3 “Strong Buy” Infrastructure Stocks Ready To Run In 2021

NYSE: BHP | BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares) News, Ratings, and Charts

With the advent of the coronavirus pandemic, the construction industry has been one of the hardest-hit segments, essentially coming to a halt. However, historically low interest rates have boosted construction activities over the last few months, as cheap financing has driven demand. According to the U.S. Census Bureau, total construction spending increased 3.7% year-over-year to $1438.5 billion in October 2020. The sector is expected to flourish further based on president-elect Jo Biden proposal to invest $1.3 trillion in infrastructure over 10 years.

The gradual recovery of Infrastructure stocks is reflected in the performance of iShares U.S. Infrastructure ETF IFRA, which has gained 69.2% since hitting its low in March. The ETF has gained 19.2% in the past three months. With their strong  financials, we think BHP Group Limited (BHP), Nucor Corporation (NUE), and Cemex, S.A.B. de C.V. (CX) are three infrastructure stocks that are well positioned to benefit from the increasing spending in the construction space.

BHP Group Limited (BHP)

Headquartered in Melbourne, Australia, BHP is a global resources company. BHP is engaged in the discovery, acquisition, development, and marketing of natural resources worldwide. The company operates primarily through four segments — Petroleum, Copper, Iron Ore, and Coal.

For the quarter ended September 2020, the production of Zinc has increased 68% year-over-year to 34 kt (kilotons). Its iron ore production has increased 8% year-over-year to 66 Mt. Its metallurgical coal production has increased 4% year-over-year to 10 Mt, and Nickel West production has increased 3% year-over-year to 22 kt.

BHP’s consensus revenue estimate of $45.58 billion for the quarter ending June 2021 represents a 6.2% increase from the same period last year. The consensus EPS estimate of $3.80 for the quarter ending June 2021 indicates a 6.1% increase year-over-year. Moreover, the company’s EPS is expected to increase at a rate of 5.3% per annum in the next five years.

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