U.S. President Joseph Biden will meet with Republican Senator Shelley Moore Capito today, as Democrats and Republicans make a final push to hammer out a bipartisan infrastructure deal aimed at supporting the economy.
Indeed, the Global X U.S. Infrastructure Development ETF (NYSE:PAVE), which aims to invest in companies that stand to benefit from a potential increase in infrastructure activity in the United States, has rallied around 27% so far this year. The S&P 500, for its part, is up around 12% over the same timeframe.
Below we highlight three leading names that are likely to be positively impacted by the looming infrastructure package.
1. Nucor
- Year-To-Date Performance: +108.2%
- Market Cap: $33.1 Billion
Nucor Corp (NYSE:NUE) is the largest steel producer in the United States, potentially making it one of the biggest beneficiaries from the expected boom in construction resulting from President Biden’s infrastructure spending package.
The Charlotte, North Carolina-based company, which is also the biggest recycler of scrap in North America, manufactures steel and steel products, such as bars, beams, sheets, and plates. In addition to steel, Nucor also brokers ferrous and non-ferrous metals, and processes ferrous and non-ferrous scrap.
Shares of the steel products company, which owns and operates 23 scrap-based steel production mills across the country, have more than doubled since the start of 2021, jumping 108% year-to-date amid a recovery in steel and iron ore prices.
NUE stock—which has gained almost 161% in the last 12 months—ended at a fresh record high of $110.74 on Tuesday, earning the mid-cap company a valuation of $33.1 billion.
Nucor announced earnings and revenue which improved substantially from the year-ago period when it posted first quarter results on Apr. 22, benefitting from a favorable demand environment.
Earnings per share jumped more than 200% from the same quarter a year earlier to a record high $3.10, while revenue increased about 25% year-over-year to $7.02 billion.
According to Leon Topalian, Nucor's President and CEO:
"The first quarter of 2021 was the most profitable quarter in our history. We are clearly reaping the rewards from our prior investments and the more strategic approaches we are taking to our key end-use markets."
In a sign that bodes well for the future, Nucor's management sounded upbeat regarding its outlook for the current quarter, underpinned by strong steel market fundamentals.
“We expect earnings for the second quarter of 2021 to exceed our first quarter results, setting a new record for quarterly earnings,” the company said.
Honorable mentions: Steel Dynamics (NASDAQ:STLD), Cleveland-Cliffs (NYSE:CLF), U.S. Steel (NYSE:X)
2. United Rentals
- Year-To-Date Performance: +46.4%
- Market Cap: $24.5 Billion
United Rentals (NYSE:URI) is the world's largest equipment rental company.
The Stamford, Connecticut-based corporation rents out heavy machinery equipment needed for major infrastructure projects, such as, backhoes, forklifts, and excavators, to a customer base that includes construction and industrial companies, municipalities, as well as homeowners.
In addition to rentals, it also offers new and used equipment sales, servicing, and safety training.
United Rentals has seen its shares jump by around 46% year-to-date, much better than the comparable returns of both the Dow Jones Industrial Average and the S&P 500, reflecting a strong used-equipment market.
URI stock—which has skyrocketed 142.5% over the past 12 months—settled at $339.45 last night, within sight of an all-time high of $354.05 reached on May 10. The industrial machinery rental firm has a market cap of roughly $24.5 billion.
United Rentals reported impressive first quarter results on Apr. 28, easily topping expectations for both earnings and revenue due to robust demand for heavy machinery equipment amid a booming U.S. economy.
The company has now either beaten or matched Wall Street estimates for 17 consecutive quarters, dating back to Q4 2016.
CEO Matthew Flannery noted in the company’s earnings release:
“We were very pleased with our first quarter results and the strong start to our year, as our key end-markets continue to rebound from the challenges of 2020. Sentiment among our customers continues to improve, and we are well prepared to support them as we enter the busiest part of our season.”
“The recovery that we’ve seen since the middle of last year remains evident across our business, and virtually all indicators point to these trends continuing.”
Looking ahead, United Rentals lifted its full-year outlook for the rest of fiscal 2021, reflecting expectations for stronger growth in its core rental business and increased used equipment sales.
Honorable mentions: Caterpillar (NYSE:CAT), Deere (NYSE:DE), Oshkosh (NYSE:OSK)
3. Vulcan Materials
- Year-To-Date Performance: +23.8%
- Market Cap: $24.3 Billion
Vulcan Materials Company (NYSE:VMC), which was founded in 1909 as Birmingham Slag Company, is the largest U.S. producer of construction materials, such as gravel, crushed stone, and sand. It is also a major producer of asphalt and cement.
As such, it stands to benefit from ambitious plans to repair and improve the nation’s deteriorated roads, highways, and bridges. The looming infrastructure bill would earmark $115 billion for highway and street funding, according to initial reports.
Shares of the Birmingham, Alabama-based company, which focuses primarily on the production, distribution, and sale of construction materials, have climbed around 24% year-to-date.
VMC stock—up about 71% over the last 12 months—closed at $183.62 yesterday, not far from an all-time high of $194.14 reached on May 10. At current levels, the building materials company has a market cap of $24.3 billion.
Vulcan delivered first quarter earnings and revenue which blew past analyst estimates when it reported financial results on May 4, reaping the benefits of surging demand amid an improving economy.
The firm said it earned $0.69 per share, easily topping forecasts for EPS of $0.45. Revenue totaled $1.07 billion, up 2% from the year-ago period. Consensus expectations called for sales of $1.02 billion.
According to Vulcan CEO Tom Hill in the earnings report:
"Our first quarter results are a testament to the resiliency of our best-in-class aggregates business.”
“Recent growth in highway awards and construction employment trends in our markets also bode well for further recovery in construction activity later in 2021.”
Honorable mentions: Jacobs Engineering Group (NYSE:J), Martin Marietta Materials (NYSE:MLM), Summit Materials (NYSE:SUM)