5 Stocks to Buy as Capital Spending Poised to Jump in 2018

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Nucor

This top steel company could do very well if the economy continues to pick up and the administration’s infrastructure push comes back to the forefront. Nucor Corp. (NYSE: NUE) is one of North America’s largest steel producers, with almost 27 million tons of finished steel capacity at 23 mini-mills throughout the United States. The company’s downstream steel products business includes rebar fabrication, steel joists/deck, cold finished bars, fasteners, building systems and wire mesh. Nucor also has 5 million tons of scrap processing capacity.

Nucor has always kept a very conservative balance sheet and is poised for slow but steady growth next year and beyond, especially if a huge infrastructure build-out becomes a reality. Some think that continued demand from the rebuilding of large parts of Houston after Hurricane Harvey and storm damage in Florida is also be a positive that has carried into 2018.

Nucor investors are paid a very solid 2.33% dividend. The $76 Jefferies price target compares with the posted consensus target of $74.54. The stock closed Monday at $65.33 per share.

Schlumberger

This top oil services company is expected to benefit from increased exploration and production spending. Schlumberger Ltd. (NYSE: SLB) is the world’s largest provider of services and equipment used in drilling, evaluation, completion, production and maintenance of oil and natural gas wells. Revenues in 2017 totaled $30.4 billion, and EBITDA was $6.9 billion.

The company operates in the oilfield service markets through three groups: Reservoir Characterization, Drilling and Production. Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. These include WesternGeco, Wireline, Testing Services and Schlumberger Information Solutions.

Schlumberger shareholders are paid a very nice 3.09% dividend. Jefferies has set its price objective at $87. The consensus target price is $81.89, and the stock ended trading on Monday at $64.70 a share.

United Rentals

This stock has rallied smartly in 2018 but still has solid upside potential. United Rentals Inc. (NYSE: URI) is the largest equipment rental company in the world. It has an integrated network of 876 rental locations in 49 states and 10 Canadian provinces. With approximately 12,200 employees, the company serves construction and industrial customers, utilities, municipalities, homeowners and others. It offers for rent approximately 3,100 classes of equipment for rent.

With the White House ready to focus on our crumbling infrastructure, many think that United Rentals would benefit from spending on bridge maintenance and airport and utility work, but it may see proportionally less benefit from increased highway spending as many firms use their own gear rather than renting.

The Jefferies price target is $210. The consensus target is $180.29, and the stock was last seen trading at $185.40 per share.

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These five top companies should benefit not only from corporate increases in spending but infrastructure spending, which is expected to be huge. Given that the quarter is almost over, and commentary on earnings could be forthcoming, it may make sense to buy partial positions now and see how the earnings come in.