What gives? "Back to the Future II" promised us flying cars - nuclear-powered flying DeLoreans, no less - by 2015, but, as of Friday morning, my car's wheels weren't obsolete yet.
And that's turning into a real drag - and a big problem. And I'm willing to bet it is for you, too, wherever you are.
Roads are obviously still essential, but the 44,440-mile "Dwight D. Eisenhower National System of Interstate and Defense Highways," a.k.a., the Interstate, is 65 years old in most places... and, to put it politely, it shows.
And that's no laughing matter - more like a matter of life and death. Just a couple of days back, some inspectors working the six-lane Interstate 40 bridge across the Mississippi River between Tennessee and Arkansas found a "potentially catastrophic" crack in the critical, busy structure.
And that, folks, is just one problem we know about. It's a virtual certainty there are others.
That's part of the reason why the Biden administration wants to pony up $115 billion to bring our highways and bridges up to snuff as part of its wider $2.25 trillion infrastructure plan.
Frankly, I just don't see any way around it; Congress can debate the size of the package, or what constitutes "infrastructure," or where the money goes, but the problems certainly won't go away by themselves.
And that's exactly why I'm recommending folks buy this stock today - this week, in fact. This company calls itself "America's Infrastructure Specialist," and that's no exaggeration....
Uncle Sam's Go-To Construction Firm
I'm talking about Granite Construction Inc. (NYSE: GVA), a Watsonville, Calif.-based engineering firm. Granite is involved in all sorts of real-world projects - including roads, highways, bridges, tunnels, mass-transit facilities, airports, power-grid projects, and even water systems.
Every single one of its business segments will see increased spending from the infrastructure bill, but roads and bridges will be among the biggest infrastructure-spending beneficiaries. The transportation-infrastructure business accounts for about 75% of Granite's revenue.
A PORTFOLIO "GOLD MINE"
Shah Gilani says 2021 could be a gold mine for Americans - and these 5 stocks are "screaming buys."
A PORTFOLIO "GOLD MINE"
Shah Gilani says 2021 could be a gold mine for Americans - and these 5 stocks are "screaming buys."
It's also involved in segments beyond what we typically think of as textbook "infrastructure," but which in fact are critical infrastructure. For instance, the firm recently landed a deal to build a new railroad yard on 17 acres in the Port of Stockton in California. Granite is also working on a Columbus, Ohio, project that will reduce the amount of water that spills out of the sewer and storm-water systems and pollutes local creeks and rivers during the flooding seasons there.
Recent contract awards illustrate that Granite will compete for business in several of these segments that will receive funding once Biden's plan finally passes.
And the COVID-19 pandemic hardly slowed Granite at all. In fact, the pandemic was a boom time for Granite and plenty of other infrastructure firms. With the overall reduction in foot and vehicle traffic, these companies were able to do more work during longer hours - no commuters to inconvenience with closed roads.
For 2020, Granite's revenue rose 3.4% to $3.6 billion. And operating cash flow reached a record $268.5 million. No wonder Granite ended the year with a rock-solid balance sheet. The markets were just as good to it as it was to everyone else; cash and marketable securities jumped 49.6%, and now stands at $639 million. Debt decreased 7% to $338.8 million in the most recent quarter.
In other words, this company has momentum-with-a-capital-M. It's heading into the Biden infrastructure opportunity in a nearly unstoppable position.
Granite also has a competitive advantage in today's inflationary environment in that it's somewhat vertically integrated: It controls its own mining and production facilities, meaning it has access to the asphalt, concrete, aggregates, specialty sands, and rock needed for the whole host of projects it will be targeting. That gives it control over raw-material costs. But just as important, it won't have to compete against other companies in a bid for these all-important key ingredients.
Granite's Fast-Lane Highway to Profits
Looking forward, the biggest near-term catalyst will come from work on roads and bridges. But its work with utility grids positions it to be a major, longer-term beneficiary of the electric vehicle (EV) revolution.
Not coincidentally, included in the Biden infrastructure plan is a $174 billion outlay on improving the sorry state of EV charging stations across America. The White House wants 500,000 built, coast to coast, and Granite's utility expertise can get the job done.
No wonder earnings are forecast to jump nearly 140% from fiscal 2021 to fiscal 2022.
Granite currently trades at about $39 today, and there's serious upside potential.
If Granite benefits from the avalanche of business emanating from the White House's infrastructure push, you're looking at a stock that could trade between $55 and $93 within the next year to 18 months. And a discounted-cash-flow (DCF) analysis points to an upside as high as $118.
So the gains could be anywhere from 41% to 203%. Based on what we know about the company and the Biden plan, the higher number seems the more likely.
While I'm making predictions, I've got another one for you - one that could potentially dwarf the $2 trillion-plus Biden plan and the estimated 203% gains from Granite stock.
I've run some numbers, and right now, I'm projecting a $353 billion "tsunami" of capital may be about to wash over five specific small tech companies. This predicted "tsunami" is generating some of the most impressive 12- to 18-month stock trajectories I've ever seen for stocks of this small size. You can go here to learn about my forecast...
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About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.