24/7 Wall St.

If there was one word that could be used to describe the 2016 presidential election, perhaps “tension” is about as close as you can get. With the lines shifting between whether it will be President Trump or President Clinton being blurred again in recent days, the reality is that the public has been told repeatedly that they will get hundreds of billions of dollars worth of infrastructure spending in the coming years.

24/7 Wall St. has been focusing on companies that can survive and thrive under either candidate. Here, six companies are featured from multiple analysts on Wall Street that should be infrastructure spending winners in the coming years.

Before getting too hooked on a share price today, and before worrying about how these will perform during just this one earnings season, please understand that these picks are viewed favorably by 24/7 Wall St. and by recent analyst reports for an outside view.

The American Society of Civil Engineers has recently given the United States a failing grade for its infrastructure. Its view is that $3.6 trillion would be needed to raise the standard of America’s roads and infrastructure to acceptable levels before 2020 — and neither candidate has offered up anything that grandiose.

Many other infrastructure stocks have been named elsewhere as would-be spending winners. The problem is that many stocks are close to multiyear or all-time highs. 24/7 Wall St. wanted to look for stocks wherein the consensus analyst target was higher or where at least two major analyst calls were extremely bullish in recent days or weeks.

Again, these are not short-term calls based around the election. They feature companies that should do fine in the quarters and years ahead, once the election is over and life can resume without everyone fighting over their presidential hopes.

Caterpillar

Caterpillar Inc. (NYSE: CAT) will be a big winner if serious infrastructure spending begins to take off again. Maybe this won’t be in its major mining equipment sales in the United States or emerging markets, but Caterpillar already benefits from construction spending. Numerous analyst upgrades have been seen around this strategy, and this is the best performing Dow Jones Industrial Average stock of 2016, despite not seeing a sales recovery take place yet.

Goldman Sachs recently gave Caterpillar a major upgrade to Buy from Neutral with a $112 price target on October 11. The prior close was $88.22, but shares have pulled back to $83.50 after earnings. The consensus analyst target price was $77.37 mid-month and has now risen to $80.50. Goldman Sachs has the highest analyst target of all now, based on margin expansion and an earnings recovery much greater than investors have expected.

AECOM

AECOM (NYSE: ACM) may operate all around the world, but Credit Suisse believes that its engineering services would benefit from large infrastructure projects, and the firm thinks it is already a good at cash generation with lower energy exposure than some peers. The 2014 URS acquisition is also helping, and AECOM trades at only about 8 times expected 2017 earnings as is. Credit Suisse had a $36 price target in September.

UBS recently projected 20% organic earnings per share growth for AECOM in 2017, reiterating its Buy rating and $37 price target. That is based on 11 times the $3.40 per share earnings target for 2018.

With shares at $27.84 now, AECOM’s 52-week trading range is $22.80 to $36.30, and it has a consensus price target of $34.67. One final note: AECOM has a history of mixed results, and it is currently under several class action suit investigations.
Chicago Bridge & Iron

Deutsche Bank recently maintained Chicago Bridge & Iron Co. N.V. (NYSE: CBI) as Buy with a $35 price target. The firm noted it as a key infrastructure play a month or so earlier than the election. Deutsche Bank believes that both candidates will press for billions of new dollars to go toward fixing the electric grid, roads and bridges, airports and countless other projects.

S&P’s equity group recently kept a Buy rating and a $36 price target for the stock. Sales are seen down 16% in 2016 after the nuclear construction business sale, but the firm sees an increased activity for both large and small projects in 2017 being offset by low energy prices and a strong dollar to end down just 5% in 2017. It currently is valued at less than 7 times expected earnings.

Chicago Bridge & Iron shares recently traded at $32.15, with a consensus target price of $36.07 and a 52-week range of $26.12 to $45.92.

Nucor

Jefferies listed Nucor Corp. (NYSE: NUE) as being 50% around construction, 10% from transportation and 19% tied to industrial and manufacturing. These should bode well under the infrastructure theme, particularly with Jefferies talking about it being significantly levered to nonresidential construction and using only 83% of capacity. Jefferies shows Nucor with a Buy rating and $55 price target.

S&P’s equity team recently reiterated its Buy rating and its $55 price target. S&P sees 2016 operating earnings of $2.50 per share in 2016 rising to $3.15 per share in 2017, driven partly by construction and infrastructure markets. Thomson Reuters sees earnings rising to $2.93 per share in 2017 and $3.35 per share in 2018.

Nucor shares recently traded at $48.25, in a 52-week range of $33.90 to $57.08. The consensus price target is $52.28.

Vulcan Materials

In early October, Vulcan Materials Co. (NYSE: VMC) was touted by Wyatt Research as would-be winner from infrastructure spending gains by either candidate. The reason: Vulcan Materials is already the largest supplier of construction aggregates, which means sand, gravel and crushed stone, and the public sector already accounts for half of its product shipments under contract with rather high barriers to entry.

Another view came from S&P, with its equity team’s Strong Buy rating and $138 price target. The S&P view is that rising public construction activity will be a meaningful demand catalyst for Vulcan for several years in the future.

With shares at $113.30, the 52-week range is $78.83 to $127.20 and the consensus price target is $128.18.

Headwaters

Jefferies highlighted Headwaters Inc. (NYSE: HW) as having exposure to infrastructure spending through its construction materials business. Where the firm sees a big boost is from about 15% of its total sales coming from infrastructure construction via fly ash. Its rating is Buy with a $21 price target.

Deutsche Bank also recently issued a reiterated Buy rating, along with a $22 price target. The view is that Headwaters will have $140 million of free cash flow in 2017 that will be used to trim debt and will help bring organic growth. The firm noted that infrastructure demand should pickup with highway bill money being spent, and nonresidential market share gains should bolster growth too.

Shares were changing hands at $16.40 recently, in a $13.62 to $21.25 range in the past 52-weeks, while the consensus target price is $22.72.