In this article, we discuss the 11 best infrastructure stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Infrastructure Stocks to Buy Now.
The word infrastructure brings to mind images filled with roads, bridges, water supply mechanisms, transportation networks, and advanced manufacturing. However, in recent years, for many across the world, the definition of the word has changed. In a developed economy like the United States, where more than 90% of people have access to the internet, and high-tech services make a major contribution to local economies, development of basic infrastructure for access to these services has become of paramount importance. For example, think of the manufacture of Apple Inc. (NASDAQ:AAPL) phones, Tesla, Inc. (NASDAQ:TSLA) superchargers, and NVIDIA Corporation (NASDAQ:NVDA) semiconductor chips.
Tech-based infrastructure is one of the key areas where the United States is lagging behind the rest of the world. China is aggressively deploying 5G towers to improve coverage, investing heavily in the manufacture of the latest chip technology, and scaling up smartphone production to expand presence in foreign markets. These developments are seen with rising concern in Washington. At the start of the Biden presidency, a $2 trillion infrastructure plan was proposed and later approved. As part of this plan, the US government pledged $650 billion for infrastructure, $620 billion for transportation, $580 billion for research and development, and $400 billion for a caretaking economy.
The numbers certainly reflect the changing priorities of the government when it comes to long-term infrastructure plans. However, since the US is also lagging behind other countries in the development of roads, airports, and water supply networks, the Biden administration also pledged to rebuild traditional infrastructure along with the modern one to improve the standard of living in the country and help local businesses. The hundreds of billions in federal funds for this purpose are now beginning to roll out to companies working in the infrastructure field, per reports from news platform NBC News. Experts predict that these funds will create hundreds of thousands of new jobs for the American economy.
Hiring for these new jobs is likely to begin as early as next year and ramp up through 2025 and 2026, per the Association of Builders and Contractors, a trade group representing the commercial and industrial construction industry. Jim Umpleby, the CEO of construction firm Caterpillar Inc. (NYSE:CAT), said in a recent earnings call that the company was continuing to experience robust growth and now expected results of the present fiscal year to be better than expected, driven by favorable price realization and volume growth. He added that positive momentum was likely to continue for the construction industry in North America.
“In North America overall, we continue to see positive momentum. We expect continued growth in non-residential construction in North America due to the impact of government-related infrastructure investments, and a healthy pipeline of construction projects. Although residential construction growth has moderated, we expect it to remain healthy. In Asia Pacific, excluding China, we expect growth in Construction Industries due to public infrastructure spending, in support of commodity prices. As we have mentioned during previous earnings calls, we anticipate continued weakness in China, and expect it to remain well below our typical range. Construction activity in Latin America is expected to be about flat versus a strong 2022.”
The infrastructure boom comes amid a shortage of workers in the construction sector. Investors should keep an eye on this development. Of the 500,000 unfulfilled construction jobs this year, most were in fields like welders, electricians and broadband technicians. Ben Brubeck, a national trade leader, believes that all this competition for skilled workers could result in projects being delayed and costing more because of higher wages, on top of material costs that are already up 40% since before the coronavirus pandemic. Brubeck noted there won’t be enough labor in certain markets to complete large projects on time. He also added that taxpayers would not be getting the best bargain for their investments in such a scenario.
Our Methodology
For this article, we selected infrastructure stocks and ranked them based on hedge fund sentiment. A database of around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to quantify the popularity of each stock in the hedge fund universe.
Photo by Denys Nevozhai on Unsplash
Best Infrastructure Stocks to Buy Now
11. Brookfield Infrastructure Partners L.P. (NYSE:BIP)
Number of Hedge Fund Holders: 17
Brookfield Infrastructure Partners L.P. (NYSE:BIP) owns and operates utilities, transport, midstream, and data businesses. On October 25, investment advisory Scotiabank maintained an Outperform rating on Brookfield Infrastructure Partners L.P. (NYSE:BIP) stock and lowered the price target to $38 from $44, noting that the higher for longer interest rate environment was one of the reasons behind the target drop.
At the end of the third quarter of 2023, 17 hedge funds in the database of Insider Monkey held stakes worth $115 million in Brookfield Infrastructure Partners L.P. (NYSE:BIP), compared to 11 the preceding quarter worth $325 million.
Just like Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and NVIDIA Corporation (NASDAQ:NVDA), Brookfield Infrastructure Partners L.P. (NYSE:BIP) is one of the best infrastructure stocks to buy now.
In its Q2 2023 investor letter, Emeth Value Capital, an asset management firm, highlighted a few stocks and Brookfield Infrastructure Partners L.P. (NYSE:BIP) was one of them. Here is what the fund said:
“Brookfield Corporation has $7.6 billion invested through Brookfield Infrastructure Partners L.P. (NYSE:BIP), a publicly traded permanent capital vehicle that is one of the largest owners and operators of critical global infrastructure. The entity was demerged from Brookfield in 2008 and was seeded with interests in 1.2 million acres of timberlands in Canada and the United States and interests in 10,900 kilometers of electricity transmission assets in Chile, Brazil, and Canada. The oldest of these assets, Great Lakes Power Transmission Co., an electricity transmission system based in Ontario, was acquired by Brascan in 1982. Brookfield Infrastructure Partners has significantly enhanced the quality, scale, and diversity of its portfolio over the last fifteen years. The timber assets were fully divested, and rail networks, toll roads, diversified terminals, last-mile utilities, midstream energy, and digital infrastructure were added. The partnership now owns many of the world’s premier infrastructure assets, several of which were acquired for value during a dislocation. For example, in 2020 Brookfield Infrastructure Partners acquired a six percent ownership interest in Sabine Pass, the largest LNG export facility in the United States. The transaction occurred amid unprecedented lows in natural gas pricing and an oversupplied LNG market. The partnership paid $1 billion for its interest, which was funded with forty percent equity and sixty percent low cost debt. In 2022, Sabine Pass generated $2.5 billion in earnings, or approximately $120 million in earnings against Brookfield Infrastructure Partners’ $400 million equity investment, equating to a thirty percent cash on cash yield…” (Click here to read the full text)
10. AECOM (NYSE:ACM)
Number of Hedge Fund Holders: 27
AECOM (NYSE:ACM) provides professional infrastructure consulting services for governments, businesses, and organizations. On November 15, RBC Capital analyst Sabahat Khan maintained an Outperform rating on AECOM (NYSE:ACM) stock and raised the price target to $109 from $102, appreciating the fourth quarter earnings beat and above-consensus FY24 guide of the firm.
At the end of the third quarter of 2023, 27 hedge funds in the database of Insider Monkey held stakes worth $531 million in AECOM (NYSE:ACM), compared to 26 in the preceding quarter worth $612 million.
9. CNH Industrial N.V. (NYSE:CNHI)
Number of Hedge Fund Holders: 29
CNH Industrial N.V. (NYSE:CNHI) designs, produces, markets, sells, and finances agricultural and construction equipment and vehicles. On November 21, investment advisory Berenberg maintained a Buy rating on CNH Industrial N.V. (NYSE:CNHI) stock and lowered the price target to $25 from $31, noting the firm was well placed to exploit two of the most robust structural trends in the agricultural machinery industry.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in CNH Industrial N.V. (NYSE:CNHI) with 123 million shares worth more than $1.5 billion.
In its Q3 2023 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and CNH Industrial N.V. (NYSE:CNHI) was one of them. Here is what the fund said:
“CNH Industrial N.V. (NYSE:CNHI) (Italy), which designs, manufactures, and distributes agricultural and construction equipment, was the top detractor for the quarter. CNH Industrial’s share price fell following its second-quarter results, as agriculture equipment sales rose 5% in local currency, a slowdown from the prior quarter. This performance fell below market expectations due to destocking activity in Brazil and some production ramp-up issues for its new Patriot sprayer. We believe the production issues are temporary while the destocking actions will better position the business for the midterm. Pricing power remains quite strong and increased by roughly 7%, and precision agricultural sales grew by 21%. While the market was overly focused on near-term demand and sales growth, the agriculture equipment division produced its highest quarterly margin ever at 16.8%—an encouraging development that supports our view of the company’s long-term profitability. Further, the much smaller construction business delivered strong results, including its own quarterly margin record. Management maintained guidance for the rest of the company’s current fiscal year and indicated it expects to exceed the 2024 targets laid out at a capital markets day in 2022. We recently met with CEO Scott Wine at the company’s offices. He expressed confidence in the company’s ability to drive much better through-cycle financial performance while avoiding the company’s previous mistakes. He also believes the company’s share price is materially undervalued, and although he would prefer to invest in the business, he sees an opportunity to increase returns to shareholders via share repurchases. We believe CNH Industrial remains a solid business in an attractive industry that is run by a much-improved management team.”
8. Fluor Corporation (NYSE:FLR)
Number of Hedge Fund Holders: 31
Fluor Corporation (NYSE:FLR) provides construction and engineering services. On November 14, investment advisory Barclays maintained an Equal Weight rating on Fluor Corporation (NYSE:FLR) stock and raised the price target to $39 from $30, noting the company had made six months of progress on structure and there were more positive catalysts on the horizon.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $718 million in Fluor Corporation (NYSE:FLR), compared to 32 in the preceding quarter worth $518 million.
7. Generac Holdings Inc. (NYSE:GNRC)
Number of Hedge Fund Holders: 34
Generac Holdings Inc. (NYSE:GNRC) designs, manufactures, and sells power generation equipment, energy storage systems, and other power products for the residential, and light commercial and industrial markets. On November 15, investment advisory Bank of America upgraded Generac Holdings Inc. (NYSE:GNRC) stock to Neutral from Underperform and raised the price target to $110 from $73, noting that latest commercial and industrial results showed that FY23 guidance was more attainable and shares looked increasingly de-risked.
At the end of the third quarter of 2023, 34 hedge funds in the database of Insider Monkey held stakes worth $660 million in Generac Holdings Inc. (NYSE:GNRC), compared to 43 in the previous quarter worth $853 million.
In its Q2 2023 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and Generac Holdings Inc. (NYSE:GNRC) was one of them. Here is what the fund said:
“Leading global manufacturer of power generation equipment, Generac Holdings Inc. (NYSE:GNRC), also advanced and was among the top 5 performers in the S&P 500 this quarter. Shares traded higher amid reports of widespread power outages and oppressive heat across the southern U.S. Moreover, demand trends for home standby generators have begun to pick up, while pandemic related headwinds from high inventory levels began to subside. In our view, GNRC’s unmatched distribution network and product portfolio enjoys strong brand advantages, creating a wide moat for this niche business which commands a 75% market share in the North American residential market. Historically, growth has been limited due to a lack of awareness around the benefits of having a home standby generator, as well as its high price point. However, elevated power outage events, both weather related and due to aging infrastructure, have tipped the scales in both the residential and commercial markets. We expect these heightened consumer sensitivities to result in a long runway of penetration across an expanding addressable market, margin expansion and free cash flow generation.”
6. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 35
Enbridge Inc. (NYSE:ENB) operates as an energy infrastructure firm. On November 6, investment advisory CIBC maintained an Outperform rating on Enbridge Inc. (NYSE:ENB) stock and raised the price target to C$57 from C$56.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Zimmer Partners is a leading shareholder in Enbridge Inc. (NYSE:ENB) with 4.1 million shares worth more than $135 million.
Along with Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and NVIDIA Corporation (NASDAQ:NVDA), Enbridge Inc. (NYSE:ENB) is one of the best infrastructure stocks to buy now.
In its Q3 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Enbridge Inc. (NYSE:ENB) was one of them. Here is what the fund said:
“The financials sector was our best contributor and the industrials sector our biggest detractor, each dominated by one stock. Our energy overweight was also a help, though this was offset by negative effects from our underexposure within energy to commodity-sensitive exploration and production companies, and by our holding Enbridge Inc. (NYSE:ENB), which sold off after announcing a large acquisition in the quarter.”
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Disclosure. None. 11 Best Infrastructure Stocks to Buy Now is originally published on Insider Monkey.
