JPMorgan sees big gains for two stocks in a unique industry: water dredging
JPMorgan is betting that a niche corner of U.S. infrastructure — marine construction and dredging — is entering a multi-year upswing with help from increased government spending. On Thursday, the investment bank initiated research coverage on Orion Group and Great Lakes Dredge & Dock with overweight ratings. Both companies are players in the U.S. dredging market, closely tied to the energy industry and based in Houston, and analyst Tomohiko Sano expects double-digit earnings growth ahead for each. Sano’s $16 year-end price target for Orion implies upside of more than 40% from where the stock closed Wednesday. The analyst’s initiation comes after a site visit to Orion’s Tampa office and Clearwater Marina project, which highlighted the company’s operational strengths and culture. “We believe ORN’s macro exposure, and its improving operational trajectory under new leadership, will support sustained revenue growth and margin expansion,” the analyst wrote. Sano applauded Orion’s marine construction portfolio, which he said allowed the company to capture an array of projects and attract varied funding sources. The stock is also a beneficiary of a U.S. infrastructure and data center construction boom, and its robust backlog provides visibility for strong demand. In 2026, the analyst believes that revenue could increase 6% year-over-year, to $896 million. Orion’s concrete segment is another strategic growth engine, Sano said, giving exposure beyond marine infrastructure into other end markets such as data centers and making the company an indirect beneficiary of artificial intelligence investment. “This diversification broadens ORN’s addressable market and positions the company to benefit from megatrends such as AI-driven digital infrastructure, reshoring and population growth in key Sunbelt regions, supporting long-term earnings resilience and growth,” he wrote. Shares of Orion Group are 9% higher Thursday and have surged 44% in just the past three months, according to FactSet data. JPMorgan issued a $20 price target on Great Lakes Dredge & Dock, corresponding to a 35% gain from Wednesday’s close. Shares are ahead 11% Thursday and have now soared 49% in the past three months. Sano touted Great Lakes’ dominance as the largest dredge contractor in the U.S., with the company currently holding a 35% market share and operating a highly diversified fleet, he wrote. “Our on-site management discussions confirmed the company is uniquely positioned to benefit from rising demand driven by port deepening, coastal protection and climate resilience projects,” Sano said. “These expanding opportunities in the infrastructure sector provide GLDD with a strong foundation for future growth and continued industry dominance.” Sano highlighted Great Lakes’ $1 billion backlog and pending awards of around $194 million, giving the stock “exceptional revenue visibility well into 2026.” The company’s entry into offshore energy, servicing wind turbines, alongside its modernized fleet also strengthen its market position and diversify its revenue streams, supporting wider profit margins and faster growth than competitors. That also strengthens the case for a premium valuation for the stock, Sano added. Record government infrastructure spending will provide a tailwind for Great Lakes at the same time as the company’s fleet renewal should boost profit margins and operational efficiency, improving profitability thanks to improved free cash flow.
