Stock of the day: Acrow Formwork and Construction

(AI video summary)

This video was created on 8 April for IG audiences by ausbiz.

ASX code: ACF

Infrastructure spending creates resilience

Acrow is positioned to capitalise on over $185 billion worth of infrastructure projects across Australia, with a potential revenue pool between $2 billion and $9 billion over the next seven years. A significant driver will be Olympic-related spending, with approximately $7 billion allocated for new stadiums and supporting infrastructure.

Trading at around $1 per share, Acrow offers an attractive fully franked dividend yield of nearly 6% and trades at a price-to-earnings (P/E) ratio of just under nine, compared to around 13 for comparable companies.

Alternative defensive investments

When market conditions deteriorate, experts recommend prioritizing both risk management and quality. Alternative defensive options include:

• Telstra (TLS): Offers growth potential and dividends with pricing power during inflation
• Woolworths (WOW): Provides defensive qualities with its stable consumer staples business
• TechnologyOne (TNE): Becomes attractive during significant market pullbacks, especially with its high customer retention rates

While smaller companies may offer greater upside potential, investors should consider that periods of market stress often last several months, during which larger, established companies typically demonstrate greater resilience.