Market Overview

How To Trade The Expected Expansion In U.S. Infrastructure Spending

How To Trade The Expected Expansion In U.S. Infrastructure Spending

One of President Donald Trump's election promises that struck a chord with the people was his plan to spend $1 trillion on infrastructure. The plan unveiled in October last envisaged spending on highway, waterway, airport, pipeline and bridge projects.

Private Participation Sought

Trump intends to invite participation by private investors by offering them a $137 billion tax break. However, experts argue that there are very few roads in the United States that can qualify as projects with a large private sector component that can pay for themselves.

Democrats — Same Goal, Different Path

Meanwhile, as recently as last month, Senate Democrats led by Chuck Schumer outlined their own version of a $1 trillion infrastructure spending plan spanning over a period of 10 years.

Related Link: Why Trump's $1 Trillion 10-Year Infrastructure Plan Will Only Provide $200 Billion In Stimulus

The Democrats are calling for spending on repairing old bridges and roads, expanding bus and rail systems, modernizing ports, highways, airports, schools, grids, etc. Unlike the Trump plan, Democrats are looking to finance the spending through direct federal spending.

A report in The Hill suggested that an infrastructure package may take shape only after his first 100 days in office, although it could be still part of the 2017 agenda. Key transportation lawmakers believe it could come through before the August recess, the report added. However, lawmakers are skeptical if Trump could keep his date with the $1 trillion figure. Many believe it could be far smaller than the figure.

Even as we await more details on the plan, here are some infrastructure plays investors can keep an eye on to ride a potential spending-related bump.

Among the large-cap names are:

  • Calgon Carbon Corporation (NYSE: CCC) — provider of pollution treatment controls.
  • Crane Co. (NYSE: CR) — provides various pumps, flow meters, other fluidics systems and components, and engineered products.
  • Curtiss-Wright Corp. (NYSE: CW) — industrial products company.
  • General Electric Company (NYSE: GE).
  • IDEX Corporation (NYSE: IEX) — provides various pumps, flow meters, other fluidics systems and components, and engineered products.
  • Johnson Controls International plc Ordinary Share (NYSE: JCI) — multi-industrial company catering to the construction market.
  • Mueller Water Products, Inc. (NYSE: MWA) — manufacturer of products and services for the use in transmission, distribution and measurement of water.
  • Nordson Corporation (NASDAQ: NDSN) — plumbing materials maker.
  • Primoris Services Corp (NASDAQ: PRIM) — provider of a range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services.
  • Rexnord Corp (NYSE: RXN) — manufacturer of process and motion control, and water management products worldwide.
  • TELUS Corporation (USA) (NYSE: TU) — manufacturer of telecom products.
  • Trinity Industries Inc (NYSE: TRN) — provider of products and services for the energy, transportation, chemical and construction sectors.
  • Watts Water Technologies Inc (NYSE: WTS) — provider of products and solutions that manage and conserve the flow of fluids and energy.
  • Xylem Inc (NYSE: XYL) — provider of engineered technologies for the water and wastewater applications.
  • York Water Co (NASDAQ: YORW) — water utility.

These are the some of the mid- and small-cap infrastructure plays:

  • Aegion Corp (NASDAQ: AEGN) — provider of providing infrastructure protection and maintenance.
  • Astec Industries, Inc. (NASDAQ: ASTE) — construction equipment maker.
  • Columbus McKinnon Corp. (NASDAQ: CMCO) — construction equipment maker.
  • Consolidated Water Co. Ltd. (NASDAQ: CWCO) — operates desalinization plants and water distribution systems.
  • Douglas Dynamics Inc (NYSE: PLOW) — manufacturer of vehicle attachments and equipment.
  • IES Holdings Inc (NASDAQ: IESC) — owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets.
  • Granite Construction Inc. (NYSE: GVA) — construction materials company.
  • H&E Equipment Services, Inc. (NASDAQ: HEES) — integrated equipment services company.
  • Layne Christensen Company (NASDAQ: LAYN) — water management, construction and drilling company.
  • Mistras Group Inc (NYSE: MG) — provider of technology-enabled asset protection solutions used to evaluate the structural integrity and reliability of critical energy, industrial and public infrastructure.
  • MYR Group Inc (NASDAQ: MYRG) — provider of electrical construction services.
  • Sterling Construction Company, Inc. (NASDAQ: STRL) — civil construction company.
  • TRC Companies, Inc. (NYSE: TRR) — engineering, consulting and construction management firm.
  • United States Lime & Minerals Inc (NASDAQ: USLM) — has lime and limestone operations, and natural gas interests.
  • US Concrete Inc (NASDAQ: USCR) — producer of ready-mixed concrete.

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