(List compiled by Becca Lipman. Data sourced from Finviz and company profiles)
The Transportation Equity Act, better known as The Highway Bill, is a big deal. This bill dictates the amount the government will spend on roads and bridges over the next six years. And we’re talking hundreds of billions of dollars.
The last renewal was signed under President G. W. Bush in 2005 and will expire in September. And despite the Congress’s painful incompetence to come to a conclusion on the national debt ceiling, renewing this bill is a no-brainer.
Somewhere between $210 billion (proposed by chair of the House Transportation Committee) to $556 billion (proposed by El Jefe himself (Obama)) will be earmarked for highway spending over the next six years. Spending cuts aside, the benefits associated with TEA are undeniable. When it comes time to vote, it’s likely congressmen and women from both sides will rush to cast their ballot of approval.
This translates into jobs, jobs and more jobs. It also translates into big revenues for companies involved. This includes, but is certainly not limited to, construction and engineering companies, design and management suppliers, and material suppliers.
As an example of how important this bill is for industry, “90-four per cent of Granite’s $942 million construction revenues in 2010 came from government contracts.” (via Y charts)
But when it comes down to which stocks will benefit, Y Charts notes that while bigger companies like Caterpillar and Granite will obviously benefit from the renewed TEA act, it may be the smaller-cap construction companies we should be paying attention to:
“Caterpillar has been enjoying booming overseas sales to the mining industry, but these smaller companies are heavily reliant on domestic work, and another TEA highway spending bill could help close the price gap between Caterpillar and the smaller players.”
Interested in trading from this idea? To help you along, we list in detail the companies mentioned in Y Chart’s article that are ready to benefit from the TEA act.
So take a moment to review the names below and use it as a starting-off point for your own analysis.
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1. Caterpillar Inc. (CAT): Farm & Construction Machinery Industry. Market cap of $65.33B. Current price at $101.37. It’s been a rough couple of days for the stock, losing 8.13% over the last week. Caterpillar Inc is the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company is one of only a handful of U.S. companies that leads its industry while competing globally from a principally domestic manufacturing base. The company records more than half of its sales to overseas customers. Their products are used in the construction, road building, mining, forestry, energy, transportation and material-handling industries.
2. 3M Co. (MMM): Diversified Machinery Industry. Market cap of $62.59B. Current price at $88.38. It’s been a rough couple of days for the stock, losing 6.55% over the last week. 3M Company is a diversified technology company with leading positions in consumer and office; display and graphics; electronics and telecommunications; health care; industrial; safety, security and protection services; transportation and other businesses. They are an integrated enterprise characterised by substantial intercompany cooperation in research, manufacturing and marketing of products.
3. General Motors Company (GM): Auto Manufacturers Industry. Market cap of $42.23B. Current price at $28.57. General Motors Company is engaged in the designing, manufacturing and retailing of vehicles globally including passenger cars, crossover vehicles, and light trucks, sport utility vehicles, vans and other vehicles.
4. Raytheon Co. (RTN): Aerospace/defence Industry. Market cap of $16.02B. Current price at $45.22. The stock has lost 3.64% over the last year. Raytheon Company is a global technology company. The company provides products and services in the areas of defence and commercial electronics, engineering and construction, and business and special mission aircraft. Raytheon has operations throughout the United States and serves customers in numerous countries around the world.
5. CEMEX, S.A.B. de C.V. (CX): Cement Industry. Market cap of $7.36B. Current price at $6.85. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). The stock is a short squeeze candidate, with a short float at 6.26% (equivalent to 5.98 days of average volume). It’s been a rough couple of days for the stock, losing 5.74% over the last week. CEMEX is one of the largest cement companies in the world, with close to 78 million metric tons of production capacity. Through operating subsidiaries in four continents, they are engaged in the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates and clinker. They are also the world’s leading producer of white cement and the world’s largest trader of cement and clinker.
6. Owens Corning (OC): General Building Materials Industry. Market cap of $4.41B. Current price at $35.59. This is a risky stock that is significantly more volatile than the overall market (beta = 2.02). The stock has gained 14.37% over the last year. Owens Corning is a world leader in building materials systems and composite solutions. Owens Corning people redefine what is possible each day to deliver high-quality products and services ranging from insulation, roofing, siding and stone, to glass composite materials used in transportation, electronics, telecommunications and other high-performance applications.
7. AECOM Technology Corporation (ACM): Technical Services Industry. Market cap of $3.01B. Current price at $25.25. The stock is currently stuck in a downtrend, trading -5.62% below its SMA20, -7.15% below its SMA50, and -7.95% below its SMA200. The stock has gained 1.45% over the last year. AECOM Technology Corporation is a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental and energy. Its Professional Technical segment delivers planning, consulting, architectural and engineering design, and program and construction management services.
8. Granite Construction Incorporated (GVA): Heavy Construction Industry. Market cap of $903.79M. Current price at $23.46. The stock is a short squeeze candidate, with a short float at 14.01% (equivalent to 18.21 days of average volume). The stock is currently stuck in a downtrend, trading -5.21% below its SMA20, -6.82% below its SMA50, and -10.58% below its SMA200. The stock has gained 0.39% over the last year. Granite Construction, Inc. is a diversified heavy civil constractor and construction materials producer. The Company concentrates on ifrastructure projects including roads, bridges, dams, tunnels, canals and rapid transit facilities. The Company also manufactures asphalt, concrete base rock and other construction materials.
9. Sterling Construction Co. Inc. (STRL): Heavy Construction Industry. Market cap of $205.75M. Current price at $12.88. It’s been a rough couple of days for the stock, losing 5.16% over the last week. Sterling Construction Company, Inc. is a holding company which has historically operated as a wholesale distributor to the automotive aftermarket and construction through two subsidiaries, Steel City Products and Dowling’s Fleet Service.
10. Iteris, Inc. (ITI): Communication Equipment Industry. Market cap of $44.68M. Current price at $1.29. The stock has lost 9.09% over the last year. Iteris, Inc. is a leading provider of outdoor vision systems and sensors that optimise the flow of traffic and enhance driver safety. Iteris combines outdoor image processing, traffic engineering, and information technology to offer a broad range of transportation and safety solutions.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.