Here Are 4 E&C Buying Opportunities After Brexit

A selling frenzy has broken out across the engineering and construction sector, which is known on the public side to be heavily tied to governments both domestic and abroad, creating ample buying opportunities within the space, according to some industry followers. 

E&C firms within KeyBanc Capital Markets analysts' coverage universe are down 9.7% on average versus the S&P 500 index , which was down 3.7% heading into Wednesday.

Nevertheless, KeyBanc recommends 4 players it rates "overweight" as safe bets in the space, both with and without U.K. and European exposure, due to their strong fundamentals.

First to make KeyBanc's list is KBR (KBR) , which saw shares crash after Thursday's vote to nearly reach 5-year lows hit in February, as the firm believes the stock's sell-off was overdone. 

"Despite exposure to U.K. government spending, we believe KBR's work is tied to military programs that potentially gain momentum from a security standpoint on account of an exit," KeyBanc's Tahira Afzal wrote. "Additionally, despite investor concerns around the Magnolia LNG project, we view Magnolia as highly discounted in current estimates."

KBR, which has traditionally been heavily levered to energy engineering and construction, also notably made a move to diversify away from the sector in May when it agreed to pick up private equity-backed Wyle Inc. for $570 million. The deal was aimed at expanding the acquirer's government services exposure. 

E&C giant AECOM (ACM) , a firm with some substantial U.K. and European exposure, also made the cut for KeyBanc because the firm views concerns over these exposures, which it estimated to be about 10% of its overall business, as overdone. 

"We note ACM's current operational profile in Europe remains largely centered on civil infrastructure projects, which proved resilient in the 2008 downturn," Afzal said. 

On the smaller side of the space, KeyBanc views high-pressure pipelines maintenance services provider Team (TISI) as a safe bet despite its roughly 10% exposure to Europe. 

The firm cites the resilient demand TISI's maintenance and inspection services in a time when pipeline operators are struggling themselves as cause to rally behind this stock, which was down 11% following the Brexit vote as of Tuesday's close. 

And finally if there's no shaking the fear over companies levered to the U.K. and Europe, the firm points to domestic energy and utility construction services provider MasTec (MTZ) , which also took an 11% after Thursday.

"With no exposure outside of North America, we view the post-Brexit decline in MTZ's shares as overdone and creating an attractive entry point," Afzal noted. "We believe MTZ's core U.S. pipeline and telecom end markets are likely to remain relatively unscathed in the Brexit aftermath."