On Nov 15th, President Biden signed a bipartisan infrastructure bill for $550 billion, in addition to previously approved funds of $450 billion for five years. The goal of the bill is to upgrade our nation's infrastructure. An infrastructure bill has been talked about for decades, and now that one has passed, there will be many winners.
The bill is expected to provide billions toward roads and bridges as well as upgrade freight and passenger rails. It should provide a boost to the U.S. economy and will serve as a new catalyst for the markets. This is especially true for industries such as materials, industrials, telecommunications, and utilities. Investors have been anticipating the bill based on the U.S. Infrastructure Development ETF's (PAVE) 35% gain this year.
But there is plenty of upside left as companies can now get to work. As revenue increases, this will be reflected in future earnings reports. To find stocks that are likely to benefit from the bill and see gains in the months ahead, I ran a search in our POWR Ratings database. Based on that search, Reliance Steel & Aluminum Co. (RS), Olin Corporation (OLN), and EMCOR Group Inc. (EME) look like great options.
Reliance Steel & Aluminum Co. (RS)
RS is a metal service center in the United States, providing metal processing and inventory management services for carbon and stainless steel, aluminum, and alloys. The company predominantly supplies the nonresidential construction, automotive, aerospace, energy, transportation, and heavy equipment end markets.
The company reported strong results for the third quarter. Earnings came in at $6.15, up 307% year over. Sales hit record levels, jumping 84% year over year due to a favorable pricing environment and high demand in many end markets, especially nonresidential construction, its largest market. Management expects this to continue for the rest of the year.
Strong demand is driving metal prices higher, which should aid the firm's revenue and margins. RS has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. The company has a Growth Grade of B as analysts expect sales to jump 78.8% year over year in the current quarter. Earnings are expected to soar 158.2% year over year.
RS also has a Momentum Grade of A as the stock is up 9.2% for the month and 35.1% over the past year. We also provide Value, Stability, Sentiment, and Quality grades for RS, which you can find here. RS is ranked #12 in the A-rated Steel industry. For more top stocks in this industry, click here.
Olin Corporation (OLN)
OLN manufactures and sells a variety of chemicals and chemical-based products. It sells products through three segments. Its Chlor alkali products and Vinyls segment generate the majority of revenue. This segment sells chlorine and caustic soda used in various industries, including cosmetics, textiles, crop protection, and fire protection products. The company's epoxy segment sells epoxy resins used in paints and coatings.
Its Winchester segment sells sporting ammunition and ammunition accessories. In the most recent quarter, revenues surged 94% year over year in the Winchester segment due to increased commercial and military sales and higher commercial ammunition pricing. Its overall revenues jumped 62.8% year over year, driven by higher pricing.
Management expects an increase in results in the Chlor alkali products and Vinyls segment going forward. OLN has an overall grade of B and a Buy rating in our POWR Ratings system. The company has a Growth Grade of B as Wall Street analysts forecast sales to rise 42% and earnings to surge 2,744% year over year in the current quarter.
The company also has a Quality Grade of B due to solid fundamentals. For instance, OLN has a current ratio of 1.5, indicating a stable short-term liquidity position. For the rest of OLN's grades (Value, Momentum, Stability, and Sentiment), click here. OLN is ranked #11 in the A-rated Chemicals industry. For more top-ranked stocks in this industry, make sure to visit this link.
Note that OLN is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
EMCOR Group, Inc. (EME)
EME is one of the largest electrical, mechanical, construction, and facilities services firms in the United States. It provides a wide range of services, including the installation of electrical distribution systems, voice & data communication systems, and environmental controls within buildings. The company's services are provided to a broad range of commercial, industrial, utility, and institutional customers.
EME contracts for large installation projects in the multimillion-dollar range or smaller projects involving renovations and retrofit work. In the third quarter, earnings and revenue surpassed estimates and rose year over year. This was driven by strong demand in the U.S. Construction and U.S. Building Services segment, along with cost control measures. This led to management to lift its full-year 2021 guidance.
The company is also seeing robust demand for its electrical, mechanical systems in new construction. EME has an overall grade of A, translating into a Strong Buy rating in our POWR Ratings system. The company has a Momentum Grade of B, which makes sense with the stock up over 10% for the month and 40% for the year.
EME also has a Quality Grade of B as its recent cash balance of $664 million is much higher than its short-term debt of $16 million. To access all of EME's grades, including Growth, Value, Stability, and Sentiment, click here. EME is ranked #4 in the Industrial – Services industry. For more top stocks in this top industry, click here.
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This article was written by David Cohne, Chief Value Strategist for StockNews.com. David has helped investors find the most profitable stocks for over 20 years.
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RS shares were unchanged in after-hours trading Thursday. Year-to-date, RS has gained 35.70%, versus a 26.87% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.3 Top Infrastructure Stocks to Buy Right Now appeared first on StockNews.com