This basket of stocks bets on the Biden administration’s infrastructure plan

Published Mon, Mar 15 202111:43 AM EDT

Frank Holland @in/frank-holland @FrankCNBC

With the $1.9 trillion dollar stimulus bill passed and millions of Americans set to receive checks, an infrastructure bill is expected to be the next item on the agenda for the Biden administration. President Joe Biden wants his infrastructure plan to win support on both sides of the aisle, but lawmakers have already begun discussing what should be in the bill and how to pay for it . During his 2020 campaign, Biden proposed a $2 trillion plan that includes aiming for carbon-free power generation by 2035 , upgrading buildings for energy efficiency and creating union jobs. How the proposed legislation will ultimately look remains to be seen, but Kathryn Thompson, founder of Thompson Research Group, recommends a basket of "Build Back Better" stocks that should benefit from infrastructure spending. Thompson Research Group's stock picks for an infrastructure bill Heavy Materials: Vulcan Materials Co. , Martin Marietta Inc. , Summit Materials, U.S. Concrete Engineering Firms : Jacobs Engineering Group , Tutor Perini Transport : Arcosa , Allison Transmission Holdings Inc. , Trinity Industries , Dorman Products Support : Cracker Barrel Old Country Store Source: Thompson Research Group Heavy materials sector Heavy materials stocks will see the most immediate benefit from infrastructure spending, said Thompson. " Whether a wind farm or energy grid rebuild or a new road, you will need rocks, and lots of them, to build," she said. Vulcan Materials and Martin Marietta as the best in class of the group several reasons, Thompson added. "Scale. Because infrastructure projects tend to be a lot bigger," she said "And so when you're doing these projects you really have to partner with someone that can meet all the needs." Market exposure is a second reason, as there are companies that work infrastructure but that only accounts for a small portion of their overall business, Thompson said. "With Vulcan and Martin Marietta, it's 35% or 40% of their end market," she added. Energy companies that benefit Major utility companies pledging to reduce carbon emissions and investing in renewable energy should also give these stocks a boost according to Thompson. Utilities reducing carbon emissions by 2025 NextEra Energy 67% 6.7M customers Southern Companies 50% 8.5M customers WEC Energy 55% 4.5M customers NRG Energy 50% 3.7M customers Source: Company filings, Guggenheim "Wind farms take a ton of rocks and it ends up being high margin and it's also hugely specified," Thompson said. "Also when you think about rebuilding the grid or rethinking the grid, that's another way where they would benefit to some extent." Publicly traded engineering firms Jacob Engineering and Tutor Perini should see an uptick in demand due to the complexity of infrastructure projects according to Thompson. She also sees companies that support the transport of the materials getting a boost, including Arcosa, Dorman Products and Alison Transmission, and Trinity. "With the reopening of the economy you are going to have more goods and services flow into the U.S.," Thompson said on CNBC's "Worldwide Exchange" on March 3. "Once you get those goods to the U.S., it can't just be on the road," she said. "Rails are an important driver of those goods as we get them all around the U.S." Thompson also highlights Cracker Barrel as a beneficiary of an infrastructure bill because its 663 stores in 45 states are often positioned near highways. The timing of the legislation remains a major question. Thompson believes the Biden administration will wait until late 2021 to get a bill through Congress. "It really goes back to 'what are his priorities?'" she said. "The faster people can get vaccinated, it really addresses both the economy and also the schools." "I think May is a magic date where people can get vaccinated so you can get through the summer and see how variants work through," Thompson said. "Once [kids] are in school in September, that's really where you can get down to the infrastructure so it's indirectly related, but it all is part of a bigger plan."

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With the $1.9 trillion dollar stimulus bill passed and millions of Americans set to receive checks, an infrastructure bill is expected to be the next item on the agenda for the Biden administration.

President Joe Biden wants his infrastructure plan to win support on both sides of the aisle, but lawmakers have already begun discussing what should be in the bill and how to pay for it.

During his 2020 campaign, Biden proposed a $2 trillion plan that includes aiming for carbon-free power generation by 2035, upgrading buildings for energy efficiency and creating union jobs.

How the proposed legislation will ultimately look remains to be seen, but Kathryn Thompson, founder of Thompson Research Group, recommends a basket of "Build Back Better" stocks that should benefit from infrastructure spending.