Trump's $1 Trillion Gift To Investors
Welcome to 2018!!
It’s a brand new year with a brand new Trump agenda in play.
And this time, there’s $1 trillion in government payments up for grabs!
You might think that Trump and the Republicans might take a few weeks to catch their breath after passing the highly contested tax cut at the end of 2017.
But even before leaving Washington for his Christmas vacation, Trump told reporters to get ready for the next big thing. And that next big thing is a bill paving the way for $1 trillion in spending on U.S. infrastructure projects.
With that much money flowing into projects around the U.S., there’s bound to be some big winners when it comes to profiting from infrastructure spending. And today, I want us to take a look at three key areas where you can grow your wealth in 2018…
Widespread Infrastructure Spending
There are still a lot of details to be worked out for a new infrastructure bill. But Trump has already stated a goal of creating $1 trillion in spending over the next decade.
Across the country, CEO’s are salivating at the chance to bid on new projects that this $1 trillion will fund.
Of course, the first thing that responsible Americans should think when they hear this number is “who will pay for this spending?”
The good news is that the tentative plan currently calls for only $200 billion in Federal spending, with the additional $800 billion coming from state and local funding.1 Presumably, the Federal government would offer incentives and matching funding for projects that states and local governments are willing to put their own money into.
This is likely to be a much more efficient way of spending taxpayer money.
States and local governments are much more knowledgeable about which projects are needed the most. And since states and local governments will be putting their own money to work, they’ll be focused on getting the most bang from their buck.
A more free-market approach to infrastructure projects will naturally generate more jobs, will give states the improvements that will really help to improve resident’s lives, and will help to grow the overall economy.
Time will tell exactly how this bill will look when it is ultimately passed into law. But for the time being, there will be a lot of talk about hundreds of billions in infrastructure projects. And that talk will naturally drive a handful of key stocks higher.
Infrastructure Stocks to Keep On Your Radar
As I begin to build my watch list for infrastructure investment plays, there are three main areas that I’m looking at.
First, keep an eye on construction materials stocks. These are companies that mine metals like iron ore or copper, steel companies, concrete companies and similar corporations.
Naturally, with more infrastructure projects kicking off in the U.S., demand for the materials these companies produce will pick up. That means higher profits, higher stock prices and increased dividends. A couple of names in this area to watch are U.S. Steel (X) and Freeport McMoRan (FCX).
In addition to construction materials, I’m also watching construction equipment companies. After all, with more projects kicking off in the U.S., there will be a need for more cranes, backhoes, graders, dump-trucks and the like.
Share prices for equipment stocks have already started moving higher thanks to infrastructure projects in emerging market countries. And as U.S. projects start coming online this year, I expect more equipment demand and higher stock prices.
Two solid equipment companies you should have on your radar are Deere & Co. (DE) and Caterpillar (CAT).
Finally, these new infrastructure projects will need to be managed by project management companies with plenty of experience. Think of these firms as the architects and contractors for roads, bridges and so forth.
The great thing about project management companies is that they typically have low expenses, and high profit margins. Their main cost is the salaries paid to architects and engineers. And that leaves plenty of income available for shareholders.
I’m watching shares of AECOM (ACM) and KBR Inc. (KBR) as two project management companies that will generate a tremendous amount of new business this year.
We’ll certainly cover the new infrastructure bill here at The Daily Edge. And you can keep track of my real-time thoughts on infrastructure and plenty of other market opportunities by following me on Twitter.
Here’s to growing and protecting your wealth!