Fluor’s stock has shown significant growth over the past five years, with a 20.8% average annual gain, outpacing the S&P 500’s 12.8% average annual gain. However, the company’s cyclical nature and potential disruption from artificial intelligence (AI) raise questions about its future prospects.
Introduction
Fluor Corporation, a diversified construction and engineering company, has seen its stock perform well over the past five years, with a total return of 257.4% compared to the S&P 500’s 182.2% return. However, the company’s business is cyclical, and its fortunes are closely tied to the economic environment.
Key Points
- Fluor’s business is cyclical, with its performance closely tied to the economic environment.
- The company has a robust backlog of orders, worth $25.5 billion, which reduces its risks.
- Fluor is shifting away from fixed-price contracts, which also reduces its risks.
- The company has held a majority stake in the nuclear start-up NuScale Power but is shedding that stake for billions of dollars.
According to Morningstar, Fluor’s returns have been lumpy, with the company performing well mainly when the economy is doing well. The company’s stock price has been under pressure lately due to fears about what AI might do to its business.
Should You Buy Fluor Stock Now?
The Motley Fool’s Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and Fluor wasn’t one of them. While Fluor’s stock is certainly worth considering, it doesn’t strike as one of the most promising growth stocks or the most appealing value stocks.
As reported by Bloomberg, Fluor’s decision to shed its stake in NuScale Power will bolster its balance sheet but potentially at the cost of future profits lost.
Conclusion
In conclusion, while Fluor’s stock has shown significant growth over the past five years, its cyclical nature and potential disruption from AI raise questions about its future prospects. Investors should carefully consider these factors before making a decision to buy Fluor stock.
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