8/2/2016
By Charles Payne, CEO & Principal Analyst

The market sees the world on the cusp of a building boom.   In America, it stands to reason that no matter which candidate wins, there will be a push to spend money on infrastructure.

According to the American Society of Civil Engineers (ASCE), which assigns letter grades for the nation’s overall infrastructure in the form of a school report card, it assigned our nation a grade of a D+. It will take $3.6 trillion to bring it up to snuff by 2020.  I suspect the market thinks that will happen along with the building that continues with the urbanization of America.

There are three signs this is a winning trend going into the election and beyond:

United Rentals (URI) posted a blowout earnings report.  The company leases an array of construction equipment in all 50 states, and management seems very optimistic.

Tetra Tech (TTEK), which most people consider a water play has a deep infrastructure portfolio and it has seen its stock take off like a rocket.  I think it has a lot more room to the upside. 

There’s the merger I am sure that Donald Trump will begin mentioning in his speeches.  His favorite construction company Komatsu (KMTUY) of Japan is buying Joy Global (JOY) of Wisconsin for almost 70% less than its market cap back in 2007.

These are investable trends.

Meanwhile, coal has surged just as General Electric (GE) was reporting earnings where the high point was a major sell to Dubai of a coal system increasing their power grid capacity by 25%.  While America’s coal has been forced to the edge of extinction, the rest of the world is using more than ever. I am focusing on metallurgical coal more than thermal; however, the world is using both. 

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Charles Payne
Wall Street Strategies

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