Five stocks to examine as Congress eyes repairs

WEATHER, rust and sheer age attack the nation’s bridges and tunnels. Many of them are crumbling. About 46,000 U.S. bridges, including the Brooklyn Bridge and the Theodore Roosevelt Bridge in Washington, D.C., are structurally deficient, according to the American Road & Transportation Builders Association.

As Joe Biden prepares to assume the presidency, Republicans and Democrats don’t agree on much. But fixing the bridges and tunnels may be one thing on which bipartisan cooperation can happen.

This seems like a good time, therefore, to look at infrastructure stocks.

Fluor

Fluor Corp. (FLR), based in Irving, Texas, is one of the largest engineering and construction companies in the world, with about 50,00 employees in more than 100 countries.

A dozen years ago, Fluor Corp. (FLR) shares looked like they might break $100. Today, they trade for less than $18. The company won many projects by bidding low, only to encounter one cost overrun after another.

Fluor also concentrated on projects for the energy industry, which is in the seventh year of a slump. To make matters even worse, the company revealed in October that the Securities and Exchange Commission is investigating its accounting.

The woes are real, but I think bankruptcy is unlikely. Fluor has $1.7 billion in debt, but it also has nearly $2 billion in cash.

Jacobs Engineering

Jacobs Engineering, based in Dallas, has extensive experience with highways, bridges, airports and rail transportation.

Jacobs has a better balance sheet than Fluor, with debt only 44 percent of stockholders’ equity vs. 156 percent at Fluor.

The years since the Great Recession of 2007-2009 have been tough for engineering and construction companies. Jacobs hasn’t boomed, but it has managed to stay profitable for every one of the past 30 years.

United Rentals

United Rentals Inc. (URI), based in Stamford, Connecticut, describes itself as the world’s largest equipment rental company. Much of what it rents is construction equipment.

At less than 14 times estimated 2021 earnings (18 times trailing earnings), United Rentals is not too extravagantly priced.

The company carries more debt than I like at 254 percent of equity. After losing money during the Great Recession, it has posted profits in each of the past 10 years.

Martin Marietta Materials

Martin Marietta Materials Inc. (MLM), based in Raleigh, North Carolina, is a major supplier of aggregates for highway construction. It also produces asphalt, concrete and chemicals. It has been profitable 27 years in a row.

At 25 times earnings, the stock isn’t cheap. But earnings have been accelerating lately.

Nucor

Any big push on bridges and tunnels would involve a lot of steel. The relatively safe play here is Nucor Corp. (NUE). The Charlotte, North Carolina-based steelmaker is the largest in the U.S. by volume. Nucor has been profitable in 14 of the past 15 years.

Riskier, but perhaps interesting as a speculation is U.S. Steel Corp. It has far more debt than Nucor and a spottier earnings history with profits in only seven of the past 15 years. But it’s cheap, selling for less than book value (corporate net worth per share) and 0.26 times revenue.