Skip to Content
Stock Strategist Industry Reports

Postelection Optimism Boosts U.S. Building Materials Firms

But it’s uncertain whether Trump’s infrastructure spending plan will be executed in its proposed form.

Mentioned: , , ,

U.S. aggregates and concrete companies rallied sharply following the election of Donald Trump as America’s next president. On one hand, we think this makes sense. Unlike globally fungible commodities like steel or copper, cement, aggregates, and concrete are almost entirely consumed near their production sites because of their low value/weight ratios. As a result, increases in infrastructure spending would benefit the financial performance of  Vulcan Materials (VMC),  Martin Marietta Materials (MLM),  Summit Materials (SUM), and  U.S. Concrete (USCR). On the other hand, we’re skeptical that the touted $1 trillion infrastructure spending plan will be executed in its proposed form. We think the shares of these companies are now pricing in significant growth, and we see little risk-adjusted upside at this time.

During his campaign, Trump proposed to spend $1 trillion over a 10-year period to repair roads, bridges, and other infrastructure. In part, he hopes to lean on private spending to achieve his goal, with $137 billion in tax credits for construction companies that would then borrow on the open market to fund projects with attached revenue streams--a toll road, for example. U.S. infrastructure construction (including transportation, highway and street, sewage and waste disposal, water supply, conservation, and development) is set to total about $180 billion in 2016. Tacking on an additional $100 billion would translate to a 55% increase in annual spending. However, we don’t think a full $100 billion increase is likely.

Kristoffer Inton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.