Although the stock market as a whole had a very nice first quarter, the stocks of many electrical manufacturers, distributors and contractors did even better.
Prices for shares of publicly-held contractors soared in 1Q 2024 (+29.1% as a group), beating electrical manufacturers (+11.6%) and distributors (7.9%). The S&P 500 finished the quarter with a +10.5% gain and the NASDAQ Composite was almost tied with the S&P with its +10.7% gain for the quarter.
Contractors
EMCOR and Quanta Services, the two contractors with the biggest electrical construction footprints in the EM Stock Index (see chart on page 2), rewarded investors with terrific returns in 1Q 2024. Shares of EMCOR were up +67% year to date as of April 1, and Quanta Services shares maintaining their growth trajectory with a +15.1% gain for the quarter. Comfort Systems, which targets both the HVAC and electrical market, enjoyed a +56.3% quarterly gain in its share prices; IES Holdings shares were up +56.2% and MDU Resources Group had a big gain of +28.7% in its share prices during 1Q 2024.
Manufacturers
As a group, manufacturers in the EM Stock Index beat all three stock market indices, and nine manufacturers had quarterly gains of +20% or better. Of the larger electrical manufacturers, GE (+38.7%); Eaton (+30.6%); Acuity Brands (+30.5%); nVent Electric (+28.9%); and Hubbell (+28%) led the pack in share price gains during Q1 2024. 3M (-14.7%); Littelfuse (-9.6%); Zumtobel Group (-8.2%); and Rockwell Automation (-7.5%) were the electrical manufacturers with the largest quarterly declines. GE’s share price gain on April 1 didn’t reflect the spin-off of its Aerospace and Power units.
Distributors
As a group, distributors didn’t log quarterly increases quite as large as electrical manufacturers, but several companies had stellar quarterly results. W.W. Grainger saw its share prices increase +23.3% since Jan. 2, and on April 1 its shares were selling for $1,009.64 each. Fastenal (+20%) and Ferguson (+15.3%) were the only distributors with share-price gains comfortably over all of the market indices in Q1 2024.
Many stock analysts expect the market to take a breather sometime in the near future because it has been running at such a fast pace since late Oct. 2023. However, monthly employment data is still strong, and quite a few analysts believe there’s a very good chance the Federal Reserve will still cut interest rates in 2024, which could support share price gains.
There’s also plenty of history that presidential election years are good for the stock market, particularly when the sitting president in the White House is running for re-election because they can pull certain levers to stimulate the U.S. economy.
