US infrastructure stocks to watch on Trump’s $1tn stimulus boost US infrastructure stocks to watch on Trump’s $1tn stimulus boost US infrastructure stocks to watch on Trump’s $1tn stimulus boost

US infrastructure stocks to watch on Trump’s $1tn stimulus boost

Equities 5 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  In today's equity note we show a basket of 30 US construction related stocks that could benefit from the potential new $1trn infrastructure plan by the Trump administration. This basket of stocks is high beta to the S&P 500 but has historically outperformed S&P 500. The basket has a lower net-debt-to-EBITDA than the market highlighting the industries' prudent financial management and valuations are generally in line with the market.

Last week’s rout in US equity markets was particular tough with US infrastructure related stocks down 9.6% but this week the group has staged a 3.4% comeback on the news that the Trump administration is preparing a $1trn infrastructure plan to boost the economy. We have created a basket of 30 US construction related stocks across different industries that could get a boost from such an infrastructure plan.

NameSectorIndustryMkt. Cap.Return YTD (%)EV/EBITDANet-debt-to-EBITDAChg. Est. EPS 1m (%)
Johnson Controls International plcIndustrialsBuilding Products25,819-13.413.61.3-0.2
Carrier Global CorpIndustrialsBuilding Products18,406N/AN/AN/A0.3
Masco CorpIndustrialsBuilding Products12,7291.
Lennox International IncIndustrialsBuilding Products8,608-7.414.32.1-0.1
Fortune Brands Home & Security IncIndustrialsBuilding Products8,629-3.512.02.3-0.3
A O Smith CorpIndustrialsBuilding Products7,7231.714.6-0.31.9
Trex Co IncIndustrialsBuilding Products6,94033.530.00.30.6
Owens CorningIndustrialsBuilding Products6,016-13.625.32.22.3
AZEK Co Inc/TheIndustrialsBuilding Products4,507N/AN/A6.0N/A
Armstrong World Industries IncIndustrialsBuilding Products3,630-18.910.10.8-0.5
Simpson Manufacturing Co IncIndustrialsBuilding Products3,6515.114.2-0.50.0
Advanced Drainage Systems IncIndustrialsBuilding Products3,48329.1131.43.124.0
Jacobs Engineering Group IncIndustrialsConstruction & Engineering11,077-4.816.01.90.4
AECOMIndustrialsConstruction & Engineering6,227-9.819.71.72.2
Quanta Services IncIndustrialsConstruction & Engineering5,299-
EMCOR Group IncIndustrialsConstruction & Engineering3,426-
MasTec IncIndustrialsConstruction & Engineering3,165-
Valmont Industries IncIndustrialsConstruction & Engineering2,404-
Caterpillar IncIndustrialsMachinery69,057-
Illinois Tool Works IncIndustrialsMachinery53,863-4.415.81.6-1.5
Deere & CoIndustrialsMachinery48,452-
PACCAR IncIndustrialsMachinery25,746-5.06.1-1.22.0
Otis Worldwide CorpIndustrialsMachinery24,898N/AN/AN/A-0.1
Cummins IncIndustrialsMachinery25,261-
Fortive CorpIndustrialsMachinery22,967-10.619.42.90.3
Stanley Black & Decker IncIndustrialsMachinery21,078-16.614.12.55.7
Dover CorpIndustrialsMachinery14,013-14.712.62.10.0
Ingersoll Rand IncIndustrialsMachinery12,239-19.944.05.40.5
Xylem Inc/NYIndustrialsMachinery11,948-
IDEX CorpIndustrialsMachinery11,543-10.417.90.8-0.3

Source: Bloomberg and Saxo Group

The basket as a whole is down 8% year-to-date on an equal-weighted basis which is in line with the S&P 500. These construction related stocks have generally a low market capitalization except for the machinery companies which are most likely more global in their business footprint. The average net-debt-to-EBITDA is only 1.6x compared to 1.9x for the S&P 500 indicating a lower leverage which means lower default risk all things equal. The basket’s equal-weight valuation is equal to the S&P 500 if Advanced Drainage Systems is excluded from the calculation. The blended 12-month EPS estimates are up on average 1.5% the past four weeks which also mimics the S&P 500. If the Trump administration’s infrastructure plan materializes we would expect estimates to drastically improve.

An alternative to our custom basket is the Invesco Dynamic Building & Construction ETF (PKB:arcx) which holds 30 US-listed companies engaged in providing construction and related engineering services for building residential/commercial/industrial properties, or large infrastructure projects.

Measured since 1 January 2015 our basket of 30 stocks (equal-weighted) has done better than the S&P 500 but with a higher beta which makes sense since this industry is pro-cyclical. The high downside beta is also evident in the fact that this group of stocks experienced a 70% drawdown compared to only 32% in the S&P 500.

Besides the potential infrastructure plan by the Trump administration the current Fed policy has pushed down interest rates including the US 30-year fixed mortgage rate which hit a record 3.13% for the week ending 18 June. This is a direct positive factor for the construction sector and as such should help lift earnings and the outlook for these stocks.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.