the color of the bar of its Trend Impulse Factor. It’s dark green in color, suggesting that this bullish move is likely to be sustained!
With both indicators in agreement, the time to buy its shares for a position trade is ripe!
Conclusion
Source: unsplash.com
Roads play an important role in our daily lives. It affects our commute, comfort, and effectiveness.
With high-quality roads that are well-maintained and designed, the risk of traffic accidents is minimized.
This road and bridge construction and maintenance company has been doing a solid job over the years, and this is well reflected in its financials.
Additionally, the market loves its stock.
Using the scanner included with the TradersGPS (TGPS) system, I’ve discovered a gem in Construction Partners.
Both the arrow and Trend Impulse Factor indicators have been tested and proven. They form the TradersGPS (TGPS) system to help you decipher if a stock is ripe for a position trade. You won’t have to feel in the dark and make wild guesses.
Relying on the green arrow and the color of its Trend Impulse Factor indicator, I can tell that its shares are ripe for a position trade for now.
What are your thoughts?
Share your thoughts with me below!
