Finding Winners in NexGen Infrastructure

One of the centerpieces of President Trump’s State of the Union speech last night was his much anticipated plan to upgrade the nation’s infrastructure. That was a campaign promise for both the president and Hillary Clinton, and one year into his presidency, Trump is now starting to push harder for it.

The goal is to urge Congress to pass a $1.5 trillion plan to rebuild our crumbling infrastructure, and with the hope that it will ultimately be a public-private partnership, the ripple effects create another NexGen trend that will provide opportunities for us to make a lot of money.

There’s no question that something needs to be done, and soon. According to a report just released this week, about 9% of the nation’s bridges are “structurally deficient” (54,259 out 612,677 to be exact). More concerning is that these bridges are crossed by 174 million Americans per day. That’s more than half of the population crossing unsound bridges.

Overall, the American Society of Civil Engineers gave the country’s infrastructure system a D+ grade last year and estimated it will take $2 trillion over the next 10 years to upgrade.

The president’s number is pretty close to that, and the hope is some of the funding will come from other sources. “Every federal dollar should be leveraged by partnering with state and local governments and – where appropriate – tapping into private sector investment to permanently fix the infrastructure deficit.” He also wants to reform the approval process. It can currently take as much as 10 years for infrastructure permits to be approved, and he proposes reducing that to one or two years.

I’ll admit that betting on Washington may not always seem like the best strategy, but infrastructure improvements are moving toward the top of President Trump’s agenda, and everyone agrees that some solution is badly needed. I definitely expect a deal to get done that includes federal funding but also relies on additional money through public-private partnerships. It might be a bumpy road to get there (so to speak), as Democrats seem likely to push back initially because they want more spending from the government. Congress is also focused right now on approving the country’s budget beyond the temporary measures, but eventually they will come to an agreement.

When you’re talking about this kind of money, you can be sure that related stocks will do well, and some will do extremely well. This is where our NexGen focus on fundamentals, technicals and intangibles (catalysts) will help us make money in both long-term winners and shorter-term trades. Sometimes the winners will be obvious, but oftentimes there will be much bigger upside potential in lesser-known stocks that are not on Wall Street’s radar. Those are the stocks our system is so successful at identifying, and I am already hard at work lining up buy candidates.

Lining Up Buys

There are multiple ways to play this potential boom that range from engineering to the raw materials used to build new structures. Let me give you a few examples.

Quanta Services (PWR) is a provider of contracting and engineering services to the energy and electric power sectors, and this company could be a big winner as long as the infrastructure bill includes much-needed upgrades to the power grid. Quanta is also on a strong earnings path, with expectations for 30% earnings growth in both 2017 and 2018. If and when a deal gets done, I expect estimates to be raised, providing some extra fuel for the share price. It recently topped $40 for the first time in 15 years, and I see it moving significantly higher as the infrastructure plan plays out. I’m watching the fundamentals, the chart and the intangibles (like the headlines in this case) for the right time to pounce. I’ll alert my subscribers as soon as we get the right buy signal.

We have already taken advantage of one buying opportunity in this theme in my NexGen Investor service, recently jumping on a smaller company that sells concrete and aggregates to the construction industry. The fundamentals certainly check out, with earnings expected to have grown 20% in 2017 and jump another 50% in 2018. We got in after the stock had pulled back from a double top but was still sitting on its uptrend line with additional support not far below. I’m confident an infrastructure bill will provide both a short- and long-term boost to this stock and others like it that sell materials to the construction industry.

Upgrading the infrastructure will take time, so we know there will be many opportunities along the way. When all is said and done, maybe we’ll own nice new cars (self-driving ones!) that we bought with the money we made. We’ll be traveling on smooth and safer roads and bridges with next-generation infrastructure in place.

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