3 US Cyclical Stocks Tied To Construction And Grid Spending

Wall Street just received a strong August jobs report, and the mix of solid hiring, steady unemployment, and higher Treasury yields has put US domestic cyclical stocks under a brighter spotlight. When growth looks resilient but borrowing costs may stay higher for longer, certain US focused companies can see sentiment shift quickly. This article walks through three stocks from our screener that appear particularly exposed to this latest news and explains why that may be relevant for your portfolio.

The three US domestic cyclical stocks below are only a starting sample, since the full screen surfaced 13 more companies with equally compelling narratives that are not covered in this article. To see the complete picture and identify your own high conviction ideas, head straight to the US Domestic Cyclical Stocks screener.

QXO (QXO)

Overview: QXO is a US based distributor of roofing, waterproofing and other building products to contractors, home builders and building owners, with operations concentrated in the United States and Canada. That puts QXO squarely in the path of North American construction and remodeling cycles, so its revenues are closely linked to domestic housing and commercial building activity.

Operations: QXO reports about US$9.9b of revenue from data processing activities, with roughly US$9.6b generated in the United States and around US$300 million in foreign markets.

Market Cap: US$13.9b

Investors looking for exposure to US construction cycles may find QXO interesting because it is now one of North America’s largest distributors of roofing, insulation and waterproofing products after the TopBuild acquisition, with revenue tied directly to domestic building and remodeling demand. The company is still loss making, and recent results show higher losses as it absorbs large deals, so execution on integration and cost control matters. At the same time, independent analysis highlights forecast growth, potential margin improvement and a share price that screens well against estimated fair value. The complex capital structure and past dilution are real risks, but also part of what makes QXO a higher beta way to gain exposure to a firm US housing and construction cycle.

QXO’s higher losses and complex capital structure could be masking something bigger about how this US$13.9b distributor is being priced. Get the full picture in the 2 key rewards and 1 important major warning sign

Powell Industries (POWL)

Overview: Powell Industries is a Houston based company that designs and builds custom electrical equipment and systems such as power control rooms, switchgear and circuit breakers that help manage and distribute electricity for industrial facilities, utilities, data centers and large infrastructure projects. That ties Powell Industries closely to US industrial capex and infrastructure spending cycles, since its gear is embedded in projects across energy, transport, commercial construction and critical power.

Operations: Powell Industries generates about US$1.2b of revenue from electric equipment, with roughly US$907.9 million coming from the United States and the rest split across Canada, Europe, Asia/Pacific and other international regions.

Market Cap: US$6.6b

Powell Industries may be worth a closer look for investors seeking direct exposure to US industrial and infrastructure spending. Its custom power systems are used in data centers, utilities and large energy projects, supported by a reported US$2.4b backlog and recent large orders. The company combines cyclical exposure with high margins and a solid earnings profile. However, there is ongoing debate about whether current optimism on sustained growth and elevated margins is justified as projects evolve and discount rates change. Investors also need to consider integration and competition risks as Powell expands further into automation and SCADA. For those monitoring how the strong August jobs report could influence domestic capex, this stock is closely linked to those trends.

Powell Industries’ backlog and high margins may suggest a story of accelerating power and data center demand that many investors may be underestimating. Get the full context in the analyst forecasts for Powell Industries

Fluence Energy (FLNC)

Overview: Fluence Energy provides large scale battery storage systems and software that help utilities and power producers balance renewable generation, stabilize the grid and meet rising electricity demand. Because its projects support power and infrastructure investment tied to economic growth and energy policy, Fluence Energy fits the US Domestic Cyclical Stocks theme while giving you exposure to the build out of renewables and data center power needs.

Operations: Fluence Energy reports about US$2.6b of revenue from batteries and battery systems, supported by activity across Asia Pacific, Europe, the Middle East and Africa.

Market Cap: US$1.9b

Fluence Energy is drawing interest from investors who want exposure to grid scale storage at a time when data centers, renewables and grid reliability are front of mind. This follows a strong US jobs report that keeps infrastructure demand in focus. The company has a multi billion dollar backlog and next generation products like Smartstack. At the same time, it still reports losses and recently cut revenue and EBITDA guidance as manufacturing delays pushed roughly US$400 million of deliveries into 2027. That mix of strong demand signals, execution hiccups and a low revenue multiple creates a tension that could matter if profitability improves. For investors comfortable with project risk and funding dependence, the full story behind Fluence Energy may be worth a closer look.

Fluence Energy’s multibillion-dollar backlog and low revenue multiple suggest that current losses could be masking a very different story for this grid storage player. Get the full context in the analysis report for Fluence Energy

Seeking Fresh Alternatives Before Others?

Some of the most interesting stocks move from quiet to flying once money starts chasing the story. Scan these fresh ideas before the crowd catches on and act now.

• Spot income workhorses that keep paying while others stall by running the 11 dividend fortresses and see which high yielders still look relatively under the radar.
• Ride the next wave of automation by checking the 36 robotics and automation stocks and find companies building the hardware and software that factories and warehouses increasingly rely on.
• Get ahead of the next power upgrade cycle with the 39 power grid technology and infrastructure stocks and review businesses tied directly to future grid capacity and reliability projects.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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