Builders Hang in the Balance
The rust beltās still not moving, but the rest of the United States is embracing old habits. The Washington Post reveals countrywide road traffic back at 90% of pre-corona highs. This traffic represents normal people going to work, to spend, to socialize. It’s grassroots intel on a fading fear factor.
This doesnāt mean weāre back to normal, though, as most other transport methods still lie abandoned, and thereās an undeniable correlation between where traffic is most jammed up (South Carolina and South Dakota) and where āronas back on the rise. However, this still good news for investors in construction stocks like Caterpillar and REV Group.
Government contracts drive these companiesā profits, and the size of those contracts correlate with public construction spending. If youāve got more commuters, wear-and-tear on public infrastructure increase the spending on public construction.
The excitement around construction spending was palpable during President Trumpās campaign, coinciding with a 200% upsurge in Caterpillar shares. The pandemic era anxieties around it were just alleviated with his touted $1 trillion infrastructure bill.
The presidentās last infrastructure bill was for two-trillion but interrupted by his impeachment. Itās agreed that builders need putting to work on dilapidated roads and bridges, but who pays adds to the complexity of Congress passing this bill in a coronavirus-hit election year.
The Invstr community remains 95% bullish on Invescoās Dynamic Building and Construction exchange-traded fund (ETF) and 93% bullish on Caterpillar specifically. Itās either a big bet on Trumpās reelection chances or a bet that infrastructure spending can be delayed no longer.
