While the housing market may still be under water, not all areas of real estate are as hard hit as the housing industry was. According the American Institute of Architects (AIA), U.S. architecture billings are now at the highest level since December of 2007. To be sure, this index is just one piece of data and even the AIA says its still too soon to call a recovery. Still, markets are forward-looking creatures and such news could mean opportunity for those companies who benefit from nonresidential construction.

IN PICTURES: 5 Simple Ways To Invest In Real Estate

Building Profits
Diversified construction companies stand the best chance to benefit from any slight improvements in non-residential construction. Honeywell International (NYSE:HON) is one of the more diverse options. Shares, like many industrial blue chips in 2010, have had a good year. The company trades at under 15 forward earnings and yields an decent 2.3%. Caterpillar (NYSE:CAT) will also benefit, but it's likely that the stock price has already built most of gains. At $94 a share, the stock is up nearly 100% from its 52 week low. While it trades for 31-times earnings today, the estimated profit surge in 2011 has its forward P/E multiple at 16. If we are in the middle of strong cycle, shares could still deliver an attractive record in 2011.

Building Under the Radar
Despite an amazing year end rally, shares in Terex (NYSE:TEX) may still offer great upside. Terex is a $3.3 billion market cap with a minor net debt on the balance sheet. Shares currently trade for 12.9-times earnings. Since the recession took hold and decimated the company's sales volume, Terex has repositioned by strengthening the balance sheet. Management's efforts during the worst of times inspires confidence that the company can prosper through the recovery.

Tutor Perini (NYSE:TPC) is another diversified construction firm that could be poised to take off. The company has a market cap of $1 billion with over $100 million in net cash. Shares trade at 26% discount to book value and under 9 times earnings. Earlier in the month, the company was upgraded by UBS.

The Bottom Line
The best time to buy stocks is when no one is looking at them. Construction companies with a non-residential focus, namely the smaller players, may be one the few areas left where investors may start looking into in 2011. (If you were hard-hit by the real estate crash, you may be wondering when things will get better for you. We show you how to keep tabs. See 8 Signs Your Neighborhood Is On The Upswing.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center