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Infrastructure and Steel

I did a bit of an analysis last week on a few Basic Materials stocks that might benefit from a potential Infrastructure Bill. Based on my models, my conclusion was that it looks like this story was already priced in to the stocks I was looking at. Check out my models here:

[https://thinklikeananalyst-my.sharepoint.com/:x:/p/theanalyst/EU6OBhmeqS5Kkjj3-YGeTXEBzmJF6_cp1nPNOYlGkwaTsw?download=1](https://thinklikeananalyst-my.sharepoint.com/:x:/p/theanalyst/EU6OBhmeqS5Kkjj3-YGeTXEBzmJF6_cp1nPNOYlGkwaTsw?download=1)

When I did the same analysis for Steel on the other hand, it looks like the story might not be fully priced in, and that there could be some opportunities here. Actually these steel companies look cheap compared to Basic Materials, and I see some upside.

Here is a link to my Steel models

[https://thinklikeananalyst-my.sharepoint.com/:x:/p/theanalyst/Ee31ghBnu-FEqGpx2wuq104BQmsRMfDy_TKNmLoTc1LXbw?download=1](https://thinklikeananalyst-my.sharepoint.com/:x:/p/theanalyst/Ee31ghBnu-FEqGpx2wuq104BQmsRMfDy_TKNmLoTc1LXbw?download=1)

I’m also linking to a Morgan Stanley piece that talks about the potentials for a Materials “super cycle” if the Infrastructure Bill passes

[U.S. Infrastructure Investment Super Cycle | Morgan Stanley](https://www.morganstanley.com/ideas/us-infrastructure-investment-supercycle)

What do you think?

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3 Comments

  1. Hate to burst your bubble but steel prices are inflated at the moment. They are slowly dropping so while it may not seem like the effect of the infrastructure bill is included, trust me it is. As the price of steel drops so would the value of the stocks but obviously with this bill they know that the price of steel will drop but then the stock will benefit so essentially the price will remain unchanged from its current value.

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