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If you think Trump’s plans will pan out, this might be the sector for you

The materials sector has led the way as the best-performing sector in the S&P 500 this year, having surged since the U.S. election in November, and some strategists see more room to run in the space.

Much of the materials sector's success has been pinned to President Trump's proposals for increased infrastructure spending under his tenure, along with a signature promise from his presidential campaign: a wall along America's southern border with Mexico that Mexico's government itself will pay for.

Such plans might appear dim at this point, as Mexican president Enrique Pena Nieto on Thursday announced he would not meet with Trump on a previously planned visit. Trump, in turn, rebutted that the two leaders had agreed not to meet.

BK Asset Management's Boris Schlossberg believes Trump is going to make good on his promises in spending on a wall and on infrastructure nationally.

"I think he's serious about spending. He's not a guy who does not like to spend, if you know anything about Donald Trump, so he's going to try to make all sorts of spending on infrastructure, it's a real possibility … that's, I think, a cornerstone of his platform. He really believes it," Schlossberg said Wednesday on CNBC's "Trading Nation."

Interestingly enough, one of the stocks in the materials space that could benefit from such spending would be Cemex, a Mexican cement and building materials manufacturer, Schlossberg noted.

"So one of the more interesting trades here is actually on the other side of the border," he said.

Gina Sanchez, CEO of Chantico Global, is skeptical that Trump's infrastructure spending will pan out, and that may prove to disappoint the sector, because much of the enthusiasm around the materials stocks have been "built on promises." However, positive earnings from materials stocks and a positive outlook for the energy and agriculture sectors will in fact help boost materials names.

"We still don't know how we're going to pay for it, we don't know who's going to build it and we don't know what it's going to be. So those are a lot of questions that need to get answered before that," Sanchez said.

So far this year, the sector's leaders have been Freeport-McMoRan, CF Industries and Sherwin-Williams, rising 20 percent, 14 percent and 13 percent, respectively. A popular materials exchange-traded fund, the XLB, has risen 12 percent since the U.S. election and 6.5 percent this year.


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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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