12 Best Infrastructure Stocks to Buy According to Hedge Funds

3. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 50

Caterpillar Inc. (NYSE:CAT) manufactures construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. It operates through four segments; Construction Industries, Resource Industries, Energy & Transportation, and Financial Products. It provides machinery, engines, and financing solutions to diverse industries worldwide.

The company’s 2024 performance demonstrates growth driven by infrastructure-related activities, despite a 3% overall sales decline. Services revenue, which is a key component tied to infrastructure maintenance and upgrades, grew 4% to a record $24 billion. This growth reflects the company’s focus on supporting existing infrastructure through connected assets, digital tools, and customer value agreements.

Looking ahead to 2025, Caterpillar Inc. (NYSE:CAT) anticipates strength in its energy and transportation segments, both heavily involved in infrastructure development. It expects growth in power generation, which is driven by demand for data centers and AI, as well as transportation led by rail services. While overall sales are projected to be lower in 2025, the growth in services and targeted infrastructure-related segments, along with a projected $2.5 billion in capital expenditure (including investments in large engine capacity), underscores the focus on infrastructure as a driver of growth.

Diamond Hill Large Cap Strategy stated the following regarding Caterpillar Inc. (NYSE:CAT) in its Q3 2024 investor letter:

“Other top Q3 contributors included HCA Healthcare and Caterpillar Inc. (NYSE:CAT). Heavy construction machinery manufacturer Caterpillar has held up better than industry peers against a challenging macroeconomic backdrop and a generally slowing construction environment.”