Jim Cramer noted a different demeanor about President Donald Trump in his speech on Tuesday night. He spoke in measured, hopeful tones while reiterating his intent to spend on infrastructure.
Sure enough, infrastructure stocks roared higher on Wednesday.
However, one dilemma that these stocks face is that they will require legislation in order to keep climbing. Both Emcor and MasTec could benefit if the President gets his way on various issues, but could still do well without an infrastructure bill.
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On the campaign trail, Trump talked about building new roads, bridges, tunnels, airports, schools and hospitals, with numbers ranging between $500 billion and $1 trillion. In his speech on Tuesday, Trump sided with the $1 trillion number, although Cramer found that to be misleading.
Trump doesn't want to actually spend that much money, Cramer said. He wants to issue a tax credit so that companies can invest in $1 trillion worth of projects.
However, ever since Trump was sworn in, the infrastructure space has become more questionable. Republicans control Congress and absolutely hate spending money. Some critics have also said using tax credits to promote infrastructure spending is basically just giving it away to companies that would have built the projects anyways.
When it comes to MasTec and Emcor, what really matters is getting Congress to pass an infrastructure bill, which doesn't seem likely to Cramer anytime soon. The first priority on their plate is clearly health care, and it could take time to find an Obamacare replacement.
The good news is that even without an infrastructure bill, Cramer said these two companies still stand to benefit from the Trump administration because they do work in the oil and gas space, especially MasTec.
Emcor is a bit more complicated because it recently reported a soft quarter with weaker-than-anticipated full-year guidance, which prompted the stock to get crushed. However, when Cramer dug into the quarter, he found that the losses that drove Emcor's earnings miss were mostly one-off issues.
Even without the help from Washington, Emcor could do well because of growth in nonresidential construction, and MasTec because of its communications business that will gain strength with the implementation of 5G. Both companies could also benefit from a turnaround in oil and gas.
"I like Emcor as a value play here, and MasTec is on fire, although I hate to chase, so I suggest you wait for a pullback in that one before you do any buying," Cramer said. "Or if you justifiably can't resist, then buy some now and wait to buy the rest until it comes in."
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