With the $1.2 trillion bipartisan infrastructure bill underway, infrastructure stocks have been taking off. This ambitious plan making its way through congress eventually landing on President Joe Biden’s desk will have serious effects on the economy. It could potentially strengthen infrastructure stocks. Biden recently made a statement about his “Build Back Better” agenda. He stated that “we’ve seen the Senate advance two key pieces of my economic agenda.” These key pieces include “the bipartisan infrastructure bill and the budget resolution.” Those pieces are the framework for his Build Back Better plan.
Biden’s “Build Back Better” campaign promise and addresses the following:
- Transportation
- Clean water
- Universal broadband
- Clean power
- Remediation of legacy pollution
- Efforts to address climate change
As the bill makes its way through Congress, keep an eye on these three best infrastructure stocks that are set to benefit.
Best Infrastructure Stocks
Caterpillar Inc. (NYSE: CAT)
Caterpillar is the world’s largest construction-equipment manufacturer. It’s an American Fortune 100 corporation, specializing in design, development, engineering, manufacturing and marketing. The company sells machinery, engines, financial products and insurance to customers. It does this through a worldwide dealer network.
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If the global economy continues its cyclical recovery, combined with the major infrastructure spending plan that’s earmarked over the next decade, Caterpillar stands to benefit. It has been reporting strong earnings recently, beating estimates by $0.20 per share. As of August 2, shares are up 13% YTD. Caterpillar is not only a strong company, it’s a great value play, especially with an infrastructure bill in place.
Demand channels such as housing, have jumped higher throughout the COVID-19 pandemic. Thus, Caterpillar stock may be a name you can trust over the long haul.
Its construction and infrastructure equipment paired with its mining and aggregates equipment sector offer a strong tailwind even in the face of an inflationary environment. According to CEO, Jim Umpleby, Caterpillar is a company that definitely stands to benefit from the infrastructure bill. Umpleby’s comment only helps to prove that the largest construction-equipment manufacture will be one of the best infrastructure stocks to invest in.
Vulcan Materials Company (NYSE: VMC)
Vulcan Materials Company is an American company based in Birmingham, Alabama. It’s principally engaged in the production, distribution and sale of construction materials.
It’s the country’s largest producer of construction aggregates, such as crushed stone, sand and gravel. Vulcan is also a major producer of aggregates-based materials, making it no question as to why it’s on many investors lists of infrastructure stocks to invest in. Vulcan essentially puts the build in “Build Back Better” so it’s no wonder why investors are putting this name on their list of best infrastructure stocks to invest in.
The company has received strong support from investors. Over the past year, shares are up almost 54%. On a year-to-date (YTD) basis, the stock has already gained nearly 22%. This gain compares favorably to the benchmark exchange-traded fund SPDR S&P 500 ETF Trust (NYSEARCA: SPY). SPDR S&P 500 ETF Trust is up 34% over the year and 17% YTD. Vulcan stock is up 6.57% over the past week and has received a Bullish rating from Investors Observer.
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Betting on infrastructure stocks is not necessarily a safe bet. As I mentioned above, the bill must still go through the House before landing on Biden’s desk for signature. However, a report from The Hill revealed that most American voters support the infrastructure bill. Vulcan is a critical investment, so you really can’t go wrong with this stock.
Alcoa Corporation (NYSE: AA)
Alcoa is an American industrial corporation. In fact, it’s the world’s eighth largest producer of aluminum. And its corporate headquarters are in Pittsburgh, Pennsylvania. furthermore, it conducts operations in 10 countries.
Alcoa benefited from the COVID-19 pandemic. And its optimistic due to the prospects of higher government spending. However, its stock took a hit when the trade war between the U.S. and China began. A Bloomberg report from September 2019 stated:
“The market is bracing for another sharp increase in inventories as demand growth stops completely. Aluminum has fallen to a two-and-a-half-year low as slowing global growth and the U.S.-China trade war hurt demand for the metal used in airplanes, automobiles and beer cans.”
Today, we are experiencing the complete opposite. Shortages and inflationary pressures are strengthening the aluminum market. And all of a sudden, Alcoa stock is in high demand.
Over the past year, Alcoa shares skyrocketed 204%, making it one of the best infrastructure stocks this year. The stock is up 68% on a YTD basis. It’s also reported the highest quarterly net income since becoming an aluminum mining company. According to analysts, it also predicts a strong third quarter due to increased shipments. And experts predict that the price per stock may rise to $51.
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The increase in the price of aluminum will increase profit growth by 20%. In addition, aluminum prices do not anticipate a decline in the months ahead. And Chinese demand for the metal is only growing. With that being said, Alcoa remains a strong investment for at least the remainder of the year.
It’s also important to note that analysts predict Alcoa will receive double-digit growth in product sales this year. And with the underlying political conditions supporting infrastructure stocks like Alcoa, this stock is definitely one to watch.
Beneficiaries of The Infrastructure Bill
Caterpillar, Vulcan and Alcoa are three companies set to benefit from the bill. For those wondering how to start investing and what stocks to invest in, infrastructure stocks seem to be the way to go in our current market climate. There are few areas where the government can really make a difference in the short term and infrastructure is at the top of that list. Should the bill get passed by the House, there will be massive cash-flow heading towards infrastructure-focused companies. And Caterpillar, Vulcan and Alcoa are three stocks many investors are keeping their eyes on as some of the best infrastructure stocks to benefit from the bill.