Momentum Meets Value: Sterling Infrastructure Stock Could Be A Good Buy

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 88% so far this year, but can still run more given its good fundamentals and the fact that it is 23% below its 52-week high.

Sterling Infrastructure demonstrates strong operating margins by prioritizing high-value E-Infrastructure projects, particularly data centers, and shedding lower-margin work, with Q3 2025 gross profit margins reaching a new high of 25%. The company’s Q3 2025 signed backlog reached $2.6 billion, with a total pool of opportunities exceeding $4 billion, showcasing significant momentum and future revenue visibility. Sterling maintains a low debt-to-equity ratio of 0.39, supported by strong cash generation, holding a positive net cash position of $12 million. Management recently raised its full-year 2025 guidance, reflecting confidence in these drivers, while the stock has climbed over 80% year-to-date despite a recent market dip.

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 23% 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. Nextpower (NXT)
2. Coeur Mining (CDE)
3. InterDigital (IDCC)

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%

Portfolios Win When Stock Picks Fall Short

Individual stocks are unpredictable. A smart portfolio keeps you invested, limits downside shocks, and provides upside exposure

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, 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. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.