For the second straight year, American states will receive huge amounts of money allocated by the Bipartisan Infrastructure Law. For example,  New York state is getting $2.76 billion for the current fiscal year, Vermont is receiving $329 million, and Oregon is obtaining $757 million. Most of these funds will be used to bankroll traditional transportation projects, such as roads, bridges, and tunnels.

Meanwhile, the Department of Transportation is devoting  $1.4 billion to improving the nation’s “rail infrastructure.” U.S. Senator Maria Cantwell announced on Sept. 25. that the funds would be spent on “70 projects across the nation to improve rail safety, strengthen supply chains and passenger rail service.”

And just last week, the Environmental Protection Agency allocated $7.5 billion for “low-interest loans” which will finance the development of  “infrastructure for drinking water, wastewater and stormwater projects.” Here are seven infrastructure stocks that should get big boosts from all of this government spending.

Vulcan Materials Company (VMC)

Vulcan Materials Company (NYSE:VMC) provides various materials used in construction, including asphalt, concrete, sand, and gravel. The company is poised to  get a big boost from the many extra tens of billions of dollars that will be spent by American states on building highways, bridges, streets and tunnels over the next year.

Likely partially driven by state governments’ huge spending on infrastructure last year, VMC’s “mix adjusted sales price” climbed 15% last quarter versus the same period a year earlier, and the firm reported that it expected strong price increases to boost its “profitability” going forward.

VMC added that the “cash gross profit” of its asphalt business “nearly tripled (year-over-year)…to $66 million.” Governments’ elevated spending on traditional infrastructure had a major impact on the profits of VMC’s asphalt unit.

Overall, VMC’s EBITDA, excluding certain items, soared to $595 million last quarter from $450 million during the same period a year earlier.

Given VMC’s strong growth and excellent prospects, the company’s forward price-earnings ratio of 26 is quite attractive.

Given these points, it is one of the best infrastructure stocks to buy.

Greenbrier (GBX)

A leading provider of equipment for trains, Greenbrier (NYSE:GBX) can benefit in two ways from the Bipartisan Infrastructure Law. First, as I mentioned in the introduction, Washington is going to spend $1.4 billion on measures to  “improve rail safety…and passenger rail service.”  A portion of those funds should find their way into GBX’s accounts.

Secondly,  because “railroads haul components used in construction,” Greenbrier should get more orders as a result of Washington’s spending on roads, bridges, and tunnels.

Aside from government funds, GBX is also likely getting a boost from the onshoring trend, which has resulted in record spending on factory construction.

Greenbrier recently announced that it had received an impressive total of $1.9 billion in orders last quarter.

Quanta Services (PWR)

As I noted in a previous column, “Quanta (NYSE:PWR) builds…electrical power stations, (and) facilities for renewable energy and natural gas transmission.” It also provides “infrastructure” for electric utilities.

PWR should get a significant portion of the $14 billion allocated by the Infrastructure Law “for enhancing the reliability, resilience, and efficiency of the electric grid.”

And as I noted in my prior article, PWR is also benefiting tremendously from the energy transition. For example, it was chosen to play a major role in two multi-billion dollar renewable energy projects in the Western U.S.: SunZia Wind  and SunZia Transmission.

Last quarter, the company’s net income jumped to $165.9 million from $88 million during the same period a year earlier.

Given the company’s rapid profit growth, its forward price-earnings ratio of 20 times is quite low.

Sterling Infrastructure (STRL)

Texas-based Sterling (NASDAQ:STRL) carries out “infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater, and storm drainage systems” on behalf of various governments.

As a result, the company is well-positioned to benefit from multiple parts of the Infrastructure Law, including the funds that will be spent by states on roads and highways, the $7.5 billion that Washington will provide to enhance water infrastructure, and the $1.4 billion that it’s spending on improving “rail infrastructure.”

Last quarter, Sterling’s top line jumped 13% year-over-year to $522 million, while its net income soared 40% YOY to $49.5 million.

On July 21, Sterling announced that it had been awarded a large portion of a $216 million “design-build contract….by the Utah Department of Transportation.”

I believe that Sterling will also get a boost from Texas’ rapid population growth and resulting need for new and wider roads.

Xylem

Xylem (NYSE:XYL) “engages in the design, manufacture, and servicing of engineered products and solutions for the water and wastewater applications.”  As a result, the company should get a lift from the $7.5 billion that Washington will provide to bankroll improved “infrastructure for drinking water, wastewater and stormwater projects.”

Earlier this year, Xylem acquired Evoqua, another company in the water infrastructure sector which I wrote about in an August 2022 column. On Evoqua’s Q3 earnings call, its CEO predicted that the firm would start to obtain revenue from the Infrastructure Law in the second half of 2023. Consequently, I expect Xylem to get a major boost from the legislation in upcoming quarters.

In the wake of Xylem’s acquisition of Evoqua, investment bank Robert Baird upgraded the stock to “outperform.” The bank believes that XYL can “outperform” in any sort of economy while it is well-positioned to increase its profits.

Granite Construction (GVA)

Granite (NYSE:GVA) carries out the construction of roads, bridges, and rail lines. It also provides materials, such as asphalt, used in construction and implements water improvement projects.

Of course, GVA is very well-positioned to benefit from multiple portions of the Infrastructure Law,  including Washington’s investments in roads, bridges, railroads, and water infrastructure.

In August, Granite announced that it had been selected to carry out a $73 million water improvement project in Utah.

Last quarter, the company’s top line jumped 17% year-over-year to $899 million, while its earnings per share, excluding certain one-time items, gained  $12 million versus Q2 of 2022  to $46 million.

Caterpillar (CAT)

Caterpillar (NYSE:CAT) sells construction equipment such as excavators, haulers, backhoes, and bulldozers.

As a result, the company should get a lift from Washington’s huge spending on building roads, bridges, and tunnels. Additionally, the firm should be helped by the current record spending on building factories amid the onshoring trend.

Moreover, CAT sells equipment used to search for and extract oil, so the company should get a lift from the current high oil prices.

In the second quarter, CAT’s revenue jumped 22% year-over-year to $17.3 billion, while its earnings per share soared to $5.67 from $3.13 during the same period a year earlier.

Given the company’s strong growth and excellent prospects, its forward price-earnings ratio of 13 is quite low.

On the date of publication, Larry Ramer 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.