CASH IN ON THE INFRASTRUCTURE - BUILDING BOOM

Consider these stocks and funds to make the most of the U.S industrial renaissance.

- NELLIE S. HUANG

AMERICA'S manufacturing industry, after waning for decades, is adjusting to a world that has ditched globalization for reshoring-bringing production back home. That has set the stage for an infrastructure building boom, much of it backed by the U.S. government. "The U.S. is in the early innings of reindustrialization, a multi-decade investment opportunity that will restore growth to the U.S. industrial economy following 20-plus years of stagnation," Morgan Stanley research analyst Chris Snyder wrote in a recent report.

The big infrastructure buildout is worth paying attention to because it encompasses a broad range of businesses in a number of sectors. Many infrastructure companies are old line industrials, including businesses that make heavy machinery or parts for industrial production. Other companies provide services to such businesses or transport goods or people.

Also included under the infrastructure tent are companies in the materials, energy and utilities sectors.

Even some tech firms are considered infrastructure plays these days.

DAWN OF A NEW ERA

America's manufacturing industry is beginning to reassert itself. The dominance of U.S. industrial firms began to decline when China joined the World Trade Organization in 2001. Back then, American industrial companies made up roughly 12% of the market value of the S&P 500. But cheap labor abroad and a focus on globalization helped to undermine the sector, as companies moved manufacturing overseas. (At the same time, the soaring fortunes of technology-related firms shifted market leadership in their direction.) Today, industrials represent just over 8.5% of the S&P 500.

But the tide is turning. The COVID19 pandemic highlighted the downsides of operating some businesses on an international scale. Think back to the floating traffic jam of 50 container ships in the Pacific Ocean waiting to dock in California in 2021.