Most news from the Capitol this month has centered around the bipartisan infrastructure bill that President Joe Biden signed into law earlier this week. It allocates significant funding for all things related to infrastructure, including electric vehicle charging. Now, lawmakers have switched their focus to a softer side of infrastructure, as debate heats up around the Build Back Better bill. This second piece of legislation promises to fund things like universal preschool and reduce prescription drug costs. Following a vote in the House of Representatives today, what are some potential Build Back Better stocks to watch?
And perhaps more importantly, what else should you know?
According to a statement released by the White House, Biden “believes that there’s no greater economic engine in the world than the hard work and ingenuity of the American people.”
While the statement doesn’t directly mention the stock market, we’re about to see massive investments in related sectors. That in turn will send these stocks up. With that in mind, what companies should investors be considering as Build Back Better stocks?
Here are the top seven to watch:
- AvalonBay Communities (NYSE:AVB)
- Bright Horizons Family Solutions (NYSE:BFAM)
- ChargePoint Holdings (NYSE:CHPT)
- Eaton (NYSE:ETN)
- First Solar (NASDAQ:FSLR)
- Nucor (NYSE:NUE)
- Vulcan Materials (NYSE:VMC)
Build Back Better Stocks: AvalonBay (AVB)
This would have been a good stock to buy for the coming year even without the Build Back Better bill. As InvestorPlace contributor Chris Markoch noted a few months ago, there’s bullish case to be made for AVB stock for any investor looking to stay ahead of inflation.
With $150 billion in the bill allocated for affordable housing, it makes sense to look at this real estate investment trust that focuses on apartment development. Its business model also highlights affordable housing as a key component, and there aren’t many publicly traded companies that focus on that aspect of real estate.
The current real estate market is complicated, to say the least, and as aspiring home buyers are priced out of their desired areas, rental and other affordable housing options start to look better and better. The need for affordable housing isn’t going away any time soon, and for that matter, neither is inflation. AvalonBay knows both those things and it is determined to stay ahead of these trends. If it can do so successfully, 2022 will be a great year for its investors.
Bright Horizons Family Solutions (BFAM)
This year brought a true back-to-school boom, as many students returned to in-person school for the first time in months. While this wasn’t initially good news for the tech companies that had benefitted from the remote learning trends of the Covid-19 pandemic, some found ways to stay ahead.
As InvestorPlace contributor Josh Enomoto noted, Bright Horizons is a rare investment in the sense that it is an education-related tech stock with the ability to leverage modern academic innovations for elementary-school-age children. This may not seem like a typical candidate for a Build Back Better stocks list, but it is absolutely worth considering.
The passing of Build Back Better is also good news for companies in this space. It includes a $400 billion investment in universal preschool. For companies such as Bright Horizons, whose dynamic business models centers around providing care primarily for young children, this type of development could allow for significant growth.
Build Back Better Stocks: ChargePoint Holdings (CHPT)
The bill includes $555 billion to fight climate change and that includes investing in electric vehicles.
As the EV race has picked up steam and seen many exiting developments, the need for the type of infrastructure that powers the innovative vehicles has become apparent. Thankfully, companies are stepping up to produce the charging stations necessary to keep vehicles from Lucid (NASDAQ:LCID), Rivian (NASDAQ:RIVN) and their peers on the road. The company leading the charge so far is ChargePoint, a company that has made quite a name for itself providing charging infrastructure.
ChargePoint has done an excellent job positioning itself as an industry leader in the emerging and expanding market that is EV infrastructure. Shares have risen more than 27% during this month and experts have indicated that it has a great chance of rising more during the coming year, potentially by as much as 50%. The passing of a bill designed to invest in its sector will only help this stock continue to grow, especially as it continues to gain market share.
One of the bill’s main focuses is clean energy technology and development. As such, companies involved in the space of green-focused infrastructure are going to among the biggest winners of the Build Back Better bill. An important company is Eaton, one of the country’s leading providers of electric systems and their components. The company may bill itself as being in the field of power management, but it’s important to remember how important alternative sources of power are going to be to both infrastructure development and combatting climate change, two central areas of the bill.
Eaton is deeply involved in the areas of both wind and solar energy, two clean energy areas whose importance has become increasingly apparent throughout recent years. As it website notes, its electrical solutions involve converting alternatively generated energy into electricity and transporting it to major grids. The Texas power grid crisis has alerted America’s politicians just how concerned they need to be with this area of infrastructure. Companies in the space are going to have plenty of work to do moving forward and Eaton is an industry leader within it, making an ideal candidate for a list of Build Back Better stocks.
Build Back Better Stocks: First Solar (FSLR)
In any discussion of alternative energy, the topic always seems to shift to solar technology. The industry took some significant hits during Donald Trump’s presidency due to his trade policies, but the Biden administration seems determined to turn things around. This will be helped considerably by the funds allocated for clean energy development in Build Back Better. And as the industry moves forward, First Solar will be at the forefront.
This Arizona-based company was an early winner among solar stocks. Despite some setbacks, FSLR stock has enjoyed an impressive year, rising by more than 50% during the past six months.
When a bill centers around building and repairing, it stands to reason that companies producing core building materials would be among the stock market winners.
Based in Charlotte, North Carolina, Nucor is North America’s largest domestic steel producer. It may not receive as much coverage as its competitor U.S. Steel (NYSE:X), but its stock performance has been notoriously less volatile. It’s a great time for a bullish play on steel stocks, and Nucor should give investors the most confidence.
That doesn’t just come from the impending influx in business from infrastructure spending, though. Nucor has reported excellent earnings this year, likely stemming from the exceedingly high demand from automakers. The stock did see a slump last month but it’s been in the green for most of November and has made steady progress since. It is absolutely a name to watch among Build Back Better stocks.
Build Back Better Stocks: Vulcan Materials (VMC)
Like Nucor, Vulcan was also recently named to a list of stocks to buy as Biden signed the more traditional infrastructure bill into law. While Build Back Better focuses on more social components of infrastructure, Vulcan and its peers will still be relevant.
Based in Birmingham, Alabama, Vulcan has spent decades securing a market share in a field that has been expanding recently and won’t be slowing down any time soon. The construction company’s market capitalization of $26 billion should be a good indicator of its stability. Like Vulcan, it’s seen some declines recently, but shares are in the green for the month.
Anyone considering a bullish play on the construction sector would do well to consider Vulcan. Next year promises to be a big year of infrastructure spending. That makes all of these Build Back Better stocks top names to consider.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.