15 Small-Cap Construction and Materials Stocks Hedge Funds Are Buying

2. Emcor Group Inc. (NYSE:EME)

Market Capitalization as of April 28: $18.53 billion

Number of Hedge Fund Holders: 55

Emcor Group Inc. (NYSE:EME) provides electrical and mechanical construction in the US and the UK. It offers design, integration, installation, and maintenance services for power transmission, distribution, and generation systems. It also provides site-based operations & maintenance, facility management & maintenance, installation & support for building systems, and other infrastructure & building projects.

Emcor generates 97% of its sales in the US, which provides it with a natural hedge against global trade disruptions, tariffs, and commodity cost volatility. The US Mechanical Construction segment at Emcor Group Inc. (NYSE:EME) made revenues of $1.66 billion in Q4 2024. This was up 12.8% year-over-year and was driven by the demand in the network and communications sector (especially data centers), high-tech manufacturing, and healthcare.

The company is confident in the underlying demand drivers of the manufacturing and industrial sectors, which is supported by a 7% year-over-year increase in manufacturing RPOs (Remaining Performance Obligations). Emcor is now capitalizing on growing markets due to its expertise in complex mechanical and piping systems, VDC (Virtual Design and Construction), and prefabrication capabilities.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding EMCOR Group, Inc. (NYSE:EME) in its Q3 2024 investor letter:

“Leaving the strategy this quarter was EMCOR Group, Inc. (NYSE:EME), which provides construction and operational services for mechanical and electrical systems to a broad range of commercial, industrial, utility, and institutional customers. It had been one of the steadiest gainers and contributors this year, though the stock’s market capitalization grew past the upper limit for the strategy.”