August is a great opportunity to discover the best cheap stocks to buy. With stock market valuations expected to peak in 2024, stocks that were previously considered cheap will become even more attractive.
These companies are currently operating in all industries with tremendous growth potential. The tailwinds in construction and infrastructure will remain strong despite rumors of a recession later in the year. This growth is not just a rumor, and the company’s strong backlog and forecasts make for an extremely compelling investment case.
In addition, a 25-50 basis point rate cut by the Federal Reserve in September seems very likely. The latest jobs report threatens the Fed’s dual mandate of ensuring maximum employment and price stability. Fortunately, this backdrop bodes well for the construction industry, as looser financial conditions will boost growth and investment.
Now let’s discover the three best cheap stocks to buy in August!
Comfort Systems USA (FIX)
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Comfort Systems USA (NYSE:FIX) is one of the best cheap stocks to buy this month. Since the pandemic, the company’s robust revenue, earnings and free cash flow growth in 2024 cannot be underestimated.
Comfort Systems primarily provides installation and maintenance of heating, ventilation and air conditioning (HVAC) systems to its commercial and industrial customers. Its focus on energy efficient building solutions has been a key pillar of its growth and success in recent years. In addition, the company’s groundbreaking dividend growth and strong cash flow generation testify to its commitment to returning value to shareholders. Despite extremely difficult macroeconomic conditions last year, Comfort Systems achieved record results across all segments.
Fiscal 2024 was no different. After the first quarter, momentum picked up. In the second quarter of fiscal 2024, revenue rose an astonishing 40% to $1.81 billion. Net income nearly doubled to $134 million, or $3.74 per share. The backlog of $5.77 billion remains near record levels, a sign of confidence to continue driving growth through 2025.
Dycom Industries (DY)
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Dycom Industries (NYSE:DY), a leading provider of specialty contract services to the telecommunications industry, is ripe for further upside. Following a great fiscal year 2023, the company’s contracted revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) remain strong.
Dycom Industries is a company that is not yet well known and that many have never heard of. It operates in an extremely niche segment, providing construction services to the telecommunications sector. Over the past year, the company has experienced strong growth, largely due to increased demand for fiber optic network expansion. In addition, management is encouraged by increasing support from federal and state regulators. The Biden administration has addressed the need for communications networks in rural America, where Dycom sees tremendous growth opportunities.
In the latest quarterly results, contracted revenue increased 9.3% year-over-year to $1.14 billion. Net income increased 21% to $62.6 million, with an adjusted EBITDA margin of 11.5%. Dycom’s strong liquidity and backlog provide sufficient visibility to drive revenue and earnings growth in the coming quarters.
United Rentals (URI)
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United Rentals (NYSE:URI) offers an attractive investment opportunity for those looking to buy companies cheaply in August. As the world’s largest equipment rental company, United Rentals is a standout candidate for 2024 due to its strong brand recognition and earnings growth.
United Rentals is coming off a record year in 2023, and its growth isn’t slowing down anytime soon. Strong demand in the construction equipment market is driving the company’s revenue, earnings and free cash flow. That growth has accelerated significantly over the past three years despite inflation and higher interest rates. CEO Matthew Flannery’s strong performance has pushed the company’s operating leverage to new highs, and 2024 is currently “exactly as expected.” In the second quarter, revenue rose 6% year over year to $3.77 billion, while earnings per share rose 11% to $9.54 per share. With particular strength in larger projects in 2024, United Rentals is well positioned to meet its longer-term business goals.
At the time of publication, Terel Miles had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.
At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.
