What are the 5 best airport and infrastructure stocks to buy under President Trump? During the election campaign, Trump made a rather bold promise to rebuild America’s ailing infrastructure, including roads and bridges. Back in 2016, he spoke a lot about the infrastructure and after winning the election, he promised to make it a priority in his first 100 days as President. There were even Democrats willing to work with Trump on this. However, between fighting allegations of collusion with the Russian government, attacking the press on Twitter, playing golf, and pretending to drive trucks, the President seems to have put his infrastructure plans on the back burner.
In June, the administration revealed some sort of infrastructure plan, although it was far from the $1 trillion plan promised. Instead, Trump and his team said they would commit $200 billion over the next decade and somehow get the private sector to invest the other $800 billion. Now, given that the new healthcare legislation has stalled and the infrastructure plan is not even a plan, as there’s little known about it, it’s unclear what the administration will do. Especially since the midterm election season is just months away.
In any case, if Trump and his team come up with a clear plan regarding infrastructure, they can get the legislation passed, especially since Democrats might be willing to vote in favor. U.S infrastructure is in a critical state, with a lot of investment required. In 2015, it was found out that 10% of the some 609,500 bridges in the U.S were structurally deficient and required repairs. In addition, nearly 2,000 state-regulated high-hazard dams needed repair in 2015 and there are constant reports of major issues like the contamination of the water supply in Flint, Michigan and sinkholes. As John Oliver put it in a 2015 segment about infrastructure on Last Week Tonight: “At this point, we are not just flirting with disaster. We are rounding third base and asking if disaster has any condoms.”
Infrastructure needs to become a priority of the new administration, because they can’t use the same approach as with Obamacare: let it fail and then not own it. Among the industries that are looking forward to increased spending on infrastructure are the steel, construction materials, and equipment manufacturing industries, which is why they are good investments. However, there are many companies to choose from. One approach to identify companies that are suitable investments is to look at the hedge fund sentiment towards them, and this is where our research comes in handy.
At Insider Monkey, we follow nearly 670 hedge funds and by analyzing their quarterly 13F filings with the SEC we can determine their collective sentiment towards thousands of stocks. Some of the stocks we select as part our investment strategy, which we share with subscribers to our premium newsletters. The strategy, which is based on hedge fund sentiment, has returned more than 45% since February 2016, while the stock picks that we shared in February 2017, managed to beat the broader market by around 5 percentage points over the following three months.
Having said that, let’s take a closer look at the 5 best airport and infrastructure stocks to buy under President Trump, beginning on the next page.
1. Vulcan Materials Company (NYSE:VMC)
Vulcan Materials Company (NYSE:VMC)‘s stock rallied right after the November election and registered another round of gains right after Trump’s inauguration. However, the hype dialed down as the company reported lower-than-expected results for the fourth quarter. For the first quarter, however, Vulcan Materials Company (NYSE:VMC) posted EPS of $0.34 and revenue of $787.30 million, which topped the consensus estimates by $0.14 and $47.17 million, respectively. The provider of construction aggregates and producer of asphalt mix and ready-mixed concrete is among the best-positioned to benefit from an infrastructure spending increase.
Hedge funds from our database also became more bullish on Vulcan Materials Company (NYSE:VMC) during the first quarter, as the number of investors long the stock surged by 15 to 49, while the total value of their holdings went up to $1.48 billion from $1.30 billion and represented 9.20% of the company’s outstanding stock at the end of March.
2. United States Steel Corporation (NYSE:X)
Aside from concrete and other building materials, another prime material needed for infrastructure is steel. Steel companies like United States Steel Corporation (NYSE:X) were also highlighted during Trump’s presidential campaign, as he promised to target cheap Chinese steel and impose tariffs on imports in order to provide a demand boost for U.S steel. United States Steel Corporation (NYSE:X) stands to benefit from protectionist tariffs, especially since Trump also wants to build pipelines and the Wall, all using U.S steel. However, the fate of import tariffs is unclear, mainly because a lot of companies have been lobbying against them, arguing that such a move would cost jobs in their industries, according to Reuters. Meanwhile, there were 40 funds tracked by us holding shares of United States Steel Corporation (NYSE:X) at the end of March, up from 35 funds a quarter earlier.
3. Caterpillar Inc. (NYSE:CAT)
With materials figured out, infrastructure construction and repair will also require equipment. Again, assuming that Trump’s “America First” campaign promise is kept, U.S construction equipment manufacturers should see increased demand. In this way, Caterpillar Inc. (NYSE:CAT)‘s stock has gone up by 27% since the election, having also registered a jump at the end of April on the back of strong first-quarter results. The company reported EPS of $1.28, clobbering the consensus estimate of $0.62, while revenue of $9.80 billion was $550 million higher than expected. Caterpillar Inc. (NYSE:CAT) also raised its 2017 guidance, with it now expecting EPS of $3.75 and revenue in the range of $38 billion to $41 billion, versus the previous forecasts of $2.90 in EPS and revenue of between $36 billion and $39 billion. During the first quarter, the number of funds from our database long Caterpillar Inc. (NYSE:CAT) increased by four to 38, while the total value of their positions surged to $2.10 billion from $1.60 billion.
4. Macquarie Infrastructure Corp (NYSE:MIC)
In Macquarie Infrastructure Corp (NYSE:MIC), there were 36 investors tracked by us holding long positions with a total value of $876.22 million at the end of March, versus 42 funds with stakes worth $905.34 million three months earlier. Macquarie Infrastructure Corp (NYSE:MIC) is a provider of airport services, such as handling and fueling. The company’s stock is down by nearly 7% year-to-date, mainly on the back of a drop registered at the end of January, when Hedgeye Risk Management’s Kevin Kaiser recommended shorting the stock, suggesting potential downside of 50%. In June, Bloomberg reported that Macquarie is planning to sell its stake in the biggest utility in Washington state, Pudget Energy Inc. The 42% stake could be sold for as much as $2 billion, according to sources.
5. Aecom (NYSE:ACM)
The number of bullish investors in Aecom (NYSE:ACM) declined by seven to 18 during the first three months of 2017. Subsequently, the aggregate value of their holdings slid to $71.94 million from $189.77 million. Earlier this month, Aecom (NYSE:ACM) acquired Shimmick Construction Company for $175 million. The deal allowed the construction and engineering company’s expansion to the western U.S and was done in anticipation of increased infrastructure spending. In this way, Aecom (NYSE:ACM) is well positioned to benefit from new infrastructure projects in the upcoming years and it’s one of the cheapest stocks to buy in anticipation of increased spending, having lost over 10% since the beginning of the year. For its fiscal second quarter, Aecom (NYSE:ACM) posted EPS of $0.89, which topped the consensus estimate by $0.30, but its revenue of $4.43 billion was $40 million lower than expected.
These are the 5 best airport and infrastructure stocks to buy under President Trump. There are other interesting options as well, but these stand as the most popular among hedge funds in their respective industries.