ADVERTORIAL
Two Sectors That Thrive In A Recessionary Market
Editorial Feature | Nov 17, 2022 | Industry
The stock market is causing a lot of heartburn these days, setting records for both biggest one-day gains and one-day losses.
The Fear and Greed Index has bottomed out, sinking to the lowest levels since the March 2020 crash.1 All but one of the components that make up this world-famous index are flashing fear or extreme fear.2
But amid the widespread economic slowdown, some industries and companies are flourishing.
So, while the fearful yield to market pressures, forward-looking investors are finding a unique opportunity to move into what are historically safe-haven stocks.
And as decades of research reveals, two of the essential sectors that thrive during a recession are Construction and software services.3
Each require consistent, large influxes of cash for continued operation… and each is indispensable to maintaining the very basic needs of society.
We’ve identified a company that is perfectly positioned to thrive, despite market woes, whose operations service both market segments.
While the overall market slumps, these are boom times for the construction sector.
Serving an essential need, companies operating in the construction sector typically yield steady returns in a recessionary market. And some construction-related companies are positioned to grow even faster than the economy as a whole, thanks to their exposure to long-term spending trends, as we appear to be seeing now.
- In the U.S., the industry is on pace to approach a $2 trillion marketplace during the next three years.
- Globally, the figures grow exponentially, with forecasts exceeding $14 trillion by 2030.4
- New housing developments are popping up left and right. As are commercial developments.
For investors, this large influx of funds represents an opportunity.
But there’s a crisis brewing that could threaten the bottom line for many companies in this sector. And it’s all due to a surprising fact…
Construction is still a pencil and paper business.
The Last Analog Holdout In A New Digital World
A close look at the construction industry and its operations would leave most people with one thought… “how do they get anything done?”
On its own, the nature of the industry requires a complex network of loosely affiliated skilled laborers and subcontractors to work in tandem. The subcontractors on a single project can include boilermakers, carpenters, plumbers, electricians, painters, brick and stonemasons, carpet installers, concrete suppliers, equipment operators and steel workers.
Further complicating the matter, these subcontractors often bid against each other for jobs.
That means suspicion is rampant. Information is seen as proprietary and safely secured.
As a result, poor communication is often the root cause of project failure. A PMI study found that poor communication led to one third of construction project failures of cost overruns and missed deadlines.5
Rob McKinney, a construction consultant at JBKnowlege put it this way.
He said one of the reasons for the industry’s lack of productivity is the fact that construction today has an “inherently combative nature” compared to the early days of the industry.
The functions of architects and contractors were originally combined into one design house until “about 100 years ago.”
Because the industry is so fractured today, he said,
″Productivity is a train wreck. It’s almost in the dark ages.”6
A whopping 45% of construction professionals report spending more time than expected on non-optimal activities. “What were these non-optimal activities?” Propeller found that they were “fixing mistakes, looking for project data, and managing conflict resolution and mistakes.”
It’s a crisis of monumental proportions, one a band of smart software engineers at a little-known company appears to have solved.
Bringing The Construction Industry Into The 21st Century
The construction industry is so antiquated that experts believe losses and cost overruns could reach historic levels.7
In the U.S. alone, losses could soar past $100 billion a year.
Worldwide, forecasters say the failure to embrace modern ways could be punishing – losses exceeding $1.85 trillion each year.8
The problem is so rife many lenders recommend including a 20% contingency right off the bat for cost overrun.
As the data analytics firm Propeller Aero put it, “imagine a 20% salary increase, and you’ll have a good idea of what a significant expansion this is. And remember, this is an average across all projects, not a one-time overrun.”9
When broken down, the actual figures are staggering…
- Nine out of ten construction projects experience cost overruns. Over a 70-year period, a prestigious academic journal found that “85% of construction projects completed in twenty countries experienced cost overruns of nearly 30%.”10
- KPMG found that in a three-year study, “less than a third – 31% – of all construction projects came within 10% of their budget, and only 25% were completed came within 10% of their original deadlines.”11
- The Dodge Construction Network’s Data Analytics division found that 61% of the construction people who used technology it surveyed said that software reduced project error and improved performance and the bottom line.12
- The technology curve leans heavily against productivity. In fact, while 75% of construction companies provide employees with mobile devices – only 21.7% actively use mobile productivity apps and software.
Now consider that a recent study by McKinsey & Company determined that boosting productivity could save nearly $1.7 trillion annually. That’s an impact of about 14 hours of work each week per person.
That’s exactly the target this microcap has set in its sights.
The young company has developed breakthrough software that could help streamline operations, increase efficiency, and cut the losses that devastate contractors’ bottom lines.
Bridging The Gap Between, Architect, General Contractor, Subs, and Supply Chain
The Twin Infra software platform is key to solving the construction industry’s most pressing crises.
The company’s cutting-edge software manages the total lifecycle of a project from the architect’s drawings to day-in-day-out maintenance of the finished project.
The Twin Infra platform manages everyday operational tasks and challenges, including:
- Project scheduling and tracking – Twin Infra helps contractors and subcontractors assign the right people, resources, and equipment to a project. And it tracks and manages progress on a job, as well as budgets and timeline constraints.
- Document management – Twin Infra serves as a centralized repository for all project documentation. Most importantly, it manages the version control of project plans, so all teams stay on the same page.
- Job costing/project finances –Twin Infra software tracks estimated versus actual job costs throughout a project to ensure accurate invoicing.
- Workforce labor concerns – it’s no secret that the pandemic worsened the construction sector’s already significant issue with labor shortages. That’s on top of the fact that new statistics show that the construction industry appears to be aging faster than it can replace older workers. Its average age is 42.5 with nearly a quarter of the workforce 55 or older. Twin Infra software enables managers to detail project descriptions, put out calls for workers and even receive job applications.
These essential tools could move this small company to the head of the class when it comes to construction project management.
What to do next…
It appears there is nothing but upside for this rapidly growing company that still trades at a price well below its peers.
But it won’t for long. By all accounts this company could be poised to dominate throughout 2023. As more news is generated and word gets out, expect investors to discover this up-and-coming construction software provider.
For investors who wouldn’t mind the chance to take an early stake in a company that
is growing fast and could be a major player in a new technology, enter your email address below to receive a full exclusive report.
1https://www.cnn.com/markets/fear-and-greed
2https://www.cnn.com/markets/fear-and-greed
3https://gceps.princeton.edu/wp-content/uploads/2017/01/240rosen.pdf
4https://www.globenewswire.com/news-release/2022/06/15/2462960/0/en/The-Construction-Market-size-was-valued-at-USD-7-28-trillion-in-2021-and-is-predicted-to-reach-USD-14-41-trillion-by-2030-with-a-CAGR-of-7-3-from-2022-2030.html
5https://www.ascertra.com/blog/pmi-study-reveals-poor-communication-leads-to-project-failure-one-third-of-the-time
6https://www.constructiondive.com/news/the-productivity-train-wreck-why-construction-struggles-to-compete-with/419450/
7https://www.constructiondive.com/news/the-productivity-train-wreck-why-construction-struggles-to-compete-with/419450/
8https://proest.com/blog/when-good-data-goes-bad/
9https://www.propelleraero.com/blog/author/propeller-admin/
International Journal of Innovation, Management and Technology www.ijimt.org/vol8/717-MP0022.pdf
10https://assets.kpmg/content/dam/kpmg/pdf/2015/04/global-construction-survey-2015.pdf
11https://www.construction.com/
12https://www.propelleraero.com/blog/10-construction-project-cost-overrun-statistics-you-need-to-hear/
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