Investing in Infrastructure: How to Profit on the Rebuilding of America

Throughout the 2016 presidential campaign, the prospective candidates from the two major parties have not agreed on much of anything. However, one area where Democrats Hillary Clinton and Bernie Sanders, as well as Republicans Donald Trump and Marco Rubio have all been in agreement, is in their assessment of the unacceptable state of America’s infrastructure.

Presumptive Democratic nominee Hillary Clinton has a factsheet on her website, stating her plans to rebuild the infrastructure of the United States. In the document, Clinton details her intention to spend “increase federal infrastructure funding by $275 billion over a five-year period, fully paying for these investments through business tax reform.”

Donald Trump, the presumptive Republican nominee, has made similar public statements, including the following at a GOP Debate in December of 2015:

“In my opinion, we’ve spent $4 trillion trying to topple various people. If we could’ve spent that $4 trillion in the United States to fix our roads, our bridges and all of the other problems – our airports and all of the other problems we’ve had – we would’ve been a lot better off. I can tell you that right now.”

In 2013 (their most recent report), the American Society of Civil Engineers gave the United States a “D+” grade on their Report Card for America’s Infrastructure. At that time, they estimated that a jaw-dropping $3.6 trillion investment is needed to bring America’s infrastructure up to par by 2020.

In light of this apparent consensus amongst policy makers, one can assume that a massive investment into infrastructure will be made over the course of the next 5-10 years in the U.S. As an investor, an opportunity awaits to profit by investing early into the companies expected to benefit from the projected windfall of government funding. Below is a list of industries and potential companies to take a look at from a long-term investment perspective.

Infrastructure Design and Planning

Before the first shovel hits the dirt, experts must be enlisted to develop the architectural and engineering specifications for major projects. Architecture, engineering, and consulting firms poised to reap the benefits of an infrastructure investment boom include industry leaders such as AECOM (NYSE: ACM), Bechtel (Private), and Jacobs Engineering (NYSE: JSE).

Additionally, software and technology companies like Autodesk (NASDAQ: ADSK) will likely bring the benefits of Building Information Modeling (BIM) to major infrastructure projects. BIM is tool that helps improve project efficiency and construction accuracy by providing three-dimensional visualizations of structures to be built.

Building Materials

Any large project is only as good as the quality of its materials. There is plenty of international competition for things like steel and concrete, as a company like Cemex (NYSE: CX) from Mexico would likely play a big role in many projects given their status as one of the top cement makers in the world. However, the rising costs of shipping and trade politics could give domestic producers an opportunity to reap some of the benefits of infrastructure spending as well. Vulcan Materials (NYSE: VMC) boasts 340 facilities in about 20 states and is one of the largest producers of construction aggregates in the US.

Construction Firms

With plans and materials in place, a project still requires the manpower and know-how to construct the actual structures. Some of the biggest beneficiaries of an infrastructure spending boom would likely include names like Granite Construction Inc. (NYSE: GVA), a U.S.-based construction company that specializes in civil projects including highways, bridges, utilities, and water-related facilities.

Additionally, specialty firms like The MYR Group (NASDAQ: MYRG) could be a smart play. As one of the top 5 specialty electrical contracting firms in the country, The MYR Group provides electrical construction services for airports, sub-stations, distribution networks, and other major facilities around the country.

In the current political and economic environment, it appears that significantly increased spending on infrastructure is almost a given more the United States in the near future. The Economic Policy Institute recently projected a scenario where a “a debt-financed $250 billion annual investment” into infrastructure would boost GDP by “$400 billion and overall employment by 3 million net new jobs” within a single year.

With so many chips likely to get spread across the table in the coming years due to infrastructure investment, investors should do their homework and place their bets according.


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July 1, 2016 Investing in Infrastructure: How to Profit on the Rebuilding of America