Infrastructure stocks traded higher this week on reports that the Trump administration is preparing a $1 trillion infrastructure investment stimulus bill.
Bank of America analyst Timna Tanners said it’s unlikely the bill will successfully make its way through Congress in an election year, but headlines related to infrastructure spending could still move markets.
Infrastructure investment in general has bipartisan support in Washington. However, Tanners said politics will likely make getting a bill passed in 2020 very unlikely. In addition, Tanners said issues such as pandemic-related stimulus, police reform and health care will likely have higher priority than infrastructure investment ahead of the November election.
“While the need for infrastructure spending has been a repeated mantra of President Trump’s since his campaign in 2016, no such stimulus has been passed and indeed our contacts suggest any passage would be challenged by partisan politics, despite general support from both sides of the aisle,” Tanners wrote in a note.
How To Play It: Despite the fact that Bank of America sees “little chance” Democrats and Republicans will reach an infrastructure compromise this year, Tanners said Martin Marietta Materials, Inc. (NYSE: MLM) and Vulcan Materials Company (NYSE: VMC) are best-positioned to benefit. Tanners also named Commercial Metals Company (NYSE: CMC) as the best-positioned steel stock should an infrastructure bill ultimately be passed.
Benzinga’s Take: U.S. infrastructure is in desperate need of improvement, but investors shouldn’t expect politicians to put the good of the country ahead of getting reelected. Infrastructure spending will likely be a popular topic of discussion as the 2020 campaigns heat up, but analysts seem to believe it is unlikely Washington will take action this year.
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|May 2020||JP Morgan||Upgrades||Neutral||Overweight|
|Apr 2020||JP Morgan||Downgrades||Overweight||Neutral|
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