The thesis

Construction Partners, a civil infrastructure company, operates in a growing market with 34.6% revenue growth. The company's high net margin of 390.0% and gross margin of 1574.0% are notable. Despite a BUY analyst consensus rating, the conviction tier is WATCHLIST with a score of 39/100. This discrepancy makes the setup interesting,

Why now

The current macro context, with China's chip tool push and the US-China squeeze, may impact infrastructure projects. The recent Middle East war and 43-Year low in US oil reserves also create uncertainty around construction demand,

What to watch

Revenue growth and net margin over the next 1-3 quarters will confirm or deny the thesis. The company's ability to maintain its high margins and grow revenue in a potentially uncertain macro environment will be key indicators to watch

Key risks

Valuation risk is a concern with a P/E of 47.6x and a DCF intrinsic value of $-52. Execution risk and competitive risk from other infrastructure companies are also potential threats. Macro risk from geopolitical events may also impact the company's operations,