After months of negotiations, President Joe Biden’s infrastructure bill was officially signed into law in November. This new infrastructure bill carries a hefty $1.2 trillion price tag, allocating $550 billion in new federal investments in infrastructure over the next five years. As a result, the spotlight is once again on which names are the best infrastructure stocks out there right now.
According to the American Society of Civil Engineers (ASCE), the United States’ infrastructure gets a C- on the scorecard. Specifically, the country has “a water main break every two minutes.” Further, “growing wear and tear on our nation’s roads have left 43% of our public roadways in poor or mediocre condition.”
Now, the trillion-dollar bill is some of the largest spending we’ve witnessed since the end of World War II. Moreover, details of the plan imply considerable upside potential for many infrastructure names.
So, with that said, here are seven of the best infrastructure stocks offering robust growth prospects in 2022:
- Brookfield Infrastructure Partners (NYSE:BIP)
- Caterpillar (NYSE:CAT)
- Crown Castle International (NYSE:CCI)
- Enterprise Product Partners (NYSE:EPD)
- Fluor (NYSE:FLR)
- iShares US Infrastructure ETF (BATS:IFRA)
- Nucor (NYSE:NUE)
Infrastructure Stocks to Buy: Brookfield Infrastructure Partners (BIP)
52-week range: $48.25 – $62.47
Dividend yield: 3.35%
First up on this list of best infrastructure stocks, Brookfield Infrastructure Partners is a master limited partnership (MLP) that operates long-life assets spanning pipeline, utility, railroad, port and data infrastructure.
This MLP issued third-quarter results in early November. For the period, revenue increased 33% year-over-year (YOY) to $2.94 billion. Net income stood at $413 million as well, or 72 cents per diluted share, compared to $5 million in the prior year. Finally, cash and equivalents ended the quarter at $1.84 billion. After the announcement, CEO Sam Pollock commented the following:
“The successful acquisition of Inter Pipeline marked a significant milestone for Brookfield Infrastructure and third quarter results were supported by its initial contribution, as well as strong organic growth within our base business.”
Analysts highlight that Brookfield’s infrastructure assets offer reliable cash flows, solid margins and growth prospects. In fact, around 95% of the cash flow comes from regulatory entities.
BIP stock is also a way for dividend investors to access the broad infrastructure space. Brookfield has increased its annual distribution consecutively for the past 14 years. It currently offers a 3.35% dividend yield.
Currently, shares are trading around $60 per share or so, up nearly 25% for the past one year. BIP is trading at 40.5 times forward earnings and 1.66 times trailing sales. The 12-month median price forecast for the stock stands at $70 per share.
Caterpillar (CAT)
52-week range: $179.34 – $246.69
Dividend yield: 2.15%
Next up on this list of best infrastructure stocks, the iconic manufacturer of construction machinery Caterpillar needs little introduction. It is one of the largest heavy equipment groups globally.
Caterpillar released Q3 results back in late October. Revenue for the quarter increased 25% YOY to $12.4 billion. Further, adjusted operating profit came in at $1.7 billion, or $2.66 per share, compared with $1.52 per share in the prior-year quarter. Finally, cash and equivalents ended the period at $9.5 billion. Following the announcement, CEO Jim Umpleby remarked, “Our third-quarter results reflect higher sales and revenues across our three primary segments and in all regions.”
The expected acceleration in infrastructure spending continues to drive momentum in CAT stock. Dealer inventories remain at low levels, whereas customer demand is high. As a result, CAT deserves your attention in 2022. Not to mention the Dividend Aristocrat has increased its annual dividend for close to three decades.
Shares hit a bottom in March 2020 and have risen significantly since then. The stock currently hovers at $206, up 13.4% for the past one year. Shares are trading at 19.94 times forward earnings and 2.33 times trailing sales. The 12-month median price forecast for CAT stock is $237.50.
Infrastructure Stocks to Buy: Crown Castle International (CCI)
52-week range: $146.15 – $209.87
Dividend yield: 2.82%
Crown Castle International is one of the leading wireless tower real estate investment trusts (REITs) stateside and the next entry on this list of best infrastructure stocks. It leases roughly 40,000 cell towers to wireless service providers which then install equipment on these towers to support wireless networks.
CCI released Q3 results back in late October. For the period, site rental revenue grew 8% YOY to $1.44 billion, up by $112 million. Income from continuing operations stood at $351 million as well, or 81 cents per diluted share, up from $163 million in the prior-year quarter. Cash and equivalents ended the period at $542 million. On the results, CEO Jay Brown remarked the following:
“We are focused on supporting our customers as they upgrade their existing cell sites as part of the first phase of the 5G build out in the U.S., which is resulting in record tower application volumes this year and an expected 20% increase in core leasing activity for our Towers segment for full year 2022.”
Mobile data currently accounts for roughly half of the web traffic worldwide. By 2022, mobile data traffic is expected to reach 77.5 exabytes per month worldwide at a compound annual growth rate (CAGR) of 46%.
As such, analysts suggest Crown Castle as a play on mobile data usage. President Biden’s American Jobs Plan is also expected to offer universal broadband coverage. Increased government spending and the emergence of fast 5G mobile internet implies robust growth opportunities over the next few years.
CCI stock currently hovers around $206 and has soared 30% in the past one year. CCI shares are trading at 79.4 times forward earnings and 14.6 times trailing sales. The 12-month median price forecast for the stock stands at $200.
Enterprise Product Partners (EPD)
52-week range: $19.28 – $25.69
Dividend yield: 8.20%
Based in Houston, Texas, Enterprise Product Partners provides midstream energy services. As one of the largest energy infrastructure groups in North America, it operates a broad portfolio of pipelines as well as storage and transportation assets.
Enterprise released Q3 results in early November. For the period, total revenue surged about 56% YOY to $10.8 billion. Net income stood at $1.2 billion, or 52 cents per diluted share, compared to $1.1 billion or 48 cents per diluted share a year ago. Net cash flow provided by operating activities reached a record $2.4 billion as well. On the metrics, CEO Jim Teague cited:
“In the third quarter of 2021, Enterprise’s assets continued to benefit from the global economic recovery and the associated increase in demand for crude oil, natural gas, NGLs, primary petrochemicals and other energy products.”
EPD has a solid balance sheet and is on track to become a Dividend Aristocrat, currently supporting a hefty dividend yield. This pick of the best infrastructure stocks is trading around $23 per share. Shares are trading at 9.9 times forward earnings and 1.3 times trailing sales. The 12-month median price forecast for EPD stock is $29.
Infrastructure Stocks to Buy: Fluor (FLR)
52-week range: $14.41 – $25.68
Next up on this list of best infrastructure stocks, engineering group Fluor offers fabrication, construction, maintenance and project management services worldwide. Meanwhile, the company has also been in the news lately; it owns about 60% of NuScale Power, which is going public via a special purpose acquisition company (SPAC) during the first half of 2022. As such, Wall Street has been watching FLR stock.
Fluor issued Q3 results in early November. Revenue declined 10% YOY to $3.1 billion. Ending consolidated backlog stood at $21 billion as well. Further, net income came in at $46.7 million. Cash and marketable securities ended the quarter at $2.2 billion. Following the announcement, CEO David Constable remarked the following:
“This quarter we made significant progress toward our strategic goals, including the reduction of outstanding debt by 30 percent, and have identified a path to over $150 million in annual cost savings.”
In light of the strong quarter, Fluor has raised its full-year adjusted earnings per share (EPS) guidance from a range of 60 to 80 cents to a range of 85 cents to $1.00 per diluted share.
Right now, FLR stock is changing hands for a little over $25, up over 58% for the past one year. Shares are trading at 22.6 times forward earnings and 0.25 times trailing sales. The 12-month median price forecast for FLR stock is $26.
iShares U.S. Infrastructure ETF (IFRA)
52-week range: $29.25 – $38.51
Dividend yield: 1.63%
Expense ratio: 0.30%
For the next entry on this list of best infrastructure stocks, we are actually looking at an exchange-traded fund (ETF). The iShares U.S. Infrastructure ETF provides access to U.S. infrastructure companies. Since its inception in April 2018, assets under management (AUM) have grown close to $835 million.
IFRA, which tracks the NYSE FactSet U.S. Infrastructure Index, currently has 148 holdings. The top ten names account for about 8% of the fund. Because of that, moves in a single stock cannot have a significant impact on the ETF’s price.
Among the leading names on the roster are NRG Energy (NYSE:NRG), One Gas (NYSE:OGS), Atmos Energy (NYSE:ATO), Northwest Natural (NYSE:NWN) and Essential Utilities (NYSE:WTRG).
This fund is up about 27% for the past one year. Further, the dividend yield hovers at 1.63%. Potential investors could regard a decline toward the $36 level as a better entry point.
Infrastructure Stocks: Nucor (NUE)
52-week range: $47.94 – $128.81
Dividend yield: 1.75%
Last up on this list of best infrastructure stocks is Nucor, a Charlotte, North Carolina-based company that’s one of the most important steelmakers stateside. Nucor’s diverse portfolio includes carbon and alloy steel in bars, plates and sheets.
Like other names, Nucor released Q3 results back in late October. For the period, consolidated net sales increased to $10.31 billion, up 17% from $8.79 billion in the prior quarter. Additionally, Nucor posted record quarterly earnings of $2.13 billion or $7.28 per diluted share. That was up from $1.51 billion in the previous quarter. Finally, cash and equivalents ended the period at $2.29 billion.
This year, Nucor has reported three consecutive record quarters. Now, management is optimistic about a new Q4 record:
“We expect continued strong results for the fourth quarter of 2021, potentially exceeding the net earnings record set in the third quarter of 2021. Demand remains robust across most end-use markets, a trend we expect will continue well into 2022.”
Coming out of the pandemic, pent-up demand from automakers and other industrial buyers significantly boosted the overall demand for steel. Increased infrastructure spending is expected to further contribute to this demand. Moreover, the Biden Administration’s emphasis to “buy American” offers this company a competitive advantage.
NUE stock currently hovers at around $114, up 115% over the past one year. Shares are trading at nearly 5 times forward earnings and nearly 1.1 times trailing sales. The 12-month median price forecast for Nucor stands at $110.
On the date of publication, Tezcan Gecgil did not hold (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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
