When Donald Trump ran for president he promised during the campaign that the he would rebuild America’s infrastructure. When he won the election it sent the best infrastructure stocks soaring. Makes sense, after all, he did mention that he was putting together a $1 Trillion infrastructure plan that would help rebuild the roads and bridges in America.
Now, the U.S. Department of Homeland Security classified 16 critical infrastructure categories, they include: Chemical, Commercial Facilities, Communications, Manufacturing, Dams, Defense Industrial Base, Emergency Services, Energy, Financial Services, Food and Agriculture, Government Facilities, Healthcare and Public Health, Information Technology, Nuclear Reactors, Materials, and Waste, Transportation Systems, Water and Wastewater Systems Sector.
For the most part, the government will issue contracts to private and publicly traded companies to work on its infrastructure projects. Given, the current regime’s goals on infrastructure, investors may want to start looking at stocks in the sector to try to gain exposure.
The Best Infrastructure Stocks To Watch
Nucor Corporation (NYSE: NUE): A Manufacturing company that sells steel and steel products. The company runs three segments: Steel Mills, Steel Products, and Raw Materials.
Nucor is recognized as a leader in steel making, in 1989 it brought a thin-slab technology to the mini mill. Becoming the first mini mill in the world to make quality flat rolled steel using the technology. It repeated the feat in 2002, with the Castrip micro mill.
Its products are used by contractors in constructing highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums, and high-rise buildings.
The firm is a member of the S&P 500, boasting a market cap that exceeds $20B.
In addition, the stock offers investors an annual dividend of $1.52 per share. Analysts who cover the stock include: Longbow, Cowen, Citigroup, Morgan Stanley, and Credit Suisse.
Deere & Company (NYSE: DE): A manufacturer and distributor of agriculture and turf, and construction and forestry equipment worldwide.
It’s construction and forestry segment manufactures and distributes backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; harvesters, feller bunchers and related attachments used in construction, earthmoving, material handling, and timber harvesting applications.
Source: John Deere
The company sees two large catalysts that should boost revenues higher over the coming years.
The first, a growing population, the world population is expected to grow by more than 25% by 2050. That said, agricultural output needs to expand to meet demand.
Second, urbanization across the globe, specifically in China, India and other parts of Asia. The migration from rural areas will create a need for infrastructure development.
A member of the S&P 500, the firm boasts a market cap that exceeds $50B, making it one of the largest infrastructure stocks in the world.
It offers investors of the stock an annual dividend of $2.40 per share. Analysts who cover the stock include: Barclays, Stifel, Citigroup, and RBC Capital Markets.
Aecom (NYSE: ACM): The firm designs, builds, finances, and operates infrastructure assets worldwide.
Its clients include governments, businesses, and organizations in more than 150 countries.
Aecom was involved with the program management and construction management of the Barclays Center in Brooklyn. One of many projects across the globe that the firm is recognized for.
In 2017, the firm generated over $18B, an increase of over 110% when compared to 2014 numbers.
The company has a market cap of more than $6B.
Analysts who cover this infrastructure stock include Robert W. Baird, Barclays, and Credit Suisse.
DowDupont Inc. (NYSE: DWDP): Comprised of three divisions, the firm intends to separate into three independent, publicly traded companies. The three divisions are: agriculture, materials science, and specialty products.
The Materials division intends to focus on performance materials and coatings, industrial intermediates and infrastructure, packaging and specialty plastics.
One area that the specialty products division will focus on will be transportation and advanced polymers. It’s already recognized in the safety and construction community for brands like: Kevlar, Nomex, Tyvek, Styrofoam, and Corian.
The Agriculture division will offer a complete portfolio of products and technologies, and pipeline of germplasm, traits and crop production. An area the company should see growth in as the demand for food is set to rise along with the global population.
A member of the Dow Jones Industrial Averages and the S&P 500, DowDupont has a market cap of $180B, making it one of the largest publicly traded companies in the world.
The firm offers its investors an annual dividend of $1.52 per share. Analysts who cover the stock include: Goldman, Stephens, Morgan Stanley, HSBC, and JP Morgan.
Martin Marietta Materials, Inc. (NYSE: MLM): A leading supplier of aggregates and heavy building materials, with operations spanning 26 states, Canada, the Bahamas, and the Caribbean Islands.
The company mines, processes, and sells granite, limestone, sand, gravel, and other aggregate products for use in the public infrastructure, and nonresidential and residential construction industries, as well as in the agriculture, railroad ballast, chemical, and other applications.
In addition, the firm offers asphalt products and manufactures magnesia-based chemical products.
A member of the S&P 500, Martin Marietta Materials has a market cap of approximately $15B. The firm offers its investors an annual dividend of $1.76 per share.
Diversified Approach To Infrastructure Stocks
One way that you can gain diversified exposure to the infrastructure is through ETFs.
SPDR S&P Global Infrastructure ETF (GII): The ETF seeks to provide investment results that generally track the total return performance of the S&P Global Infrastructure Index, minus fees and expenses.
It primarily invests in industrials, utilities, and energy.
Here are some of the funds largest holdings:
It has nearly $200M in total assets and sports an expense ratio of .40%
The ETF offers shareholders an annual dividend of $1.77 per share.
Final Thoughts On The Best Infrastructure Stocks
Traders and investors look at several factors before deciding to take a position long or short. Traders rely more on a catalyst and technicals. While investors rely more on the catalyst and fundamentals.
Its safe to say that the demand for infrastructure is set to rise. Not only based on what President Trump has vowed. But also, the population is growing across the globe, and a new middle class is emerging in China and India leading to urbanization.
That said, its important to keep up with economics, politics and policy. Also, keep an open mind, and even consider exploring infrastructure stocks that have international exposure.