Construction Partners (NASDAQ:ROAD) delivered stellar gains in the past few years due to increased infrastructure spending by the federal government and record demand as a result of that. But since late 2024, the stock has turned into a laggard.
Recently, the company’s President and CEO Fred J. Smith III purchased 9,333 shares worth $689,055 at $73.83 per share. Could this mean a turnaround, especially as the stock has started to flatten out? Let’s take a look.
Construction Partners has a very aggressive growth strategy and has expanded via acquisitions. It has $1.264 billion in debt as of Q1 FY2025 and this is double the debt it had in Q4 due to its acquisitions. Margins have also lagged, and net income actually turned negative in the most recent quarter.
Smith likely believes the debt is worth it and that the acquisition and help the company make a turnaround. Revenue grew 41.63% in Q1 FY2025, and backlog reached record levels at $2.66 billion.
Yes, I do think that buying the dip is worth it due to the long-term potential here. But before you head to your broker to hit the buy button, consider that the current market has opened up other opportunities that are much better right now. There are stocks trading at cheaper levels with much better margins. They may not have the best growth, but the upside potential is still better.
Still, if you are specifically looking for a growth stock in the infrastructure sector, ROAD is one of the best stocks to buy now.
