See how these three construction materials and heavy machinery companies grade on certain key criteria that you need to consider in order to capitalize on a potential national infrastructure spending bill.
There have been high hopes for a significant U.S. infrastructure spending bill for the last few years with very little to show for it. Some politicians are renewing calls for more infrastructure spending. Will this time be different? President Biden wants to spend $2 trillion on roads, bridges, airports, railways, sources of renewable energy,5G wireless broadband networks, power grids and electric transport infrastructure, and hopes to win bipartisan support for his plans. The need is indeed enormous. The American Society of Civil Engineers has graded the nation’s infrastructure as a D+ and warned that its deterioration is harming the nation’s ability to compete in the global economy. The last major infrastructure funding program that was passed into law was the Fixing America’s Surface Transportation Act or FAST Act. The FAST Act was passed in 2015 during the Obama administration. Originally, the FAST Act program funding totaled $305 billion over five years. The program was set to expire in September 2020 but was extended for another year. Spending more to rebuild roads and bridges, as well as building out high-tech infrastructure such as 5G networks, could also help provide jobs to those who need them and give a lift to the broader economy. Still, there are questions about whether Congress will be willing to approve a big infrastructure package. Politicians need to show that infrastructure spending benefits society and taxpayers at large and can improve the economy and make it more productive. If a large infrastructure spending bill passes, it would likely boost the sales and earnings for a variety of leading U.S. companies in the basic materials, consumer cyclicals, industrials, utilities and technology sectors. Companies that produce building materials such as cement, concrete, and sand and gravel could benefit from any increased spending on transportation infrastructure. Old economy companies like railroads could also benefit as the industry goes more electric and becomes more competitive, with the trucking sector as a greener option for the long-haul transportation of goods. Martin Marietta Materials MLM is a supplier of aggregates products (crushed stone, sand and gravel) used for the construction of infrastructure, nonresidential and residential projects. The company’s business is categorized into aggregates business, cement business and magnesia specialties business. Its cement business produces Portland and specialty cements. Its magnesia specialties business manufactures and markets magnesia-based chemical products used in industrial, agricultural and environmental applications, and dolomitic lime sold to customers in the steel industry. Cleveland-Cliffs (CLF) is a vertically integrated producer of iron ore and steel products. The company has upstream and downstream operations. It supplies both customized iron ore pellets and steel solutions. Its segments include steel and manufacturing and mining and pelletizing. Its steel and manufacturing segment is a producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing and distributors and converters markets. The company’s steel and manufacturing segment includes subsidiaries that provide customer solutions with carbon and stainless-steel tubing products, engineered solutions, tool design and build, hot- and cold-stamped steel components and complex assemblies. Its mining and pelletizing segment is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. Caterpillar (CAT) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company operates through its main segments, including construction industries, which is engaged in supporting customers using machinery in infrastructure, forestry and building construction; resource industries, which is engaged in supporting customers using machinery in mining, quarry, waste and material handling applications; and energy & transportation, which supports customers in oil and gas, power generation, marine, rail and industrial applications. AAII’s A+ Stock Grade Summary for Three Infrastructure Rebuilding Stocks Latest News As of March 1, 2021, Martin Marietta had a $21.
