Movers and SHAKERS
U.S. Government Spending Provides Investment Opportunity in Maritime Infrastructure
Ensuring the Future is Made in America by All of America’s Workers was an executive order signed by the newly sworn-in President on January 25, 2021. While economists may debate if it makes sense to give preference to U.S. firms without consideration as to price or expertise, investors can view Executive Order 14005 as a starting point when sifting through opportunities under a new administration. Investors may refine their sort for investment possibilities within the category of “Made in the U.S.A.” using the newly proposed American Jobs Plan presented by the White House on March 31. This new proposal is to add $2.25 trillion in spending on infrastructure projects. These two actions, taken together, provide strong insight into where the U.S. Government is likely to prioritize spending and what companies may win the contracts.
Overlooked Infrastructure Category
One construction-related service that’s likely to get a boost from ramped-up infrastructure falls under the radar of many. The service is dredging canals, channels, and other waterways. Although dredging may not be as “sexy” as other infrastructure initiatives, such as spending to speed the U.S. on the road to electric vehicles, one only needs to look at the recent incident in the Suez Canal to understand the importance of deep passable waterways.
The March 31 proposal by the White House calls for funding to dredge harbors and rivers of silt, and construct dikes, improve navigable conditions for larger container ships by creating deeper harbors, and wider channels. This would modernize ports and allow for more efficient exports from cities like Houston that could export more oil if it could accommodate larger ships.
What Businesses Could Benefit
While we often witness highways and bridges being built, electric vehicle charging stations being installed, and know that drinking water in parts of the country needs to be improved, dredging companies are not part of most of our lives, so we may not consider what opportunities the new spending will provide. Even more, many don’t know where to look for ideas and information to help make a well-informed investment decision.
One domestic company that works on many of these marine-based infrastructure projects is Orion Group Holdings, Inc. (NYSE: ORN). Orion is involved in marine construction, including transportation facilities, pipelines, environmental structures, and dredging waterways, channels and ports, among others.
A more broad-based company that is involved in maritime projects and generates most of its revenue in North America is Aegon Corp. (Nasdaq: AEGN). Aegon’s maritime solutions include construction and maintenance and are involved in corrosion protection and maintenance.
Great Lakes Dredge & Dock Corp. (Nasdaq: GLDD) is a pure-play on U.S. dredging - the company's only operating segment is dredging. Their contracts involve enhancing or preserving navigable waterways, protecting shorelines, and port enhancements.
The three companies above are by no means a comprehensive list. Instead, they demonstrate that within the maritime infrastructure and construction sector, some companies narrowly specialize, and there are also more broad-based diversified businesses. Use Channelchek as one of your resources when dredging up ideas to dig deeper into a corporation’s business lines, revenue sources, and business outlook among U.S. maritime infrastructure companies.
The U.S. will be investing in transportation infrastructure projects in a very big way. The contracts, by executive order, are quite likely to go to American companies, many of which already have government contracts from the Army Corp of Engineers and other U.S. agencies. As the U.S. plans to spread trillions of dollars and allocate billions to providing more navigable waterways, investors may want to keep this segment of the infrastructure construction sector on their watchlists.
Suggested Content on Channelchek:
Industries that Could Benefit from the “New American Jobs Plan”
How Much is a Trillion?
Great Lakes Dredge and Dock NobleCon17 Presentation (Video)
Orion Group Holdings NobleCon17 Presentation (Video)
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