Federal, state, and local infrastructure agencies will be spending like they haven’t in almost two decades, and this is going to go on for years, so now is the time to decide which companies you think have the best prospects going forward and invest in them accordingly. This article identifies 12 companies that are already responding favorably to the opportunities.

As illustrated in the chart below, for almost two decades, the U.S. has been underinvesting in infrastructure

BEA

All that under-allocation in infrastructure spending is about to change with the passage last November of the Infrastructure Investment and Jobs Act (IIJA) into law which has authorized the spending of $1.2 trillion (see below) with $550 billion of new spending over the next 5 years. In excess of $110 billion of spending across 4,300+ projects has already been awarded, announced, or initiated.

In addition to the passage of the federal infrastructure bill, a number of states are also joining in with their own infrastructure packages totaling in excess of $17.5B to date. 

After the bill passed and was subsequently added to the Federal budget (the fiscal year begins October 1, 2022), the White House issued a series of executive orders to the relevant agencies tasking them with setting up the legal framework for spending all this money. Those are beginning to trickle in and that is reflected in the surge in stock prices of most of the constituents in the munKNEE Infrastructure Bill Beneficiaries Index. Most of the states’ fiscal years began July 1, and most of the rest coincide with the Federal October start so we are at the starting line of this 8-year or so marathon. 

In my June Update, I reported that NONE of the 12 constituents in the Index had advanced during the month but commented that "one would expect the constituents to advance in the months - and years - ahead, so now might be the ideal time to do your own due diligence and decide which companies you think have the best prospects going forward and invest in them accordingly." The Index did just that in July with ALL constituents advancing by a collective +17.8% and they have continued to advance since then. Below is the performance of the 12 constituents in the munKNEE Infrastructure Bill Beneficiaries Index since the end of June, in descending order:

Advanced 15% or More Since the End of June

1. Nucor (NUE): UP 37.8% 
   • As the largest domestic steelmaker in North America, the pent-up demand from automakers and other industrial buyers should benefit NUE considerably going forward.
2. ChargePoint Holdings (CHPT): UP 31.0% 
   • With the expected building of 250,00 customized charging stations, CHPT should benefit considerably from their involvement.
3. United Rentals (URI): UP 29.8% 
   • As the provider of specialty equipment specifically designed for underground work and fluid treatment URI should benefit from business generated by the infrastructure bill.
4. Deere & Company (DE): UP 25.1% 
   • As a major producer of earthmoving and roadbuilding and forestry equipment, DE should see an increased demand for its machinery.
5. Vulcan Materials (VMC): UP 21.0% 
   • As America's largest producer of construction aggregates such as crushed stone, sand, and gravel, and a major producer of asphalt and cement VMC will benefit from future major infrastructure projects.
6. Martin Marietta Materials (MLM): UP 20.2% 
   • As a producer of crushed sand and gravel products, ready-mixed concrete and asphalt, paving products and services, dolomitic lime for the steel and mining industries, and chemical products for use in flame retardants, wastewater treatment, and assorted environmental applications MLM should be a major beneficiary.
7. Brookfield Infrastructure Corporation (BIPC): UP 15.1%
   • With operations spanning utilities, transportation, energy, and even data infrastructure, BIPC should benefit enormously from business generated by the infrastructure bill.
8. Eaton Corp. (ETN): UP 15.0% 
   • As a major supplier of electrical components and systems, ETN should benefit from the integration of wind and solar farms into the national grid.

Advanced Between 5% and 15% Since the End of June

1. Freeport-McMoRan (FCX): UP 13.1%
   • Given that 43% of all copper mined is used in building construction, with another 20% used in transportation equipment, FCX should be a major benefactor.
2. Caterpillar (CAT): UP 7.5%
   •  As the manufacturer of asphalt pavers, compactors, excavators, pipe layers, backhoes, etc., CAT will benefit from future major infrastructure projects.

Advanced Between 1% and 5% Since the End of June

1. Crown Castle International (CCI): UP 2.3% 
   • As one of America's leading wireless tower real estate investment trusts, CCI should benefit from the expansion of mobile data usage.
2. Oshkosh Corp. (OSK): UP 1.4%
   • As the manufacturer of specialty trucks used in heavy construction projects as well as cement mixers, truck-mounted cranes, "cherry pickers" and other hydraulic lifting systems and is well placed to meet the demand for the electrification of the federal vehicle fleet OSK should prosper going forward.

Federal, state, and local infrastructure agencies will be spending like they haven’t in almost two decades, and this is going to go on for years, so, as I mentioned above, "now might be the ideal time to do your own due diligence and decide which companies you think have the best prospects going forward and invest in them accordingly." Now is the time to get ready to capitalize on the opportunities. The 12 constituents in the munKNEE Infrastructure Bill Beneficiaries Index are UP 19%, on average, since the end of June, so imagine what the future could well hold.

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