During the 2020 election campaign, President-elect Joe Biden pledged to invest $2 trillion in roads, bridges, clean energyand other initiatives to advance American competitiveness, create jobs and curb climate change.
Key points to remember
- Stocks involved in the construction of roads, bridges and clean energy should benefit from an increase
infrastructure spending under the Biden administration.
- Fluor Corporation (RPF) shares formed a Gold Cross buy signal in mid-November.
- Nucor Corporation (NUDE) actions find Support from a well-respected nine-month bullish trendline and the 50-day trendline simple moving average (SMA).
This figure could even increase after the Democrats take control of both chambers of Congress after winning the Georgia Senate runoff earlier this month, paving the way for even greater infrastructure spending. “Cyclical value stocks will likely benefit from larger stimulus packages and infrastructure spending that will be more likely with the Democrats’ full control of Washington,” said Hodges Capital portfolio manager Eric Marshall. told Reuters.
Below, we take a closer look at two stocks that stand to benefit from the coming infrastructure spending spree. We will also analyze their charts to identify technical levels to monitor.
Fluor Corporation (FLR)
Fluor provides engineering, procurement, construction and fabrication services to end market customers in energy, chemicals, mining, metals and transportation. Last year, the $2.84 billion company landed a government contract to decommission, decommission and remove select nuclear facilities nationwide, a trend that is expected to continue under the new administration as she is turning to clean energy solutions. As of January 18, 2021, Fluorine stock has traded relatively flat over the past year, but has jumped almost 30% since the start of the year.
The company’s stock price has remained in a consistent uptrend since late September, with the 50-day SMA crossing above the 200-day SMA in mid-November to generate a golden crossover buy signal. Active traders should look for retracement entries at the $17.15 level, where price finds confluence of support from a four-month trendline and the 50-day SMA. In terms of business management, seek to recognize profits close to significant overhead resistance at $29.75 while mitigating risk with a stop loss order placed under the December swing low at $15.52.
A simple moving average (SMA) calculates the average of a selected range of prices, usually closing prices, by the number of periods in that range. Traders often use this indicator to determine the direction of a stock or security.
Nucor Corporation (NUE)
With a market value of $16.75 billion, Nucor produces and sells steel products through three segments: steel mills, steel products and raw materials. The 63-year-old company could become the Biden administration’s steelmaker of choice, given that it recently signed a 15-year deal with EDF Renewables North America that will see it reduce its carbon footprint by using solar energy from 2023.
Additionally, Nucor is well positioned to meet increased demand for government infrastructure spending with the construction of a new sheet steel plant in Kentucky. Through Friday’s close, Nucor stock is issuing a handy 2.92% dividend yield and trades up 4.29% on the year. Over the past 12 months, stocks have gained about 4%.
The steelmaker’s share price has trended steadily higher since its March 2020 pandemic plunge liquidation down. Those looking for “buy the dip“Opportunity should seek entries near $53.30, where price finds support from a well-respected nine-month uptrend line and 50-day SMA. Consider Bank Profits at $61.50 or $68.80, two important resistance levels. cutting losses if the stock closes below last month’s low at $51.78.
“Buy the dips” refers to the entry of a stock or security after a retracement in an uptrend. The hope is that the stock will resume its upward movement after the pullback.
Disclosure: The author held no position in the aforementioned titles at the time of publication.