Last week in this space, my colleague Nancy Zambell wrote about “3 Infrastructure Stocks for a Joe Biden Win.” Today, I have four additional ideas along those same lines.
Occasionally, I look back to 2017, when the Republicans controlled the presidency, the Senate and the House of Representatives. This was a unique opportunity to make transformative change.
The decision was made to go with a tax cut as the centerpiece of a legislative agenda. There were some that preferred a significant infrastructure bill.
In my opinion, while the tax cut did stimulate the economy, an infrastructure program would have created a tangible sense of progress and a more enduring growth while rebuilding our industrial base.
Now the bill has come due no matter which party wins the White House next week.
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America’s outdated infrastructure is in critical need of a 21st century overhaul, receiving just a D+ grade from the American Society of Civil Engineers’ (ASCE).
Deteriorating roads, waterways, bridges, airports and seaports clog the nation’s economy, slowing growth. America requires about $2 trillion of additional investment over the next 10 years to adequately repair and replace existing infrastructure. The ASCE cites some of the below statistics to highlight America’s infrastructure deficit:
- 32% of urban roads are in disrepair
- 70% of U.S. transmission lines are at least 25 years old
- 8% of drinking water doesn’t meet EPA standards
- Few U.S. ports are deep enough to handle the largest ships that pass through the Panama Canal
The needs and pent-up demand are enormous. Here are some ideas that allow you to invest in the coming infrastructure boom.
4 Infrastructure Stocks and ETFs to Buy
Infrastructure ETF to Buy: Global X U.S. Infrastructure Development ETF (PAVE)
The Global X U.S. Infrastructure Development ETF (PAVE) seeks to invest in companies that stand to benefit from a potential increase in infrastructure activity in the United States, including those involved in the production of raw materials, heavy equipment, engineering, and construction. Some of the leading companies in this ETF basket include Fastenal (FAST), Rockwell Automation (RPK) and Eaton Corporation (ETN).
Infrastructure Stock to Buy: Nucor (NUE)
You can’t go wrong with America’s biggest steel company, Nucor (NUE).
Whether it’s rebar for concrete construction, tube steel for uses including energy, transportation and production, or the beams used to build bridges and skyscrapers, Nucor is a leader in steel for infrastructure.
Now let’s turn to a couple of companies that capture infrastructure growth both at home and overseas.
Infrastructure Stock to Buy: Fluor Corporation (FLR)
In my experience, Fluor Corporation (FLR) is one of the best at international engineering and construction. Founded in 1912 and based in Texas, Fluor has built power plants that light up our homes, petroleum plants that fuel commerce, and roads and bridges that connect our cities by developing, executing and maintaining capital projects. Fluor serves more than 4,000 clients in over 100 countries.
Infrastructure Stock to Buy: Brookfield Global Infrastructure (BIP)
If you want to diversify your infrastructure exposure outside America’s borders, Brookfield Global Infrastructure (BIP) is a leader in this space. Brookfield Infrastructure has many of the benefits of a utility but with a higher growth rate and steady cash flows that come in handy during a recession.
Furthermore, about 75% of its cash flows are inflation-indexed and only 5% are subject to commodity price risk. But the big advantage with Brookfield is its diversification by type of infrastructure and geography. About 25% of its revenue comes from North America, 25% comes from Europe, 30% from South America, and 20% from Asia, Australia, and New Zealand. Additionally, its 35 assets include railroads, electricity and natural gas utilities, timberlands, toll roads, ports, and pipelines.
The oncoming infrastructure-spending boom will likely pull the above stocks and ETFs forward. I recommend you put a few in your portfolio today.
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