By now, many have already heard about president Biden’s infrastructure plan, which includes everything from road repairs to quality of life at home, to research development and manufacturing. President Joe Biden on Wednesday introduced a $2 trillion infrastructure and jobs package that aims to reshape the American economy and make the most significant domestic U.S. investments in generations. The plan though needs to pass congress where republicans are calling against it for now.
According to the plan there will be $621 billion investment in Transportation infrastructure, $650 billion investment in quality of life at home, $400 billion investment towards caregivers for the elderly and people with disability, and about $300 billion toward research, development and manufacturing. Clearly this government spending plan will touch many sectors and businesses. I have spent some time trying to identify companies that might benefit from this plan shall it gets approved. Below I will talk about couple of companies that I have looked at and think they might benefit shall this plan gets approved. As a disclaimer, I currently do not own any shares of these two companies. I am also certain that there will be many other companies that will benefit from this plan as well, but in this article I want to focus on companies that are considered small and are in the Engineering and Construction sector. My believe that they will have a chance to take advantage from this infrastructure spending.
The first company is Construction Partners, Inc. (ROAD). They focus on the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina. The company, through its subsidiaries, provides various products and services to public and private infrastructure projects, with a focus on highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; paving activities, including the construction of roadway base layers and application of asphalt pavement; site development, including the installation of utility and drainage systems; mining aggregates, such as sand and gravel that are used as raw materials in the production of HMA; and distributing liquid asphalt cement for internal use and sales to third parties in connection with HMA production. The company has a decent balance sheet with low debt to equity ratio.
Another company that is also in the same sector is Sterling Construction Company, Inc. (STRL). The company has a decent balance sheet as well and engages in construction projects mainly in the southern United States, the Rocky Mountain states, California, and Hawaii. The company undertakes various heavy civil construction projects, including highways, roads, bridges, airfields, ports, light rail, water, wastewater and storm drainage systems for the departments of transportation in various states, regional transit authorities, airport authorities, port authorities, water authorities, and railroads. It offers specialty services such as foundations for multi-family homes, parking structures, and other commercial concrete projects for blue-chip end users in the e-commerce, data center, distribution center and warehousing, energy, mixed use, and multi-family sectors.
I think these two companies are worth a look in the case of the infrastructure plan becomes a reality. Always do your own research before investing and make sure whatever investment you do meets your investment strategy and goals.