Later this week, President Joe Biden is expected to unveil the details of a $3-trillion infrastructure package.
While a great deal of early attention has been focused on new investments in cleantech solutions designed to address climate change, the package will also address the rebuilding of the nation's fraying transportation infrastructure including highways, bridges and rail lines.
For investors who are considering the companies that will be active participants in the upgrades to physical infrastructure, here are four stocks that deserve an in-depth look.
Caterpillar Inc. (NYSE:CAT): It's safe to assume that the world's largest construction equipment manufacturer will have some type of involvement in any infrastructure endeavor.
The company is in the right place at the right time. The U.S. manufacturing world is more than eager to move beyond the pandemic era, as witnessed in the Institute for Supply Management data from March 1 that found manufacturing activity in February on the rise, marking the ninth straight consecutive month of sector gains.
Still, the economic residue from the pandemic needs to be considered. Caterpillar posted fourth-quarter revenue of $11.2 billion, a 15% decrease compared with $13.1 billion in the fourth quarter of 2019.
The quarter's profit per share of $1.42 was down from $1.97 one year earlier.
Chairman and CEO Donald James Umpleby is optimistic on this year, declaring that the company has "been making investments over the last few years in our digital capabilities, in many of our processes and our models, and we're going to work hard to leverage those connected assets and those investments that we've made to grow services going forward, and we think that represents just an excellent opportunity for future profitable growth over the next few years."
Caterpillar closed Monday at $230.22, slightly under its 52-week high of $237.78 and distant from its 52-week low of $100.22.
Canadian Pacific Railway Ltd. (NYSE:CP): Many infrastructure projects will rely on rail transportation for material shipments, and Canadian Pacific is in a great way to move materials.
On March 21, the company announced it was buying Kansas City Southern (NYSE:KSU) in a $25-billion transaction that creates a combined rail network connecting points throughout Canada and Mexico and points in the Midwest, Northeast and South Central U.S. This is Canadian Pacific's second acquisition within a year. Last June, it completed its today completed acquisition of the Central Maine & Quebec Railway U.S. Inc.
"We delivered fourth quarter revenues of C$2 billion, which was an all-time quarterly record, operating ratio of 53.9%, and adjusted EPS growth of 6%. An industry leading performance for the year, total revenues were down only 1%. We produced an all-time record operating ratio of 57.1%, operating income was up 6% to C$3.3 billion, which enabled a record adjusted EPS of C$17.67, an increase of 7% versus last year, truly an outstanding achievement across the board," President and CEO Keith Creek said during the company's fourth-quarter earnings call in January.
Canadian Pacific closed Monday at $364.25, closer to its 52-week high of $385.87 and distant from its 52-week low of $205.26.
Nucor Corporation (NYSE:NUE) – This Charlotte, North Carolina-headquartered company holds the distinction of being the nation's largest steel producer, the largest "mini-mill" steelmaker and the largest scrap recycler. Any major infrastructure projects planned for the near-future will certainly have Nucor's involvement.
To date, 2021 has been a very good year for Nucor. The stock has gained approximately 37% since New Year's Day, and on March 16 the company announced guidance for its first quarter ending April 3, with expected earnings in the range of $3 to $3.10 per diluted share, which would be the highest quarterly earnings in Nucor history.
"March is expected to be the strongest month of the quarter," the company said in a statement. "Margins have expanded since the beginning of the year, a trend we expect to continue into the second quarter. We believe earnings in the second quarter of 2021 will likely set a new record for quarterly earnings."
Nucor closed Monday at $78.75, closer to its 52-week high $82.76 and far from its 52-week low of $32.16.
U.S. Concrete Inc. (NASDAQ:USCR): What's an infrastructure project without concrete, and what is the concrete sector without this Texas-based firm? Last year, the company sold approximately 8.2 million cubic yards of ready-mixed concrete and approximately 12.6 million tons of aggregates.
While the pandemic's tumult still resonated with U.S. Concrete — its fourth quarter revenue of $334 million was down 9.43% year-over-year, which missed the estimate of $352,880,000 — it nonetheless continued to show resilience.
Its earnings per share increased 17.02% year-over-year to 55 cents, which beat the estimate of 26 cents.
CEO Ronnie Pruitt predicted a strong second half in 2021 "led by robust residential activity across all of our markets, complemented by heavy industrial commercial projects, including warehouses, data centers, and other commercial work that supports the development of new neighborhoods. Our key markets all expect strong and resilient activity for infrastructure, including freeways, roads and streets, either with or without the federal infrastructure bill."
U.S. Concrete closed Monday at $66.36, closer to its 52-week high of $71.19 and far from its 52-week low of $13.66.