In 2017, the United States experienced a significant surge in infrastructure stocks, driven by the government's focus on modernizing and expanding the nation's infrastructure. This article delves into the key factors that contributed to this growth and highlights some of the top-performing infrastructure stocks of the year.
The Rise of Infrastructure Stocks in 2017
The year 2017 marked a pivotal moment for infrastructure stocks in the United States. This surge can be attributed to several factors:
Government Initiatives: The Trump administration's infrastructure plan, which aimed to invest $1 trillion in infrastructure projects over a decade, played a crucial role in boosting infrastructure stocks. The plan focused on improving transportation, water systems, and energy infrastructure.
Economic Growth: The U.S. economy experienced robust growth in 2017, leading to increased demand for infrastructure projects. As the economy expanded, businesses and governments needed better infrastructure to support their operations.
Low Interest Rates: The Federal Reserve's decision to keep interest rates low in 2017 made borrowing cheaper for infrastructure projects, further fueling the growth of infrastructure stocks.
Top Performing Infrastructure Stocks in 2017
Several infrastructure stocks outperformed the market in 2017. Here are some of the key players:
Caterpillar Inc. (CAT): As a leading manufacturer of construction and mining equipment, Caterpillar saw significant growth in 2017. The company's revenue increased by 22% year-over-year, driven by strong demand for its products in the infrastructure sector.
Union Pacific Corporation (UNP): As one of the largest railroads in the United States, Union Pacific experienced a surge in revenue and earnings in 2017. The company's strong performance was attributed to increased demand for rail transportation in the infrastructure sector.
Berkshire Hathaway Energy (BHE): Berkshire Hathaway Energy, a subsidiary of Warren Buffett's Berkshire Hathaway, owns a portfolio of utilities and energy assets. The company's revenue and earnings grew significantly in 2017, driven by increased demand for energy infrastructure.
Case Study: The American Water Works Company (AWK)
The American Water Works Company (AWW) is a leading provider of water and wastewater services in the United States. In 2017, the company's revenue increased by 6% year-over-year, driven by strong demand for water infrastructure projects. AWW's focus on investing in water infrastructure projects, such as upgrading water treatment plants and expanding water distribution networks, contributed to its strong performance in 2017.
Conclusion
The rise of infrastructure stocks in 2017 was a testament to the growing importance of infrastructure in the United States. As the government continues to invest in infrastructure projects, the sector is expected to remain a strong performer in the years to come. Investors looking to capitalize on this trend should consider investing in companies like Caterpillar, Union Pacific, and Berkshire Hathaway Energy.
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