One thing we have learned over the past four years is that there is very little that the two political parties agree on, and the gulf between the two seems to keep widening. However, one issue has broad bipartisan support, and that is on infrastructure in the United States, and the critical need for something to be done, and done soon.
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A new Jefferies research report makes the case that almost regardless of who wins the upcoming election, which is now less than three weeks away, infrastructure is an agenda item that Republicans and Democrats can and will find common ground on. They noted this in the research report:
Assuming bipartisan support, a potential long-term infrastructure reform bill will come down to timing and funding. In terms of timing, if we do see a Blue Wave it will likely take the Senate several months to settle in, leading to committees perhaps focusing on infrastructure around February-March Though the INVEST in America Act was passed in the House this year, it was truly planned to be ready for 2021, but ultimately it will depend on how quickly Congressional leadership prioritize it.
Multiple industrial subsectors look poised to benefit from the infrastructure spending, and the Jefferies team spotlighted numerous companies that could benefit the most. We picked five Buy-rated stocks that look like solid ideas for growth investors looking to cash in on what could be a very profitable upcoming scenario. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Deere
Equipment company’s products certainly will be in demand, and this is a leader. Deere & Co. (NYSE: DE) is the largest manufacturer/distributor of agricultural equipment worldwide, with leading market shares in large farm-equipment segments.
Its Construction and Forestry segment, which should benefit the most from an infrastructure push, offers a range of machines and service parts used in construction, earthmoving, road building, material handling and timber harvesting, including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; milling machines; recyclers; slipform pavers; surface miners; asphalt pavers; compactors; tandem and static rollers; mobile crushers and screens; mobile and stationary asphalt plants; log skidders; feller bunchers; log loaders; log forwarders; and log harvesters and related logging attachments.
Shareholders receive a 1.28% dividend. Jefferies has a $230 price objective on the shares, while the Wall Street consensus target price is $232.00. Friday’s close for Deere stock was above both levels at $240.06 per share.
Martin Marietta
This remains a favorite across Wall Street, especially if a large infrastructure package emerges. Martin Marietta Materials Inc. (NYSE: MLM) is one of the largest U.S. suppliers of aggregates, with operations across 27 states, Canada and the Bahamas. Its largest concentration is in Texas, comprising approximately a third of its exposure.
The company remains upbeat on construction demand and noted that many states with its greatest exposure were well positioned for housing and public nonresidential construction growth.
Investors receive a 0.98% dividend. The Jefferies price objective is $314, and the consensus figure was last seen at $264.50. Martin Marietta Materials stock ended Friday’s trading at $258.97 a share.
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