Here’s Why Sterling Infrastructure Stock Can Keep Rallying From Here
Key Points
The company's e-infrastructure revenues have more than doubled year over year, and the segment is fueling high-margin growth.
It has been acquiring other companies to expand its market share and tap into lucrative regions faster.
Its $5.15 billion backlog will serve as a good foundation for future results.
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Sterling Infrastructure (NASDAQ: STRL) has delighted investors with almost 4,000% in gains over the past five years, including a 170% return year to date.
Some investors sell shares of promising growth stocks just because they have rallied. Others feel like they missed out and that the best gains are gone. However, Sterling Infrastructure's fundamentals are still improving, and it remains a key player in the AI infrastructure boom.
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E-infrastructure solutions are the major catalyst
Sterling Infrastructure operates in three business segments: e-infrastructure solutions, transportation solutions, and building solutions. The company develops and builds residential and commercial property and also works with governments for projects related to public transportation, like highways, roads, bridges, and airports.
E-infrastructure solutions is the company's largest and fastest-growing segment right now. That part of the business includes the development and maintenance of data centers and semiconductor fabrication sites. It also produces the company's highest margins. Data center construction has helped Sterling Infrastructure reach double-digit net profit margins, and with hyperscalers continuing to ramp up their AI investments, it's likely that the boom the e-infrastructure segment is riding has years left to run.
This segment's backlog grew by 123% year over year in Q1, which should support further profit margin expansion.
High revenue growth and a promising backlog highlight the long-term thesis
The only way for a stock to sustain a significant long-term rally is for the company's fundamentals to improve. Sterling Infrastructure is meeting that prerequisite. It has been delivering high revenue growth and has a multibillion-dollar backlog to support solid quarters in the future.
For instance, in Q1, the company almost doubled its revenue year over year to $825.7 million, even as its backlog grew by 78% to $5.15 billion.
It's important to note that the company's acquisition of CEC Facilities Group in September 2025 contributed to those increases. That acquisition will make it easier for Sterling Infrastructure to expand its market share. But even factoring out the impact of the acquisition, Sterling Infrastructure's backlog rose by 51% year over year.
Sterling Infrastructure is continuing its acquisition strategy: This month, it closed its purchase of Stone Ridge Contracting, expanding the company's presence in the Pacific Northwest.
"This acquisition strengthens our ability to serve existing customers across a broader geographic footprint while also adding new, attractive end markets and customer relationships," Sterling Infrastructure CEO Joe Cutillo said when announcing the news. This company is still growing, and that could help the stock climb further.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sterling Infrastructure. The Motley Fool has a disclosure policy.
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