Tax reform finally is making some progress through the halls of Congress, and early 2018 may see President Trump unveil a $200 billion federal spending plan related to another of his campaign pledges, which is to restore the nation's decaying network of roads, bridges and other vital infrastructure, Barron's reports.

Among the companies that Barron's cites as likely to be big beneficiaries are suppliers of materials such as concrete, cement, asphalt, crushed stone, and wallboard, including Vulcan Materials Co. (VMC), Martin Marietta Materials Inc. (MLM), Eagle Materials Inc. (EXP), and U.S. Concrete Inc. (USCR).

Others are engineering and construction companies such as Fluor Corp. (FLR), AECOM (ACM), Jacobs Engineering Group Inc. (JEC), and Granite Construction Inc. (GVA). Heavy-equipment makers such as Caterpillar Inc. (CAT) are also potential winners.

'Everybody Wants Infrastructure'

Regarding the political hurdles faced by the infrastructure plan, Geoffrey Segal, a senior vice president of government advisory and affairs at global investment firm Macquarie Capital – which has a particular focus on infrastructure investments – is optimistic. He tells Barron's: "It's not tax reform or Obamacare; it's not politically charged. It's roads and bridges and things that both parties agree are needed. Everybody wants infrastructure."

During the 2016 presidential campaign, Donald Trump called for a $1 trillion spending plan, and pledged that it would be a major focus of his first 100 days in office.

In May 2017, some broad details finally emerged, when Transportation Secretary Elaine Chao said in a Senate hearing that "the proposal will likely include $200 billion in direct federal funds, which will be used to leverage $1 trillion in infrastructure investment over the next 10 years," as Forbes reported. That is, the $200 billion proposed federal outlay is supposed to stimulate an additional $800 billion of spending by state and local governments, as well as by private sources, Forbes added. To this date, further details have proved elusive.

Recent Performance

The price moves for these stocks from the close on Election Day (November 8, 2016) through the close on Wednesday (November 29, 2017) were: Vulcan, -5%; Martin Marietta Materials, -8%; Eagle, +19%; U.S. Concrete, +61%; Fluor, unchanged; AECOM, +19%; Jacobs, +20%; Granite +25%; Caterpillar, +58%. The S&P 500 Index (SPX) is up by 22.7% over the same period.

The consensus EPS forecasts for their next fiscal year and forward P/E ratios for these stocks are, per Thomson Reuters data reported by Yahoo Finance:

  • Vulcan: $4.18, 30
  • Martin Marietta Materials: N/A, N/A
  • Eagle: $6.37, 17
  • U.S. Concrete: $4.93, 16
  • Fluor: $2.46, 20
  • AECOM: $3.06, 12
  • Jacobs: N/A, N/A
  • Granite: $3.10, 21
  • Caterpillar: $7.81, 18.

Eagle is the only company in this group whose current fiscal year ends in 2018, thus the estimate cited here is for their fiscal 2019. For all the others, fiscal 2018 estimates are cited.

Given that the Trump infrastructure initiative has been stalled for so long, and since details so far are sketchy, many analysts have not included assumptions about its impact in their projections.