Infrastructure in our society today enables the transportation and storage of essentials like energy, water, freight, passengers, and data, easily navigating their way through the ins and outs of our nation’s daily functions.
Infrastructures are considered the physical backbone of the worldwide economy. Because of this ideology, well-maintained infrastructures are vital to the economy’s health and continued growth.
This notion paved the way for infrastructure stocks to come into reality. With the importance of infrastructures all across the globe, stocks invested and went along with it became essential and dramatically contributed to the economy’s success. Let us know some infrastructure stocks in the Canadian market and why they pose a great deal for investors.
What are Infrastructure Stocks?
Infrastructures cost a lot of budgets and require massive financing to build and maintain. US President Joe Biden’s $2 trillion infrastructure proposal plan makes this point quite a clear cut. Biden’s plan includes many projects involving repairs in the highway sector, reconstruction of bridges, and upgrades in port, airport, and transit systems. But Biden’s proposal on such targeted spending plans is a bit modest when numerous global investments require over $69 trillion until 2035—rebuilding and expanding the infrastructures worldwide has never been estimated to be cheap at all.
This idea means governments alone don’t have the luxury of finances and cannot afford hefty expenses. This is the main reason why nations increasingly collaborate with huge companies, especially in the private sector. As a result, infrastructure companies can potentially own their infrastructure systems. In addition, they can also operate, build, maintain, or expand these systems. There are different types of infrastructures that include:
- Transportation infrastructure – physical assets like airports, railroads, toll roads, ports, or any means that move people and freight from point A to point B.
- Commodity infrastructure – physical assets involving the production, transportation, processing, and storage of essential and natural commodities like water, oil, natural gas, refined petroleum products, and electricity. Systems in commodity infrastructures include interstate pipelines, electrical grids, and systems in energy distribution.
- Data infrastructure – physical components and networks like communications towers and data centers that help enable movement and storage in terms of information.
Best Infrastructure Stocks in Canada
Bird Construction Inc.
TSX: BDT
Headquarters: Mississauga, Ontario. Canada
This company was once heavily weighted to commodities but now derives 60% top-line from the infrastructure sector. Although considered one of the more undervalued operators by the National Bank, it is also deemed a leading builder in Canada with numerous coast-to-coast offices. We’d consider this to be the best Canadian construction stock.
Bird Construction Inc. has been active in construction services, providing the best services to a long list of both new and repeat clients since the 1920s. With a reflection of its broad scope, Bird’s clients are a pool of leading firms in numerous sectors such as civil, commercial, energy, industrial, institutional, mining, multi-tenant residential, nuclear, renewables, retail, and water and wastewater sectors.
Nowadays, Bird Construction Inc. is a corporation that publicly trades, having employees that form a strong shareholder group. This mentality contributes to enhancing the degree to which all employees commit to clients. In addition, Bird Corporation Inc.’s hands-on approach to their business has given them a competitive edge in making decisions quickly and adapting to their client’s needs and requirements.
IBI Group Inc.
TSX: IBG
Headquarters: Toronto, Ontario, Canada
The IBI Group Inc. is a Toronto-based firm specializing in architecture and engineering and generates 55% of its revenue in Canada, a huge chunk coming from vertical building and infrastructure. With an 8% expansion yearly, IBI Group Inc. is considered an excellent organic grower.
As they define the cities of tomorrow, IBI Group Inc. is an outstanding infrastructure stock. The company designs every aspect of truly-integrated cities from high-rises and industrial buildings, schools, top-quality hospitals, transit stations and highways, airports and toll systems, bike lanes and parks; IBI Groups Inc. covers all of these aspects for you. Their collaborative approaches focus on solutions thinking future-forward. They are slowly but surely bridging the gaps between good design and excellent technology while unlocking new potential in data-driven environments. The IBI Group Inc. believes in cities founded and built upon intelligent systems and has sustainable buildings, efficient infrastructure, and the essential human touch.
Pure Technologies Ltd.
TSX: PUR
Headquarters: South West Calgary, Alberta, Canada
Considered Calgary’s prime monitors in terms of water pipelines, Pure Technologies Ltd. has innovated and devised a simple swimming ball that can detect leaks, one cost-saving solution effective anywhere.
Pure Technologies took pride in their expertise and patented technology-driven solutions used across the globe in helping utility operators lessen the deterioration impact while maximization of capital budgets utilized for programs for rehabilitation and replacement.
Their dedication is steadfast and unwavering towards developing new technologies and improving existing tools that help infrastructure owners better understand the condition of their valuable assets. Nowadays, Pure Technologies Ltd. has more than 80 patents and pending patents worldwide, continuously developing more by the minute.
Pure Technologies Ltd. prioritizes the safety and well-being of its clients and employees with a non-negotiable principle. The company will never compromise the safety of everyone over mere schedule, amenable production or sheer financial gain. Pure Technologies Ltd. is true to its commitment to believing that it is feasible for an accident-free workplace. This promise is to be achieved by empowering employees via accountability and integrity ensured in the dedication of each employee to HSE. The highest standards and reliable programs will surely meet or exceed the industry’s standards through a committed and continuous improvement of HSE programs. In addition, the HSE principles integration should and will be present in all that they do.
Stantec Inc.
TSX: STN
Headquarters: Edmonton, Alberta, Canada
Stantec Inc. is an Edmonton-based consultancy for engineering that has taken a massive hit from its vast exposure to oil and gas. Although undervalued, trading at 14.6 times its 2017 earnings, it is still considered one of Canada’s best infrastructure stocks.
Stantec Inc. “designs with the community in mind” because communities are fundamental for them. Stantec promises to provide a strong foundation, a secure sense of place, and utmost belongingness, either those communities around the corner or anywhere across the globe; hence, Stantec claims to always design with the community in mind.
The company cares about the communities they serve. This mentality is because the company itself, Stantec Inc., is a massive community of vast communities. This mantra allows them to assess what is needed easily, connect it to their expertise, appreciate nuances, envision those usually never considered, and bring together diverse perspectives for effective collaboration towards shared success.
Consisting of a pool of talented and skilled designers, engineers, scientists, and project managers, all aim for innovation achieved together at the intersection of meaningful relationships among the three (3) C’s: community, creativity, and client. Balancing and prioritizing these three (3) C’s consequently results in projects that are advancements for the quality of life, especially in communities all across the globe.
WSP Global Inc.
TSX: WSP
Headquarters: Montreal, Quebec, Canada
Based in Montreal, WSP Global Inc. is a global hedge provider for those sensitive and who choose not to be too exposed to Canada— with 18% of WSP Global Inc.’s revenues generated here. “We value our people and our reputation” is the existing ideology of the company as a whole.
WSP Global Inc. takes extraordinary measures of effort in attracting, developing, engaging and retaining only the best professionals in their fields of expertise. This notion is important because it is what makes WSP Global Inc. great. The company puts the highest ethical standards at the center of all they do. Professionalism is naturally inherent and exhibited in all offerings they showcase. A humble and act full of moral and intellectual integrity, WSP Global Inc. keeps its word, treats everyone with the utmost respect, supports colleagues in all levels and fields, and embraces diversity towards unity. They care about each part of the organization and their progress, whatever their pace, believing that all progress is still progress. Additionally, they offer career development options most fulfilling for every professional part of their company. WSP Global Inc. also promotes their young recruits to believe that fresh perspectives bring forth greatness in ideas and new and raw positive energy.
Are Canadian Infrastructure Stocks a Good Investment?
Remember that we mentioned trillions of dollars being required worldwide for infrastructure stocks in the early parts of this article. This is because both the rebuilding of ageing infrastructures and the construction of new assets need a hefty monetary figure to meet the steadily rising population demands. With such a paramount need and many ways for investment, adding these infrastructure stocks or ETFs to your expanding investment portfolio is a concrete and straightforward way to achieve profit from this megatrend.
Infra-Takeaways for Infrastructure Stocks
Anyone can surely be overwhelmed with the investment needed for infrastructure stocks. But remember that infrastructures are the backbone of any society, so paying hefty budgets to achieve this feat is quite understandable given what you can reap after you sow. In addition, it will take and require a considerable lengthy amount of time for you to fully enjoy the fruits of this megatrend labour, but it will all be worth it. So, go ahead and check out for yourself what infrastructure stocks can do for your portfolio today.
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Investors who want to own a diversified portfolio of infrastructure companies rather than bet on individual stocks should consider infrastructure ETFs. Infrastructure Exchange Traded Funds (ETFs) provide companies that build and maintain major projects and systems such as highways, bridges, waterways, railways, communications networks and electricity grids. The infrastructure companies are Dominion Energy Inc. (D), Fortis Inc. (FTS) and Consolidated Edison Inc. (ED).
You should consider two stocks, Brookfield Infrastructure Partners L.P. and SNC-Lavalin Group Inc. Public infrastructure maintenance in Canada, including roads, bridges, public transportation, community buildings, water and sanitation projects, has been mentioned over 150 times. The term “infrastructure” was cherished as the key to the 2021 budget, which Chrystia Freeland unveiled on April 19.
Three of the leading infrastructure companies have a long history of creating shareholder value and are well placed to benefit from sector growth. Consider two stocks that could deliver good returns over the medium to long term.
As a leader in the ownership and operation of transportation infrastructure, Brookfield Infrastructure has a diversified global portfolio of transportation infrastructure companies. The company is a state-owned company that transfers infrastructure assets to the private sector to finance the maintenance and development of other infrastructure from which it can benefit.
Brookfield Infrastructure Partners, L.P. is a publicly-traded limited partnership in Toronto, Canada. The partnership is engaged globally in the acquisition and management of infrastructure assets. Brookfield’s segments include utilities, transportation, energy and data infrastructure.
The best investments are high-quality companies operating in the industry for decades. In addition, durable infrastructure assets are attractive because their returns are resilient, and Brookfield is constantly looking for ways to improve its operations and profitability. Insights like these make infrastructure stocks attractive assets and, as such, an excellent long-term investment.
Utility stocks are relatively safe, but several market conditions can lower their valuations. So try to buy them on a dip to get a discounted price and a better return.
One of the best Canadian stocks today to buy offers investors a portfolio of high-quality infrastructure assets worldwide. Its long-term assets include ports, railways, toll roads, utilities, data centers, telecommunications towers, and much more. Infrastructure is not an investment, but it has attractive global diversification and high-value assets.
It is also a top investment trust, which means it will effectively manage your capital over the long term. So Northland is a top choice if you’re looking for a leading Canadian stock that you can keep for years. It’s an outstanding stock to own in the long term and one of the best Canadian stocks I would buy today.
When selecting the best renewable energy Canadian stocks for your investment portfolio, make sure they match your investment objectives and risk appetite. Questrade, Canada’s leading discount broker, uses Questrade to trade most shares. If you don’t mind buying and selling shares on your mobile device, there’s no better way to use wealthy, simple trades.
IFRA tracks the NYSE FactSet US Infrastructure Index, an index composed of US companies that have benefited from increased infrastructure activity. The index includes information on various infrastructure companies, including railways, utilities, materials and construction companies. In addition, the Alerian Midstream Energy Select Index comprises a group of North American infrastructure companies involved in the transportation, storage and processing of energy raw materials, supporting Midstream Energy Infrastructure companies in North America.
The US Infrastructure Index of NYSE FactSet, composed of US companies benefiting from increased infrastructure activity, follows a mixed investment strategy in a mix of value and growth stocks across the market cap spectrum.
Mississauga, Ont., is one of the most undervalued operators, says Maxim Sytchev of the National Bank. The company has come under criticism for its oil and gas exports. The company, heavily weighted by raw materials, derives 60% of its turnover from infrastructure.
VMC shares have risen 71% over the past 12 months and closed yesterday at $18.362, not far from the all-time high of $19.414 reached on May 10. Toronto, Canada’s most extensive stock index, recovered from heavy losses last week as a bipartisan infrastructure deal in the United States saw crude oil prices rise above $74 a barrel. The agreement includes a focus on roads and transportation infrastructure in the U.S. However, it stands afoul of the reopening as the number of vaccinations continues to rise, said Macan Nia, a Senior Investment Strategist at Manulife Investment Management.
The August crude oil contract rose 7.5 percent to $74.05 a barrel, and the August natural gas contract rose 8.3 percent to $3.52 a mmBtu.
The COVID-19 pandemic has prompted both sides in Washington to act. As a result, many Canadian companies are awaiting economic stimulus in this sluggish environment. The truth is that Canada’s infrastructure process and the US’s have been slow. Still, recent pledges and signals that the government is giving the go-ahead for significant projects could boost economic activity in infrastructure stocks and create jobs at a time of dire unemployment.
The downturn in the energy sector has hit Canada’s construction companies particularly hard, highlighting the vulnerability of local firms. Vishal Patel, portfolio manager at the Dynamic Fund, sees no great added value in the infrastructure sector. He argues that retailers who benefit from infrastructure money and make it into the overall GDP buy better.
In terms of projects, AECON has won Transmountain and is working on two other projects, including West Gordie Howe Bridge in Windsor. The stock has caught up with the TSX but still lags behind the index with a YTD YTD of 9.7%. It is also an income stream in infrastructure, pays a payout ratio of 4.45% to 5.459% and is traded at a PE of 13.57 x.
Christine Poole, who warns that overruns of costs on some projects could cause lawsuits against AECON, still likes the stock as it looks for the long term.
