Electric vehicle and infrastructure stocks stand to gain from Biden’s $2t bill

Biden’s looking to pass a $2.25t jobs and infrastructure plan and if he succeeds, the construction, renewable energy and other infrastructure-based industries could see billions in additional spending — and EV and infrastructure stocks stand to benefit.

But the road to passing it won’t be easy…

What’s on Biden’s wish list?

Inside the proposal, $620b is being allocated for transportation infrastructure, $650b for high-speed broadband and home infrastructure and $580b for manufacturing. But why is infrastructure so important?

• Traffic congestion costs the US over $120b/year according to Henry Petroski in his book, The Road Taken: The History and Future of America’s Infrastructure.
• Poor state of US airports cost the economy $36b from travel delays/cancellations.
• Multiplier effect — spending on infrastructure creates jobs which could lead to gains in other parts of the economy.

But what you see isn’t what you’ll get. The bill will go through several negotiations and the final version could look a lot different — and that’s if it manages to pass through the White House.

Standing in the way is a debate on how the bill will be funded — mainly via tax increases on businesses. Republicans are against the idea of a tax hike that could lead to job cuts.

How are the pros investing?

Here are the areas Ursula Tonkin of Whitehelm Capital Pty, a developed-market infrastructure fund, is focusing on (via Bloomberg):

• Looking for opportunities in electricity transmission and distribution (related to renewables), EV charging networks, water utilities and communication infrastructure stocks
• Avoiding infrastructure stocks related to oil & gas/coal which is in danger of becoming obsolete

According to analysts at Bank of America, manufacturers of semiconductors — the chips that power devices and cars — could benefit.

• Manufacturers of chips/material used in electric vehicles: ON Semiconductors ($ON), NXP Semiconductors ($NXPI), Cree Inc. ($CREE)

Learn more: Climate tech outperformed the NASDAQ in 2020 —here are the stocks leading the way. 

For investors… The catchall way to invest

Details of the bill are likely to change, spending will be allocated over several years and the impact may not be immediately felt by companies.

Instead of taking bets on individual companies — investing in an exchange-traded fund (ETFs) that holds a group of infrastructure stocks could be the better way to get exposure: