Back to top

Image: Bigstock

5 Stocks to Buy on Massive $1.5-Trillion Infrastructure Plan

Read MoreHide Full Article

One problem that Americans face is certainly shoddy infrastructure. President Trump had raised this issue in his first State of the Union Address. He wanted to revamp infrastructure, including roads, bridges, highways and railways. This is something that he has been promising since his campaign days.

In the wake of this, Trump has announced a massive infrastructure bill on Feb 12 to modernize infrastructure. Thus, picking stocks gaining from the infrastructure drive seems judicious.

Trump Unveils Infrastructure Plan

Trump unveiled the long-awaited $1.5 trillion plan to fix America’s infrastructure over the next 10 years. The plan is primarily centered on using the $200 billion in federal funds to spur massive infrastructure investments on roads, highways, ports and airports. The comprehensive bill will also address issues related to drinking and waste water system, energy and rural infrastructure, veterans’ hospitals, to name a few.

Researchers in McKinsey & Company have figured out that such a massive amount will indeed be needed to refurbish the country’s infrastructure. To fund the bill, Trump said that every dollar should be “leveraged by partnering with state and local governments and, where appropriate, tapping into private-sector investment.”

How Will the $200B be Spent?

Of the $200 billion in federal money, half of it will go to incentives for states and cities. The White House said that this money will ultimately be used in new projects like building airports, passenger rail, drinking water facilities and Superfund sites.

About $50 billion will be used in Rural Infrastructure Programme. This is aimed at rebuilding and improving infrastructure in rural America. The White House added that “the bulk of the dollars in the Rural Infrastructure Programme will be allocated to State governors, giving States the flexibility to prioritize their communities’ needs. The remaining funds will be distributed through rural performance grants to encourage the best use of taxpayer dollars.”

Nearly $20 billion will be spent on “Transformative Projects Program,” while another $20 billion will be allocated toward expanding infrastructure financing programs. 

US in Desperate Need of Infrastructure Overhaul

Rhode Island is grappling with problems like dilapidated bridges and roads, while New Hampshire has a lot of catching up to do when it comes to water infrastructure.

Meanwhile, the broken-down Sarah Mildred Long Bridge and poor road conditions are plaguing Maine. Meanwhile, all the three states in the New York City have collapsing roads and railways, with Connecticut being the worst. Last but not the least, Mississippi will see substantial improvement in and around Port of Gulfport owing to the infrastructure plan.

5 Solid Choices

Courtesy of the all-inclusive infrastructure bill, for the first time in the history of the United States, investing in stocks related to infrastructure is a smart option at the moment. However, picking winning stocks may prove to be difficult.

This is where our VGM Score comes in handy. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at the VGM Score. Further, these stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

MasTec, Inc. (MTZ - Free Report) is an infrastructure construction company that provides engineering, building, installation, maintenance, and upgrade services for communications, energy, and utility infrastructure, primarily in the United States. The company has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings rose 8.7% in the last 90 days. The company is expected to return 47.9% this year, higher than the industry’s estimated return of 10.3%.

Granite Construction Incorporated (GVA - Free Report) operates as a heavy civil contractor and a construction materials producer in the United States. The company has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose 3.9% in the last 90 days. The company is expected to return 11.3% this year, higher than the industry’s projected return of 10.3%.

TopBuild Corp. (BLD - Free Report) is the installer and distributor of insulation products to the construction industry, primarily in the United States. The company also installs and distributes other building products, which consist of rain gutters, garage doors, fireplaces, shower enclosures, closet shelving and roofing. TopBuild has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose 0.4% in the last 90 days. The company is expected to return 40.3% this year, higher than the industry’s estimated return of 9.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masco Corporation (MAS - Free Report) designs, manufactures, and distributes home improvement and building products worldwide. The stock has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose 6.7% in the last 90 days. The company is expected to return 22.7% this year, higher than the industry’s projected return of 9.9%.

Owens Corning (OC - Free Report) — a Zacks Rank #2 company — produces and sells glass fiber reinforcements and other materials for composites; and residential and commercial building materials worldwide. The company has a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings rose 0.5% in the last 90 days. The company is expected to return 19.6% this year, higher than the industry’s estimated return of 9.9%.

The Hottest Tech Mega-Trend of All                

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>              

Published in