Change infrastructure: investment opportunities in electrification, energy efficiency and megatrends worldwide. (Photo: Freepik, Wirestock)
Global megatrends such as urbanization, digitization and climate change require massive investments in the infrastructure. Especially in areas of electricity and road traffic, there is massive investment needs. For investors there are therefore special opportunities for strategic investments. We have researched shares from all over the world as inspiration.
Emcor Group – diversification and profiteer of megatrends
Emcor focuses on mechanical and electrical construction work as well as building management and maintenance, with a focus in the USA and Great Britain. The services cover areas such as energy, healthcare, industry and the public sector. The US construction sector should double by 2030, and in Great Britain an annual growth of 5.6 percent is also forecast. Emcor sees great potential in electrification, the semiconductor industry and energy efficiency.
A special focus is currently on data centers, where EMCOR offers solutions for cooling, overheating protection, space -saving wall systems and efficient cable management. These not only ensure operational efficiency, but also increase energy efficiency.
With harmoniously divided sales segments, Emcor offers investors Diversification and protection against economic fluctuations, while competitors are often more affected by economic cycles. This diversification has already proven itself in the past.
In the past 10 years, Emcor has achieved average sales growth of 7 percent. Only in the pandemic year did the turnover fell by 4 percent, while competitors such as AECOM had to accept significant losses. With an capital return of 24 percent, an improved gross margin of 18 percent (previously 15 percent) and an average cash flow increase of over 20 percent in the past 10 years, EMCOR has shown financial strength.
The company is in debt-free, achieves a cash conversion of over 100 percent and has been able to buy 30 percent of its shares back in the past 10 years due to the strong cash generation. With a Course-profit ratio (KGV) of 20 and a free-cash flow return of 5.3 percent is an emcor in the historical evaluation average. The combination of growth, diversification and balance sheet strength positions EMCOR as an attractive investment that can benefit from megatrends such as electrification and energy efficiency.
CRH – a hidden mushroom with special power
CRH stands for Cement Roadstone Holding and is an Irish, internationally active building materials company in 38 countries around the world. The product range includes building materials, road construction and infrastructure solutions, as well as solutions for the public and private sector.
To optimize the portfolio, CRH also pursues a targeted acquisition strategy. 28 companies were bought in 2024 alone. Since it was founded in 1970, there are said to have been over 1,000 acquisitions. CRH thus buys the market for building materials. The acquisitions are increasingly strengthening the market position and negotiation power of CRH and diversifying the business, so that investors have fewer risks from individual economic considerations.
Because of its power, CRH is regularly offset by allegations of corruption. Finally, the green light of the Ukrainian competition authority had to be obtained for the purchase of 2 cement factories in Ukraine. The purchase could make CRH a dominant provider on the Ukrainian, war -smung cement market. The demand for the reconstruction of Ukraine will be given for years.
The fact that CRH has a special market thickness and a certain castle ditch can also be derived from the return on the capital, which has been significantly above that of the competitors for years. CRH shines with a ROIC of 15 percent. Only Eagle materials can keep up as a competitor. Heidelberg Materials, Vulcan Materials or Martin Marietta have only 6 to 7 percent over the years.
The growth of CRH was always given for reasons of acquisition. The debt only amounts to 1.7x while the gross margin was able to improve from 29 percent in 2014 to 34 percent today. Due to the strong growth prospects, diversification and market power, a price-profit ratio of 16 and a free-cashflow return of 4.8 percent appear attractive.
Larsen & Toubro – India’s infrastructive division
Larsen & Toubro (L&T) as an Indian share for German investors is tradable as a single share and the MSCI India ETF. L&T has been leading for traffic and energy infrastructure for more than 80 years and has a significant contribution to the establishment of India. The portfolio is broadly diversified. Half of the sales come from infrastructure projects, another 20 percent from IT and IT services (data centers, semiconductor equipment) and 15 percent from energy projects. Financial services, high-tech products and development projects complement the portfolio. Half of the turnover is achieved internationally. Geographically, diversification with an activity in 50 countries is also given.
The current CEO Subrahmanyan has been working in the company since 1965 and took over the leadership role in 2017. He received numerous awards as CEO. In 2023 he appeared on the cover of the Fortune magazine as the best CEO. He increasingly transforms the company into a global player and focuses on IT innovation. The debt reduction in recent years is impressive. In 2016, net debt was still 7x and today it is only 2.2 times. The customer loyalty rate is 90 percent after over 4 years and this includes 69 of the Fortune 500 to L&T’s customers.
The KGV is currently 37, but profit growth should be over 20 percent for years, while the cash conversion is over 100 percent. L&T seems to be strategically on the right track.
Disclaimer:
No investment advice. No call to buy or sell securities.