10 Stocks for Infrastructure Bonanza

Last week, President Biden and a group of senators finally came to an agreement on a $1.2 trillion infrastructure plan. 

This marked the end of months of back and forth between Republicans and Democrats in an attempt to craft a bipartisan plan that can be passed in Congress. 

The $1.2 trillion will be invested over eight years on a new electrical grid, transit, roads, bridges and other forms of “traditional” infrastructure. 

It was celebrated that some type of compromise can still be reached between parties, but President Biden was lambasted by fellow democrats when he let slip that “what we agreed on today is what we could agree on. The physical infrastructure. There’s no agreement on the rest.”

He tried to walk it back by assuring he’d only sign off on the bipartisan deal if another deal was also passed that focused on childcare, education, and anti-poverty measures… priorities Democrats have demanded be included in the definition of “infrastructure.” 

Which of course led to backlash from Republicans, who are still opposed to the contents of this second bill. 

So is the bill in danger? 

And if it gets passed, what’s it mean for your investments…

Biden’s Reversal 

With swift and fierce criticism coming from the Republican party, who threatened to withdraw support for the bipartisan package, President Biden attempted to roll back his comments.

Over the weekend, he explained:

The bottom line is this: I gave my word to support the Infrastructure Plan, and that’s what I intend to do. I intend to pursue the passage of that plan, which Democrats and Republicans agreed to on Thursday, with vigor.

President Biden also said that even though he wouldn’t tie the passage of one bill to another, he would continue to work to get both bills passed. 

In his statement, he clarified his intentions:

I intend to work hard to get both of them passed, because our country needs both—and I ran a winning campaign for President that promised to deliver on both. No one should be surprised that that is precisely what I am doing. 

So were his words of reassurance enough to calm the Republicans and keep the infrastructure deal on track? 

“The Waters Have Been Calmed”

It would appear the answer to that question is, yes, for now. 

Statements by leading Republicans signaled that the bipartisan bill still has their support and that they could even begin officially drafting the bill. 

Republican Senator Mitt Romney stated, “The waters have been calmed.” Other Republican Senators, including Rob Portman of Ohio and Bill Cassidy of Louisiana, made public statements backing the bipartisan bill. 

Senator Cassidy said, “It is actually going to provide the infrastructure that American people want, that they need, that will make our country more prosperous for all Americans, so I hope it’s enough.”

It’s abundantly clear there will be no Republican support for the second, broader bill, but there is a chance it could still pass with only Democratic support. 

This is looking more likely, as moderate Democrats also seem to have been assuaged by President Biden’s clarification. Senator Joe Manchin of West Virginia, a key Democratic swing vote, even said he would now support using reconciliation to pass the second bill, explaining, “We’ve worked on the one track. We’re going to work on the second track. There’s an awful lot of need.”

For now, it looks like both bills are still a-go, with the bipartisan bill potentially set to be passed as soon as July, before the August congressional recess. 

So what does this all mean for investors? 

What the Infrastructure Bill Means for Stocks 

The markets looked bright last Thursday following President Biden’s statements, with The Dow Jones Industrial Average climbing 1% on Thursday and the S&P 500 Industrial Sector adding about 0.8%. 

Analysts believe we will see the largest boom in industrial and telecom stocks. 

UBS Global Wealth Management’s Solita Marcelli noted that companies tied to roads, bridges, transportation, water and broadband communications are well placed for significant growth. He also expressed that “[o]ther beneficiaries would be engineering and construction, steel, and building materials related stocks.”

Analysts at Stifel, an American multinational independent investment bank and financial services company, noted that the deal “generates significant upside” for machinery, construction materials, and rental companies.

We already saw this play out on Thursday. Right after President Biden’s announcement, construction companies saw stocks move up right away. Shares of machinery giant Caterpillar Inc. (CAT), construction-materials supplier Martin Marietta Materials Inc. (MLM), and construction-aggregates producer Vulcan Materials Co. (VMC) increased. 

Some other stocks to watch in these industries include Astec Industries (ASTE), whose products include asphalt and concrete; Construction Partners (ROAD), which builds roadways; and United Rentals (URI), the world’s largest construction rental company. 

One of the biggest winners of the bill could be broadband stocks, according to Jefferies’ Sean Darby. He believes, “In many ways, the pandemic confirmed to policy workers the high productivity benefits from broadband internet.”

Some broadband stocks to keep an eye on include Adtran (ADTN), Calix (CALX),  American Tower (AMT), and Cambium Networks (CMBM). 

We strongly advise you to consider adding some of these stocks to your portfolio. Right now, it appears that the infrastructure bill will soon be passed, ushering in five to eight years of spending to overhaul and update America’s outdated infrastructure system. 

Leave the political squabbling to Capitol Hill, it’s time for you to focus on making smart returns on your investments. 

To a Richer Life,

The Rich Life Roadmap Team 

 

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