Record-high inflation, an almost certain interest rate hike, and persistent logistical disruptions have made market conditions quite dismal. However, investors see a ray of hope after several companies reported impressive fourth-quarter earnings results. According to FactSet, 77% of S&P 500 companies that have reported fourth-quarter earnings so far have beaten Street estimates.
Also, the prospects for the infrastructure industry look bright. The Biden administration’s infrastructure bill has already generated immense optimism in the sector and is supported by a rising number of Republicans, further expanding its acceptability.
Furthermore, with the economy’s reopening, the infrastructure industry should witness steady growth. According to Research and Markets, the global Construction Market is set to grow at a 7.3% CAGR between 2022 -2030.
So, we think it could be wise to bet on fundamentally strong infrastructure stocks Union Pacific Corporation (UNP), CRH plc (CRH), and Brookfield Infrastructure Corporation (BIPC).
Union Pacific Corporation (UNP)
UNP, through its subsidiary Union Pacific Railroad Company, is in the railroad business in the United States. The Omaha, Neb.-based company operates in 23 Western states, connecting its customers and communities to the global economy.
On Jan.25, 2022, Loup Logistics Company, a wholly owned UNP Railroad subsidiary, announced the acquisition of the Precision Components Inc. transload facility in Phoenix, Ariz. This will potentially assist the company in enhancing its logistic services.
UNP’s freight revenues increased 10.3% year-over-year to $5.3 billion in the fourth quarter, ended Dec. 31, 2021. Its net income came in at $1.71 billion, up 24% year-over-year, and its EPS was $2.66, up 29.8% year-over-year. And the company’s adjusted EBITDA was $11.6 billion, up 14.8% year-over-year.
Analysts expect UNP’s revenue to increase 8.3% year-over-year to $23.62 billion in its fiscal year 2022. Its EPS is expected to grow 16% to $11.54 for fiscal 2022. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 22.2% in price to close Friday’s trading session at $245.93.
UNP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
UNP has an A grade for Momentum and Quality and a B grade for Stability. Within the B-Rated Railroads industry, it is ranked #5 of 16 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Sentiment for UNP.
CRH plc (CRH)
Headquartered in Dublin, Ireland, CRH, through its subsidiaries, manufactures and distributes building materials. It operates in three segments: Americas Materials; Europe Materials; and Building Products.
On August 26, 2021, Albert Manifold, CEO, said, “Our integrated and solutions-focused approach leaves us uniquely positioned for the changing needs of construction, while our continued strong cash generation provides us with the flexibility to invest in future growth opportunities for our business.”
CRH’s revenue for six months ended June 30, 2021, came in at $14.04 billion, up 15% year-over-year. Its group profit for the financial period was $815 million, up 100.7% year-over-year. Also, its EPS increased 95.1% year-over-year to 99.5 cents.
Over the past year, the stock has gained 17.1% to close Friday’s trading session at $49.92.
It is no surprise that CRH has an overall B rating, which equates to a Buy in our POWR Ratings system. It has a B grade for Momentum, Stability, and Sentiment.
CRH is ranked #4 of 54 stocks in the B-Rated Industrial - Building Materials industry. Click here to see the additional POWR Ratings for CRH (Growth, Value, and Quality).
Brookfield Infrastructure Corporation (BIPC)
New York City’s BIPC, together with its subsidiaries, owns and operates regulated natural gas transmission systems in Brazil. With a more than 100-year history as a global owner and operator, BIPC focuses on investing in the backbone of the global economy, that is, infrastructure.
On Oct. 28, 2021, Brookfield Infrastructure Partners L.P. completed the strategic acquisition of Inter Pipeline. The acquisition is expected to yield optimal results in the best interest of both parties.
BIPC’s revenues increased 18.6% year-over-year to $414 million for the third quarter, ended Sept. 30, 2021. Its net income came in at $213 million, compared to a $222 million loss in the year-ago period. Its total assets came in at $9.44 billion for the period ended Sept. 30, 2021, compared to $9.34 billion for the period ended Dec. 31, 2020.
Over the past three months, the stock has gained 4.6% in price to close Friday’s trading session at $65.24.
BIPC’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has a B grade for Growth and Quality. BIPC is ranked #1 of 59 stocks in the Utilities - Domestic industry. Click here to see BIPC’s ratings for Value, Momentum, Stability, and Sentiment.
UNP shares were unchanged in premarket trading Monday. Year-to-date, UNP has declined -2.38%, versus a -7.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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