With infrastructure a focus in the political sphere, many companies stand to benefit from U.S. President Trump’s $1 trillion proposed infrastructure plan. These four stocks stand to benefit the most:
Heavy equipment manufacturer Caterpillar stands to benefit from the proposed infrastructure plan. But even before the proposed infrastructure plan, things were looking up for the company. Thanks to global recovery, the company expects to see growth in demand for parts in its rail, oil/gas and mining units. Higher construction equipment sales and mining truck shipments will also improve growth.
Infrastructure spending is not likely to benefit the company in 2018, but in the coming years, an increase in spending should benefit the company in more ways than its peers due to its diversified business model.
Caterpillar’s stock also offers a 1.8% dividend yield. Analysts are expecting the company to increase its EPS by 40% in the coming years.
As the largest steel producer in the United States, Nucor is likely to be one of the biggest beneficiaries of increased infrastructure spending. The company has the ability to provide a lot of the steel needed to build tunnels, bridges, pipelines and railroads.
Nucor has also improved its yearly payout for 44 straight years. The company has a $22 billion market value.
AECOM builds, creates, finances and operates infrastructure assets for governments and businesses. The company has a market value of $6.1 billion and has a track record ($1.9 billion over three years) of generating free cash flow in challenging environments.
With the proposed $1 trillion in spending, AECOM’s cash flow will likely grow.
The company is committed to returning capital to investors. The company announced a $1 billion share buyback program in September.
AECOM has also merged with URS to improve its transportation and energy sectors, both of which are sure to see more spending under Trump’s administration if the infrastructure package passes.
The stock has a 12-month price target of $40.54, which suggests a 20.5% upside potential.
Vulcan is in the business of building materials, such as limestone, gravel and sand. These materials are the foundation of many building projects, including roads, bridges and industrial plants.
The company has a $17.43 billion market cap and generated $3.89 billion in revenue in 2017, equating to 8% growth year over year.
The 12-month stock price target indicates strong growth over the next year, with a median price target of $143.27.