U.S. infrastructure has been crumbling for quite some time.
The situation has gotten so bad, the American Society of Civil Engineers gave the country a D+ in 2017. That’s a terrible score. In fact, to get anywhere near where the country’s roads, bridges and water systems need to be, the ASCE says we need nearly $4.5 trillion by 2025.
“We’re looking at aviation, bridges, roads, transit, dams, levees, schools, parks, solid waste, drinking water, waste water,” ASCE Executive Director Tom Smith told CNBC. “Unfortunately, 12 out of 16 categories are in the ‘D’ range, which is ‘poor’ or ‘at-risk,’ which is really reflecting a lot of our infrastructure being at the end of its useful life.”
We’ve heard a lot of talk from the government on fixing the issue. However, we may actually be a step closer to a resolution.
President Donald Trump is reportedly preparing a $1 trillion infrastructure proposal.
In fact, according to CNBC, reports say, “a preliminary version being prepared would set aside the majority of the money for traditional infrastructure projects such as roads and bridges, though funds would also be reserved for 5G wireless infrastructure and rural broadband.”
The last time I wrote about top infrastructure stocks was on June 11, when I recommended three picks. Now, things are just heating up for these infrastructure stocks.
Infrastructure Stocks: Vulcan Materials (VMC)
My first pick was Vulcan Materials, which produces and sells construction aggregates, asphalt mix and ready-mixed concrete. All of those products are needed to fix miles and miles of antiquated roads and bridges.
In the original article, I said, “with new infrastructure initiatives being launched, I believe VMC stock could revisit its prior high of $148 shortly.”
That was on June 11, as VMC stock traded at $109. As of June 23, VMC is now up to $120. If Trump can successfully push the infrastructure program through, I strongly believe VMC stock could hit my initial price target of $148 a share.
After all, the U.S. will need plenty of aggregates and concrete to repair bridges and roads that are literally crumbling below our feet.
Caterpillar (CAT)
My second choice was Caterpillar, simply because no infrastructure job is complete without this company or its construction equipment.
“With a likely infrastructure boom soon underway, I believe the Caterpillar stock could easily test $162, near-term,” I noted. “With potential multi-billion-dollar projects, the CAT stock can quickly capitalize with its diversified business model, including transportation, construction and natural resources.”
That was back when CAT stock traded at $121.52 a share. It’s now up to $127, and is just beginning to surge higher. Better, the future could get even brighter for Caterpillar. That’s especially true with high hopes that Trump’s infrastructure program will see the light of day.
Nucor (NUE)
Rounding out the list of top infrastructure stocks to own was Nucor, the largest steel producer in the U.S. Better, it was recently upgraded by Goldman Sachs analyst Matthew Korn to a “buy” rating.
“While the coronavirus threat put a dent in steel demand, new infrastructure programs could quickly change that,” I noted earlier in June.
That was back when NUE stock traded just below $40 per share. It’s now up to $45, and exploding even higher on the latest news from the Trump administration.
Better still, history tells us a lot of steel is required to fix the roads. According to Times Union contributor Tom Madison, “During the past six decades, construction of our National Highway System has required more than 6 billion tons of steel.”
That sounds like a lot of business for Nucor.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, he did not hold a position in any of the aforementioned securities.
