US President Joseph Biden will meet with Republican Senator Shelley Moore Capito today as Democrats and Republicans make a final effort to broker a bipartisan infrastructure deal aimed at supporting the economy.
Indeed, the Global X US Infrastructure Development ETF (NYSE:), which seeks to invest in companies that could benefit from a potential increase in infrastructure activity in the United States, is up about 27% to so far this year. The , for its part, has increased by about 12% over the same period.
Below, we highlight three leading names likely to be positively impacted by the looming infrastructure package.
1. Nucor
Performance to date: +108.2%
Market Capitalization: $33.1 billion
Nucor Corp (NYSE:) is the largest steelmaker in the United States, potentially making it one of the largest beneficiaries of the expected construction boom resulting from President Biden's infrastructure spending package.
The Charlotte, North Carolina-based company, which is also the largest scrap recycler in North America, manufactures steel and steel products such as bars, beams, plates and plates. In addition to steel, Nucor also mediates in 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 mills across the country, have more than doubled since early 2021, rising 108% since the start of a recovery in steel and iron ore prices.
NUE shares – which are up nearly 161% in the past 12 months – ended Tuesday at a new all-time high of $110.74, giving the mid-cap company a valuation of $33.1 billion.
Nucor announced earnings and revenues that improved significantly from the same period last year when it posted on April 22, benefiting from a favorable demand environment.
Earnings per share were up more than 200% from the same quarter a year earlier to a record high of $3.10, while year-over-year revenue grew about 25% 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 benefits of our past investments and the more strategic approaches we are taking to our key end-use markets."
As a sign of good fortune for the future, Nucor management sounded optimistic about the outlook for the current quarter, supported by strong steel market fundamentals.
"We expect revenue for the second quarter of 2021 to exceed our first quarter results, setting a new record for quarterly results," the company said.
Honorable Mentions: Steel Dynamics (NASDAQ:), Cleveland-Cliffs (NYSE:), U.S. Steel (NYSE:)
2. United Rentals
Performance to date: +46.4%
Market capitalization: $24.5 billion
United Rentals (NYSE:) is the world's largest equipment rental company.
The Stamford, Connecticut-based company rents heavy equipment needed for major infrastructure projects, such as backhoes, forklifts and excavators, to a customer base that includes construction and industrial companies, municipalities and homeowners.
In addition to rental, it also offers sales of new and used equipment, maintenance and safety training.
United Rentals saw its shares rise approximately 46% year-to-date, much better than the comparable returns of both the S&P 500 and S&P 500, reflecting a strong used equipment market.
URI shares – which are up 142.5% in the past 12 months – came in at $339.45 last night, ahead of a record high of $354.05 reached on May 10. The industrial equipment rental company has a market capitalization of approximately $24.5 billion.
United Rentals reported impressively on April 28, easily exceeding expectations for both revenue and earnings due to strong demand for heavy equipment in a booming US economy.
The company has now surpassed or equaled Wall Street estimates for 17 consecutive quarters, dating from the fourth quarter of 2016.
CEO Matthew Flannery noted in the company's press release:
“We were very pleased with our first quarter results and a strong start to our year as our key end markets continue to recover 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 we've seen since mid-last year remains evident across our business, and virtually all indicators point to these trends continuing."
Looking ahead, United Rentals raised its full-year outlook for the remainder of fiscal year 2021, reflecting expectations for stronger growth in its core rental business and increased used equipment sales.
Honourable mentions: Caterpillar (NYSE:), Deere (NYSE:), Oshkosh (NYSE:)
3. Vulcan materials
Performance to date: +23.8%
Market Capitalization: $24.3 billion
Vulcan Materials Company (NYSE:), founded in 1909 as the Birmingham Slag Company, is the largest American producer of construction materials, such as gravel, crushed stone and sand. It is also a major producer of asphalt and cement.
As such, it can benefit from ambitious plans to repair and improve the country's deteriorating roads, highways and bridges. According to initial reports, the looming infrastructure bill would allocate $115 billion in highway and street financing.
Shares of the Birmingham, Alabama-based company, which primarily focuses on the manufacture, distribution and sale of construction materials, are up approximately 24% to date.
VMC shares – up about 71% in the past 12 months – closed at $183.62 yesterday, not far from a record high of $194.14 reached on May 10. At its current level, the building materials company has a market capitalization of $24.3 billion.
Vulcan delivered revenues and earnings that exceeded analyst estimates when it reported financial results on May 4, reaping the benefits of rising demand amid an improving economy.
The company said it made $0.69 per share, easily beating forecasts for earnings per share of $0.45. Revenue was $1.07 billion, up 2% from the same period a year ago. Consensus expectations called for $1.02 billion in revenue.
According to Vulcan CEO Tom Hill in the earnings report:
"Our first quarter results are a testament to the resilience of our best-in-class aggregates business."
"Recent highway price growth and construction employment trends in our markets also bode well for a further recovery in construction activity later in 2021."
Honourable Mentions: Jacobs Engineering Group (NYSE:), Martin Marietta Materials (NYSE:), Summit Materials (NYSE:)
