UBS put out the definitive guide for investing under a Biden administration

Published Sat, Apr 17 20218:53 AM EDT

UBS this week issued a comprehensive guide to investing for President Joe Biden's massive infrastructure proposal, complete with stock picks and analyst guidance. Titled "Rethinking infrastructure," the UBS guide predicts that the final size of the American Jobs Plan will be far smaller than its current $2 trillion, but should nonetheless act as a further tailwind for cyclical equities. "Economically sensitive value stocks should get a boost as investors reassess their future earnings potential and valuation, while higher rates would be a headwind for growth stocks," wrote the team of UBS investment strategists. "Some sectors and companies are likely to be significant beneficiaries, while others will face some obstacles," they added. "The incremental boost to GDP growth in the near term, and the ensuing consequences for inflation and interest rates, do not significantly alter our optimistic equity market outlook." If approved by Congress, the president's once-in-a-generation infrastructure proposal would allocate $621 billion for transportation projects like highways, bridges and airports. The American Jobs Plan would provide more than $300 billion into improving drink-water infrastructure, expanding broadband access and upgrading the nation's electric networks. The plan would seek to raise the corporate tax rate to 28% from 21% in an effort to help pay for the massive undertaking, as well as crack down on company efforts to move profits offshore. Strategists from Capitol Hill to Wall Street have warned that the final composition of any infrastructure bill remains uncertain since the majority of the Republican caucus is opposed to another massive round of stimulus. Members of the GOP also oppose a rollback of former President Donald Trump's 2017 tax cuts, which cut the corporate tax rate to 21% from 35%. UBS highlighted several stocks across a range of sectors, including consumer discretionary, financials and materials that, in its opinion, could all benefit from even a watered-down version of the president's plan. The strategists started by talking up industrials: "Companies leveraged to traditional infrastructure spending, such as steel and aggregate companies, stand to benefit." Though the brokerage said it recently trimmed its exposure to steel, it assured clients that "a number of industrial companies still look well positioned," including Honeywell , Sunrun and United Rentals . UBS also believes several semiconductor companies, including Intel and Micron , could be due for upside amid shift toward electric vehicles and an expansion of broadband access. "Intel's chips are key components in a variety of areas ranging from PCs, cloud data centers, to 5G data networks and should benefit from domestic chip manufacturing," UBS wrote. Meanwhile, Micron should "benefit from its broad exposure to recovering end markets and domestic chip manufacturing." — CNBC's Michael Bloom contributed reporting.

A group of multi-colored lifts at United Rentals.

GordonChibroski | Portland Press Herald | Getty Images

UBS this week issued a comprehensive guide to investing for President Joe Biden's massive infrastructure proposal, complete with stock picks and analyst guidance.

Titled "Rethinking infrastructure," the UBS guide predicts that the final size of the American Jobs Plan will be far smaller than its current $2 trillion, but should nonetheless act as a further tailwind for cyclical equities.

"Economically sensitive value stocks should get a boost as investors reassess their future earnings potential and valuation, while higher rates would be a headwind for growth stocks," wrote the team of UBS investment strategists.