Every time Wall Street enjoys an extended bullish period that is inline with investor sentiment, a few stocks tend to be overlooked in the commotion.

Instead of riding the waves of buyers rushing to secure positions in this bull market, some stocks get unfairly swept away in a selloff as traders seek to purchase shares of companies making headlines. Such has been the case with Sterling Construction Company (NASDAQ:STRL), a construction company that specializes in civil engineering and infrastructure projects, particularly on the West Coast, the Southwest and Hawaii.

In March 2015, STRL shares dipped under $3 and were not keeping up with the gradual recovery experienced across the United States. Twelve months later, STRL gained in terms of price and volume to reach a more respectable $5.43. From that point on, the stock recovered until touching the $9 mark as President Donald Trump was inaugurated and the prospect of new infrastructure projects started being discussed on Wall Street.

By May 2017, the Sterling Construction Company starting making headlines as fund managers and institutional investors such as Wexford Capital and AlphaOne Investment Services loaded their portfolios with STRL, which resulted in a year-to-date high of $11. The stock held this price for nearly two weeks as major analysts such as Zacks issued buy recommendations. Notwithstanding this positive development, STRL dropped to the $10 mark, where it has floated for the last two weeks.

A Rebound In Sight for Sterling Construction

With so many buying opportunities on Wall Street at this time, it is not difficult to understand why some investors may be passing up Sterling Construction. The greater momentum is being generated by major headlines, which are usually made by the 30 companies that make up the Dow Jones Industrial Average. Many institutional investors are engaging in day trading behavior, and this is nothing new.

That Sterling Construction is being passed up could be related to the lack of headlines on the infrastructure front. The Trump administration has not yet announced its economic stimulus plan, which seems to have been delayed by the ongoing palace intrigue. At this time, the White House could be timing the announcement of major infrastructure projects as a strategy to offset political scandals. Once infrastructure returns to the headlines, STRL is worth watching for the following reasons:

* Strong first quarter 2017 results, which showcase growing revenue, improved gross margins, and new project contracts. Highlights from the report include:

• 21% increase in revenue. Revenue generated was $153.4M in Q12017, versus $126.6 million during the same period in 2016.
• Gross margin improvement. Q12017 gross margin of 6.1% versus 2.8% during the same period in 2016.
• Major reduction in net loss. Net loss decreased from $7.3M in Q12016 to $2.3M in Q12017.

* Increase in backlog highlights future revenue streams. As of March 2017, the company had $925M in total backlog. This is a 12.4% increase in the company's backlog compared to the same period the prior year. The significant increase in backlog indicates strong demand as well as the company's ability to win new projects.

* Dubbed a "triple-play candidate," a term first popularized by Bespoke Investment Group. Triple-play are stocks that beat analysts expectations on earnings and revenue, as well as raise guidance. A triple play is viewed as a highly positive signal by analysts and investors as it shows strong growth now as well as high expectations for the future. Some investors look at triple plays as a first preliminary filter for identifying strong stocks.

* Recent acquisition of Tealstone Construction, a leading Texas-based concrete construction company, will enable the company to expand into adjacent, higher profit margin, markets. We view the acquisition as a very positive move and expect it to lead to improved margins and cost reductions.

* The company is winning over contracts even as traders focus on low-hanging fruit. In mid-March, for example, San Joaquin County in California awarded Sterling Construction with a project to replace a major bridge. Nearby Santa Clara County has $2.85 billion available to improve its highways, which get major traffic from drivers who commute to Silicon Valley.

* Stock appears undervalued relative to peers. The stock trades at a price/sales ratio of 0.35x. This is significantly below the industry average of 0.61x. At the same time the company generated revenue growth (TTM) of 10.4%, versus 3.8%, which was the average revenue growth for the construction industry.

Conclusion: Excellent Buying Opportunity

STRL presents a value proposition for investors who follow the construction sector.

Once the Trump administration officially announces measures to improve and expand the national infrastructure, companies such as Sterling Construction could see enormous attention by momentum traders.

We strongly believe STRL will see significant appreciation over the next few months.