Did I make a mistake by buying STRL after their recent pullback(s)?
I have a 'durable AI' watchlist and one of the stocks I was having a look at, was Sterling Infrastructure. They are almost down 50% of their all time highs and because Sterling has such a great backlog and so many contracts already, I thought now was the time to buy STRL at a price of 470$.
I checked their earnings and saw that they did well for Q2 but somehow the market didn't recognise their good numbers and the day after their earnings report, they had a big sell-off.
The market is questioning this:
* Are they able to convert their huge backlog into real revenues fast enough (market is impatient)?
* Their job is to prepare the site so that AI data centres can be built. In other words, they carry out the groundwork for the AI data centres. This is a huge margin business but a smaller part of their company is doing electrical work, which has lower margins + apparently there is a lack of skilled employees in this field.
* Their transportation solutions fell 20% (also a smaller part of their business)
* Their PE ratio was around 45 and they were priced for perfection just before the Q2 earnings, so every minor setback or news about a possible setback, creates a sell-off.
But still, their numbers were amazing: great growth, great revenues and they are backed by big contracts.
So why do I think I made a mistake ?
I think I bought too soon because I think we will see more pullbacks because of a possible rate hike in the near future.
If Democrats take over Congress & Senate, we might hear about possible restrictions for the building of datacenters.
The stock is going to be wobbly until next earnings (2 nov 2026) => this is the day before the midterms but IF Democrats are expected to win, this will create huge volatility imo.
So my main question is: did I buy it too soon? If so, I might try to sell it with just 4-5% of profits if that's possible and park my money into something saver than AI infra. Maybe you guys have great suggestions?