Sterling Infrastructure Stock May Still Have Room to Run

We think Sterling Infrastructure (STRL) stock might be a good investment candidate. Why? Because you get strong margin, low-debt capital structure, and strong momentum – with room to run as the stock is meaningfully below its 52-week high.

There Are Several Things In Favor Of STRL Stock

STRL is up 98% so far this year, but can still run more given its good fundamentals and the fact that it is 19% below its 52-week high.

Sterling Infrastructure’s Q3 2025 results demonstrate strong gross profit margins, reaching a new high of 25% due to a favorable shift towards higher-value service offerings in E-Infrastructure. The capital structure remains robust with a low 0.28 debt-to-equity ratio and a net cash position, reflecting effective cash generation. Momentum is evident in the $3.44 billion combined backlog, fueled by significant data center demand and recent transportation contract wins, leading to increased full-year 2025 guidance. The stock’s year-to-date return is 87.06%.

And Its Fundamentals Look Good

• Long-Term Profitability: About 20.9% operating cash flow margin and 12.7% operating margin last 3-year average.
• Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
• Revenue Growth: Sterling Infrastructure saw revenue growth of 6.2% LTM and 13.1% last 3-year average, but this is not a growth story
• Room To Run: Despite its momentum, STRL stock is trading 19% below its 52-week high.

Below is a quick comparison of STRL fundamentals with S&P medians.

*LTM: Last Twelve Months

But Be Wary Of The Risks

While STRL stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. STRL slid 71% during the Dot-Com crash and 65% in the Global Financial Crisis. The 2018 correction and Covid pandemic both knocked it down around 45% and 52%, respectively. Even the recent inflation shock caused a 35% drop. Good fundamentals matter, but this stock hasn’t been immune when the market turns sour. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read STRL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell STRL Stock.

STRL Is Just One of Several Such Stocks

You could also check out:

1. Lam Research (LRCX)
2. KLA (KLAC)
3. Newmont (NEM)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. High operating or (cash flow from operations) margins
3. No instance of very large revenue decline in the past 5 years
4. Low-debt capital structure
5. Strong momentum

A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 15%
• 12-month win rate (percentage of picks returning positive) of about 60%

Why Stock Pickers Win More With Multi Asset Portfolios

Stocks can jump or crash but different assets move on different cycles. A multi asset portfolio helps you stay invested while cushioning swings in equities.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices