BY KRISTIN HOVENCAMP
There appears to be a lot of confusion around the definition of infrastructure. According to the Oxford dictionary, infrastructure is the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. In economic terms, infrastructure involves the production of public goods or production processes that support natural monopolies. Infrastructure investing occurs within the public and private sectors, and investors can opportunistically take advantage of both. As an alternative to traditional asset classes, infrastructure is less volatile and uncorrelated over the long term and can offer higher yields.
The infrastructure stimulus bill being negotiated in Congress could benefit numerous themes within the S&P 500 equity sectors. Infrastructure investment themes include stocks engaged in transportation, water, and electronic systems and communications networks. The following are examples:
Industrial metals. Companies that mine and produce iron ore, nickel, copper, gold, silver, and other metals. Copper is a commodity used in almost all construction projects, from electrical wiring to plumbing and piping.
Transport equipment. Companies that build, sell, and rent shipping, forestry, roadbuilding, railroad, airport, and mining equipment used for infrastructure projects of all sizes. Specialty electric trucks can also benefit from a surge in construction.
Road construction materials. Companies producing crushed stone, sand, and gravel for building and repaving roads, highways, bridges, and tunnels. Asphalt and cement mixers should see a boost in sales.
Chemical products. Companies that make chemicals used for industrial and agricultural purposes and invest in environmentally safe alternatives.
Utility services. Businesses are developing technology to improve the country’s gas, electricity and water services. The infrastructure bill proposes building electric vehicle charging stations throughout the country.
Communications services. Increased connectivity requires fast, reliable telecommunications and broadband coverage. Companies that provide data storage will also be in high demand.
The necessity for investment in U.S infrastructure has never been greater. Traditional and unconventional infrastructure stocks should profit from the stimulus that comes out of Washington. As part of a balanced portfolio, infrastructure may offer diversification and help minimize risk.
Kristin Hovencamp is an Investment Executive, RJFS and Director of Business Development with HAZLETT WEALTH MANAGEMENT, LLC, which is independent of Raymond James and is not a registered broker/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results. 675 Sun Valley Road, Suite J1 + J2 Ketchum, Idaho 83340 208.726.0605. HazlettWealthManagement.com
