Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
Right now, everyone is talking about infrastructure stocks - and the folks who aren't talking about them are speculating on them, big-time.
Mining companies, construction, steel and metals, and more; plenty of them have seen single- and double-digit gains since it became clear the U.S. Senate would pass the bipartisan infrastructure bill and send it along to the House of Representatives, where it's expected to pass.
Those profits are okay, but here's the thing (most) investors aren't seeing right now: Just about every single one of those stocks already has expected infrastructure spending baked into its price.
In other words, the serious infrastructure-bill profits are going to come out of left field, from what's buried in the bill.
Well, unlike most of Congress, I actually looked in the bill, and what I've found should lead to some big moves in a very small stock...
A Big Profit Catalyst Hidden in the Bill
It probably takes a special kind of glutton for punishment to sit down and read or even skim a legislative bill; most of them, especially the "landmark" ones, are impenetrable thickburgers of dense, archaic language. And of course, they can be so onerous that no one, not even Senators or Representatives, reads or knows everything about what's in them.
"We have to pass the bill to know what's in it," anyone?
The Senate infrastructure bill - which calls for around $1.2 trillion in spending as things stand now - is more than 2,700 pages long, or more than twice as long as Tolstoy's legendary "War and Peace."
But my assignment last weekend was to get into the nitty gritty of the text and determine where the opportunities lie. So that's what I did.
As you probably know, there's a ton of pork in bills, and all sorts of things that are only tangentially related to the subject of the bill.
The infrastructure bill isn't a bit different. In this text was buried a provision that has basically nothing to do with physical or electronic infrastructure, but which stands an excellent chance of becoming set-in-stone law.
It's all about drunk driving, or combatting it, to be precise. In an effort to limit drunk driving - which is responsible for around 33% of traffic fatalities in the United States - the Senate has mandated that all new vehicles will have breathalyzers.
This has been part of a wider bipartisan effort to curb drunk driving over the last few years. In 2019, Rep. Debbie Dingell (D-Michigan) introduced a bill called the Honoring Abbas Family Legacy to Terminate (HALT) Drunk Driving Act. It was named after a Michigan family killed by a drunk driver. The language of that bill is nearly identical to what is in this new bill.
As soon as 2026, new vehicles will need to have "advanced drunk and impaired driving prevention technology," the bill states.
Every. New. Car. It doesn't matter if it's an electric vehicle like a Tesla, or a gas-powered vehicle like a Ford F-150. We're talking about tens of millions of light vehicles, and millions of larger ones.
Now, electric vehicles are already proving to be one of the most lucrative sectors right now. Our Michael Robinson just threw a spotlight on a small, $2 EV stock that's piled on more than 1,100% gains over the past year or so and could potentially repeat that performance this year as it looks to go public on a big U.S. exchange - you can learn more about that here.
But it's clear from this buried language that infrastructure is going to be insanely profitable for the companies that manufacture breathalyzers, and I found a winner in a very small technology firm.
Here's How to Profit
So, on Tuesday morning, during my regular 8:30 a.m. "Money Morning LIVE" stream, I told viewers about Lifeloc Technologies Inc. (OTC: LCTC) - a $10 million, Colorado company that manufactures several different high-tech breathalyzer devices for the workplace, law enforcement use, and correctional institutions.
Again, Lifeloc is a small company, and the micro-cap label definitely applies, but its most recent earnings report last week was interesting; the company posted a quarterly net loss of $0.04 per share, but those losses are narrowing on a year-on-year basis; the COVID-19 pandemic and shutdowns of 2020 threw the company for a loop, but the future looks much better. Importantly, revenue is up around 31% versus the second quarter of 2020.
The company reported surging demand for two of its newest breathalyzer devices, noting that the two new products address previously unmet needs in its market; they function at a wider temperature range and have customizable displays.
And as we move closer and closer to a "breathalyzer in every car" scenario, we can expect that demand to keep growing.
The stock jumped around 22%, from $3.60 to $4.40 on Tuesday after the infrastructure bill passed and has been climbing, but given what's coming next for this industry, I still think this is an attractive entry point. It bears mentioning again, though, that this is a very small stock; volatility is to be expected, and it wouldn't be smart to bet the farm on this one. Use sensible position sizing as you would for any speculative investment.
We've given out quite a few recommendations and trading ideas on "Money Morning LIVE" for a few weeks already, but, tonight, Thursday, Aug. 12, at 7 p.m. Eastern, our "Money Morning LIVE" stream is "officially" launching with a special, free primetime event; we're highlighting all of our experts and their top stock, crypto, and asset trading strategies. Even better, we're giving away some of our best free trade ideas you can put to work when the market opens Friday morning.
Follow Money Morning on Facebook and Twitter.
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.
Keep in mind, in addition to the alcohol breathalyzer business Lifeloc is working on the first marijuana breathalyzer that should be released by the end of this year. Lots of R & D has went into this project and it should be ready to go soon.