Jefferies Sees 4 Huge Winners in Potential $2 Trillion Infrastructure Plan

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If there was ever an issue that everybody can agree on in a bipartisan manner, it’s the fact that our nation’s infrastructure is crumbling. Everything from bridges and tunnels to roadways, electric grids and airports needs attention, and the bottom line is the attention can’t be put off any longer. The hard part is coming up with the funding, and if anything could derail the legislation, which both sides clearly want, it’s finding the money.

A new research report from Jefferies building products analyst Philip Ng notes that funding may rest partially on an increase in the federal gasoline tax, which has remained the same since 1993. That could prove dicey, especially with gas prices at the highest levels in most areas of the country this year. The Jefferies report noted this when it comes to the bill’s funding:

Both parties will need to come to an agreement on funding and Republicans have already indicated that a tax increase is a nonstarter, and there is even division among Democrats around the gas tax, which can be viewed as a tax on the poor and working class. Industry leaders believe more than just a gas tax needs to be done to sustainably fund infrastructure, potentially including a vehicle mileage tax on trucking, electric battery taxes, and/or an inflation indexed gas tax. Additionally, policies that would reform the permitting process for large infrastructure projects could reduce the costs dramatically.

Funding aside, both Republicans and Democrats know this is not a partisan issue, and something that has to be agreed to at some point. One thing is for sure, certain companies could benefit from this endeavor, and the sheer size and scope could mean additional revenues for years. The Jefferies analysts see four top companies that could be big winners, and all are rated Buy at the firm.

Eagle Materials

This smaller cap material company offers solid upside potential for investors. Eagle Materials Inc. (NYSE: EXP) is engaged in the manufacture and distribution of gypsum wallboard and cement. It operates through the following segments: Cement, Gypsum Wallboard, Recycled Paperboard, Oil and Gas Proppants, and Concrete and Aggregates.

The Cement segment consists of raw material used in the production of Portland cement, which is calcium carbonate in the form of limestone. The Gypsum Wallboard segment mines and extracts natural gypsum rock, which is used in the manufacture of gypsum wallboard. The Recycled Paperboard segment includes paper fiber, water and paper chemicals and these recycled paper boards are sold to gypsum wallboard manufacturers.

Lastly, the Oil and Gas Proppants owns frac sand mines, wet processing plants and drying facilities, while the Concrete and Aggregates segment offers ready mix concrete, a building material that is used in construction.

Eagle Materials investors are paid a small 0.47% dividend. Jefferies has a $99 price target on the shares, while the consensus estimate across Wall Street is $95.58. The shares closed Thursday’s trading at $89.45 apiece.