A 90 second power outage at Network Rail’s Manchester control hub has turned a routine day on the rails into a real world stress test for the systems that keep UK infrastructure running. For investors, that kind of shock can quickly reshape expectations around resilience, maintenance and upgrades. This article breaks down three stocks from the Infrastructure and Engineering Services screener that are closely exposed to this news, and why their stories now deserve attention.
The three stocks in this article are just a starting sample. The full infrastructure and engineering services screen surfaces 19 more companies with equally compelling narratives that are not covered here. To identify and analyze the highest conviction ideas in this space, head straight into the Infrastructure and Engineering Services screener.
SHAPE Australia (ASX:SHA)
SHAPE Australia is a Sydney based construction group that focuses on commercial fitouts, refurbishments and modular builds across offices, hospitals, schools, government and transport assets. The business generates about A$1 billion in annual revenue from heavy construction services and related work in Australia, and has a market cap of roughly A$572 million.
Investors looking at SHAPE Australia right now are not just getting another construction contractor. They are looking at a company with strong earnings momentum, very high current ROE, a growing modular division and a facilities maintenance arm that can smooth project cycles, all in a sector where many weaker rivals have already failed. The business still carries risks, including an unstable dividend record, reliance on higher risk external funding and a premium P/E that bakes in healthy expectations. With rail and transport resilience suddenly in focus after the UK outage, SHAPE’s focus on complex fitouts, remediation and ongoing maintenance could matter more than the share price currently reflects.
SHAPE Australia’s earnings momentum and high ROE can look like a simple quality story. Yet the mix of modular growth, maintenance revenue and funding risk is more complex. Get the 4 key rewards and 1 important warning sign that shows what might be hiding behind the headline numbers
Build your own high ROE and earnings momentum shortlist
SHAPE Australia and the other two stocks in this piece all came from the same filters, which you can easily adapt to your own style. Use our flexible Screener to mix metrics like valuation, earnings quality, balance sheet strength and risks, or jump straight into curated themes through our Investing Ideas.
Symal Group (ASX:SYL)
Symal Group is a Melbourne based construction and infrastructure contractor that handles everything from rail, roads and bridges to data centers, renewables and community assets, backed by its own plant hire, quarry materials and recycling operations. Most of its A$988 million in revenue comes from Contracting Services at about A$801 million, with Plant & Equipment contributing roughly A$188 million and a small offset in Other and Eliminations. The company is valued at around A$648 million on the ASX.
Symal Group is tightly aligned with long term themes like data centers, renewables and transport, and it already works on complex, high compliance projects where its own plant fleet and quarries can support margins and control. The recent UK rail outage has pushed resilience, signalling and digital infrastructure to the front of mind for governments and operators, which fits directly with Symal’s engineering and operational technology capabilities on major transport projects. At the same time, the stock sits on strong earnings momentum, high ROE and what analysts view as an undemanding valuation. However, it also leans on external borrowing and a relatively new management team and board. That combination of growth exposure, valuation appeal and execution risk is why Symal deserves a closer look.
Symal Group’s combination of high ROE, earnings momentum and an undemanding P/E looks like it could be mispriced growth hiding in plain sight. Get the full analyst forecasts for Symal Group before one key assumption is tested.
Diploma (LSE:DPLM)
Diploma supplies specialised controls, seals and life sciences products that sit behind critical systems in industry, healthcare and infrastructure. The Controls division is the largest contributor at about £940 million in revenue, followed by Seals at roughly £454 million and Life Sciences at about £253 million. The stock is a large cap in this screener, with a market value of around £10.3b.
Diploma may appeal to investors seeking exposure to the nuts and bolts that keep complex infrastructure running, from signalling and cabling to high specification seals and medical equipment. The company has been growing earnings, reports high quality profits and benefits from a wide spread of end markets, including data centres and regulated, high risk environments where reliability is critical. The trade off is a rich valuation, reliance on external borrowing and a relatively new board and management team, so execution needs to stay tight. The recent UK rail outage has put resilience and component quality firmly in focus. This is where Diploma’s value add model and acquisition pipeline could be most relevant for patient investors who are willing to look beneath the headline multiples.
Diploma’s rich valuation and high quality profits suggest investors see something special, yet the full earnings story may still be underappreciated. Get the forward looking analyst forecasts for Diploma that could reframe what you think this stock really is.
Seeking Alternatives Before The Crowd Moves
Fresh ideas can move quickly once momentum builds and the crowd catches on. Scan these focused stock lists while they are still under the radar for now and act now.
- Capitalize on cash rich, resilient balance sheets by running the list of solid balance sheet and fundamentals (19 results) before prices reflect every strength and the easy opportunities get caught by faster investors.
- Target resilient income streams with the 4 dividend fortresses while yields stay elevated and share prices have not fully priced in those payouts and potential reinvestment options.
- Position ahead of structural trends by reviewing the 55 AI infrastructure stocks while these picks are still flying mostly under the radar.
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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