Infrastructure stocks already promise to be a big winner in the 2024 election as tensions heat up over America’s current road, bridge, and waterway conditions. While the current administration developed a substantial infrastructure plan, many feel there’s a long road (pun intended) ahead. Talking heads are already bemoaning the poor state of U.S. infrastructure development.
Even if infrastructure stocks don’t prove the biggest election stocks this cycle, plenty of upside potential is present. Current infrastructure remains a perennial talking point for both local and national politicians. And many are clamoring for changes to existing legislation to unlock additional opportunities, including jobs, access points, and transportation optimization.
Let’s explore three infrastructure stocks to buy soon, before the election ramps up.
Sterling Infrastructure (STRL)
Sterling Infrastructure (NASDAQ:STRL) is unique among infrastructure stocks. Essentially, it’s a small-cap growth play ready to explode. And, unlike many “brick and mortar” infrastructure stocks, STRL focuses on data center builds in addition to standard building and transportation development. Also, the company is diving into the red-hot housing market. Impressively, they acquired Professional Plumbing Group last year to expand residential housing.
Over-diversification of this type doesn’t always pay off, but STRL is doing well. The company grew both sales and income in its most recent filing. That’s notable considering that high capital costs are putting pressure on most infrastructure stocks today. Trading at just 1.3x sales and 20x earnings, the company’s $2.3 billion market cap conceals its true long-term upside potential compared to more mature infrastructure stocks.
Brookfield Infrastructure Partners (BIP)
Brookfield Infrastructure Partners (NYSE:BIP) is unique in that it’s basically a private equity fund that’s easily investable by retail traders. The stock owns and operates utilities and transportation companies that drive infrastructure developments.
BIP suffered particularly hard in recent months amid higher interest rates. Yet, that doesn’t stop the stock’s long-term potential. Likewise, the company’s management is adept at navigating tricky economic conditions, which led them to divest losing segments to focus on key growth sectors. Also, the company plans to divest another $2 billion worth of assets this year, creating a hefty cash balance ripe for acquisitions as smaller companies suffer more and become distressed assets for easy picking.
Alternately, the infrastructure stock might sit on its newfound cash balance and ultimately return value to shareholders. The company’s current forward-dividend yield is a respectable 5.21%, and it has a long history of share buybacks as well. Therefore, BIP is a way to access some of the top private infrastructure companies without the high capital requirements or access that private equity demands.
U.S. Steel (X)
US Steel (NYSE:X) could easily be the top infrastructure stock of 2024.
But not for the reasons you may think. You might remember an article that included U.S. Steel as one of the top merger arbitrage plays of 2024, and the heat has only increased since then.
In a nutshell, Japanese steelmaker Nippon Steel Corporation planned to buy U.S. Steel for $55 per share, a solid premium compared to today’s pricing. But lawmakers on both sides of the aisle protested the deal, creating uncertainty and turbulence.
Now, former president Trump himself is jumping into the fray, saying he’d block the deal on his first day in office if elected. Biden, too, isn’t too hot on the play as he gave union workers a “personal assurance” that he would back them if they elected to fight the move.
However it plays out, X is getting more attention today than it has in years. If the deal goes through, there’s a solid merger arbitrage play at hand. If not, renewed interest in U.S. Steel could drive demand and federal funds, creating a long-term opportunity unlike many infrastructure stocks offer today.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.