What happened

Shares of engineering and construction company Fluor (NYSE:FLR) were up 13.6% in January, according to data provided by S&P Global Market Intelligence. In the absence of any significant company news -- its fourth-quarter earnings report is due on Feb. 21 -- the move can be attributed to a change in sentiment in the marketplace.

So what

In a nutshell, Fluor is exactly the kind of stock that is going to benefit when the market is in the mood to take on risk or start favoring companies with exposure to heavy industry and commodities.

An oil refinery lit up at night.

Image source: Getty Images.

There are two related factors to this. First, Fluor's expertise and exposure to capital spending cycles in mining, energy, and heavy industries make it a go-to stock to buy if sentiment turns positive on these end markets. However, it also makes Fluor the kind of stock to avoid if that view turns negative -- see the 21% decline in December

Second, Fluor's operational performance in 2018 was characterized by challenges on a couple of major projects that caused management to lower its full-year 2018 earnings-per-share guidance from $3.10-$4.50 at the start of the year to just $1.80-$1.90 by the time it posted third-quarter earnings. Fluor's forward valuation then slumped to levels usually associated with significant declines in industrial production.

FLR EV to EBITDA (TTM) Chart

FLR EV to EBITDA (TTM) data by YCharts.

In this context, when the market is willing to take on risk, then Fluor is likely to do well. Despite the stock-specific disappointment in 2018, Fluor has actually been growing orders and backlog in recent quarters -- something that suggests a pickup in earnings in 2019.

Check out the latest Fluor earnings call transcript.

Now what

The sentiment-led bull and bear debate over Fluor will, no doubt, continue in February, and the stock's prospects will be subject to how the market feels about capital spending in heavy industries. That said, the upcoming results are an opportunity for the company to demonstrate that its operational challenges are behind it -- and that would give succor to the bulls.