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Why Infrastructure Stocks Could Rocket Higher By January 2018

|Includes: First Trust Large Cap Value AlphaDEX ETF (FTA), HEES, JEC, VMC

America’s aged infrastructure has been failing for quite some time.

One look at the countless potholes, congested roads, derailed trains, collapsed bridges and weakened dams is proof enough.  Just to fix it all could cost as much as $3.6 trillion by 2020, says the American Society of Civil Engineers (ASCE).

What’s worse, the ASCE just gave current U.S infrastructure a D+ rating. Even the Federal Transit Administration (FTA) has estimated that there’s an $808.2 billion backlog in deferred maintenance on the nation’s rail and bus lines.

On top of that, according to the American Road and Transportation Association, nearly 56,000 bridges in the U.S. alone are structurally deficient.

More than 25% of current bridges are over 50 years old. Yet, federal spending on infrastructure has fallen 9% in the last 10 years.

However, as we near January 2018, the White House is preparing to roll out its $1 trillion infrastructure plan. According to The Hill, “the administration has long said it wants to use $200 billion in federal seed money, along with significant permit reform and other incentives, to leverage $1 trillion worth of overall infrastructure investment.”

For that reason, we began looking at potential beneficiaries of such a program.

Look at H&E Equipment (HEES) for example, which operates as an integrated equipment services company. The company rents, sells, and provides parts and service support for hi-lift or aerial work platform equipment, cranes, earthmoving equipment, and industrial lift trucks.

It offers heavy construction and industrial equipment for rent on a daily, weekly, and monthly basis. It also sells new and used equipment and parts, as well as provides maintenance and repair services for customer-owned equipment. In addition, it provides ancillary equipment support activities, including transportation, hauling, parts shipping, and loss damage waivers.

The company provides its services to industrial and commercial companies, construction contractors, manufacturers, public utilities, municipalities, and maintenance contractors, as well as for other industrial accounts.

Much like Vulcan Materials (VMC) and Jacobs Engineering (JEC), which are near their highs, HEES is another infrastructure stock that could benefit from the Administration's program to update older infrastructure.

Stay tuned to the next issue of The Cheap Investor for more.