© Reuters. 2 to buy infrastructure stocks in July, 2 to avoid
With President Biden allegedly reaching an agreement with a bipartisan senatorial group on an infrastructure bill and the reopening of the economy spurring the revitalization of the infrastructure sector, we think it advisable to invest in fundamentally strong stocks in the sector eat (NYSE 🙂 and Oshkosh (NYSE :). Conversely, investors should avoid Vulcan (VMC) and Martin Marietta Materials (NYSE :), which trade at sky-high valuations that we believe are not justified by their near-term growth prospects. Let's examine these names. With traditional infrastructures such as roads, bridges and ports requiring regular maintenance and modernization, it is no surprise that the infrastructure sector is once again enjoying investor attention as the economy reopens. This is reflected in the respective returns on the Global X U.S. Infrastructure Development ETF (PAVE) and iShares U.S. Infrastructure ETF (IFRA) of 21.4% and 17.7% since the beginning of the year.
With President Biden recently reaching an agreement with a bipartisan group of Senators on a $ 1.2 trillion infrastructure plan, the industry is likely to get even more attention from investors this month and beyond. However, not all infrastructure stocks are solid bets right now.
Eaton Corporation plc (ETN) and Oshkosh Corporation (OSK) are two fundamentally healthy infrastructure stocks that we believe have the potential to benefit from industry tailwinds. So it might be wise to bet on it now. Conversely, we believe investors should avoid Vulcan Materials Company (NYSE 🙂 and Martin Marietta Materials, Inc. (MLM) stocks because of their high valuations, which seem unsustainable given the company's dire near-term growth prospects.
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