Trying to make sense of all the rotation going on in the market each week is enough to leave your head spinning. It seems like every couple of days there’s a new sector that sees major inflows or outflows, which makes it difficult for retail investors trying to spot clear trends. However, despite a lack of continuity in some sectors of the market, there’s been one clear development to note in 2021 – companies that are involved in infrastructure are catching a bid. This has a lot to do with President Biden’s big infrastructure bill that will lead to massive spending to repair America’s highways, roads, bridges, and railways.
While some of the hottest infrastructure stocks from earlier this year have been consolidating their gains, there’s a good chance that they could be gearing up for more gains. Also, keep in mind that the infrastructure bill has yet to pass, which could be a huge catalyst for these stocks after the deal is done and dusted. That’s why we’ve put together a list of 3 infrastructure stocks to buy now to help you get a sense of the best options in the sector.
1. Martin Marietta Materials
If you aren’t familiar with the term construction aggregates, it refers to materials such as crushed stone, sand, and gravel that are used in the construction of infrastructure, nonresidential, and residential projects. They are also used in agricultural, utility, and environmental applications. The companies that produce these important construction materials are set to benefit in a big way from the long-term funding that will come from the infrastructure bill after it is passed, which is why Martin Marietta Materials (NYSE:) is a great option to consider.
As the second-largest U.S. producer of construction aggregates, Martin Marietta is already benefitting from strong growth in single-family housing, public infrastructure, and the demand for new data centers, warehouses, and distribution centers. The company is also a leading supplier of cement, ready-mixed concrete, and asphalt and paving services, which means it is going to play a key role in helping to fix the roads in the United States. The bottom line here is that Martin Marietta Materials is a great infrastructure stock to buy thanks to its array of construction aggregates and strong pricing power.
There are a lot of good things happening right now in the steel market, and it’s safe to say that these companies will play a big part in helping President Biden improve America’s infrastructure. With steadily rising steel prices, strong demand for the material, and the infrastructure bill on the horizon, adding shares of a company like Nucor could be a very prudent move. Nucor (NYSE:) is the largest minimill steelmaker in the United States and has one of the most diverse product lines in the industry. The company manufactures steel and steel products like bars, plates, beams, and sheets and is also North America’s largest steel recycler.
Nucor is a company with a very strong balance sheet and management team, which are great reasons to consider adding shares. The company is benefitting from strong demand in the majority of its end markets including construction, renewable energy, heavy equipment, and agriculture, and should get another demand boost after the infrastructure bill is passed. Keep in mind that President Biden has openly referenced “buying American”, which is a great sign for a company like Nucor. This stock is also a great option for long-term investors as the company has grown its dividend for 48 consecutive years. Nucor has rallied over 104% year-to-date and could be a great stock to consider adding on dips.
3. Global X U.S. Infrastructure Development ETF
If you aren’t necessarily interested in selecting individual stocks to play the infrastructure boom, the Global X U.S. Infrastructure Development ETF (NYSE:) is another fantastic option to consider. The ETF seeks to invest in companies that stand to benefit from a potential increase in infrastructure activity in the United States, which means it’s a fund that could be in for huge gains in the coming years. It offers exposure to companies that are involved in the production of raw materials, heavy equipment, engineering, and construction, which are all areas that could see heavy government spending.
The fund’s top holdings include strong infrastructure stocks such as Nucor, Kansas City Southern (NYSE:), Emerson (NYSE:), Deere (NYSE:), Vulcan Materials (NYSE:), and Norfolk Southern (NYSE:). This ETF has rallied 26% this year and is a great way to gain diversified exposure to the companies that are rebuilding America.