The price tag for the infrastructure package is growing and that could boost these stocks

Published Tue, Mar 23 202111:26 AM EDT

As President Joe Biden's infrastructure plans grow, so too does the potential upside for a handful of materials, construction and machinery stocks, according to Goldman Sachs analysis. While the brokerage said last week that its infrastructure basket has already made sizable returns since it became clear Democrats would hold majorities in both congressional chambers, Goldman's calculations were based on the White House floating a plan worth $2 trillion. Now, given reports that the Biden economic team is working on a $3 trillion proposal and a gradual introduction of higher tax rates in the future, Goldman's infrastructure plays could be set for gains in the months ahead. The infrastructure list "that primarily consists of Construction Materials, Machinery, and Construction & Engineering firms has returned 27% since the Georgia Senate runoff races," Goldman U.S. equity strategist David Kostin wrote in a note dated Friday. "This matches or exceeds the basket's other periods of outperformance following President Trump's 2016 election and various infrastructure proposals during his term," he added. Goldman's infrastructure basket, compiled by its global markets team, includes household industrial names like equipment rental company United Rentals , as well as machinery manufacturers Deere and Caterpillar . It also includes gravel and sand company Vulcan Materials , steel maker Steel Dynamics and cement producer Eagle Materials . Since the Georgia Senate runoff races in January, the basket has also outperformed the materials sector by 18 percentage points and the industrials sector by 14 percentage points. All of those companies could see business accelerate if the White House is able to drum up enough support for its $3 trillion economic plan, which Biden's advisors are currently considering splitting into two bills. The New York Times first reported on Monday that the first bill would put money into boosting manufacturing, improving transportation systems, expanding broadband access and reducing carbon emissions. The other piece of legislation is said to focus on reducing economic inequities through investments in paid leave, universal pre-K and community college. "Our economists expect the White House will begin to outline its proposal in April and that legislation will eventually be passed around September," Kostin wrote on Friday, prior to the Times report. "Our economists believe that parts of the infrastructure plan may be passed with bipartisan support, but that the majority of the package will eventually pass through reconciliation and rely only on Democratic votes," he added. — CNBC's Michael Bloom contributed reporting.

Traffic is diverted on Foothill Road as workers place K-rail barricades along burn areas during a winter rain storm in Ventura, California, January 9, 2018.

Monica Almeida | Reuters

As President Joe Biden's infrastructure plans grow, so too does the potential upside for a handful of materials, construction and machinery stocks, according to Goldman Sachs analysis.

While the brokerage said last week that its infrastructure basket has already made sizable returns since it became clear Democrats would hold majorities in both congressional chambers, Goldman's calculations were based on the White House floating a plan worth $2 trillion.

Now, given reports that the Biden economic team is working on a $3 trillion proposal and a gradual introduction of higher tax rates in the future, Goldman's infrastructure plays could be set for gains in the months ahead.