As a man in finance, I know it’s important to look into the future: We want to predict and foresee trends in order to make a profit from our investments.
But there’s also a lot of value in looking back, in revisiting the past.
I’m a history buff. I track economic trends and the government’s reactions to those trends.
When governments are in a tough economic spot, whether that’s a recession or a depression, they’re looking to spur the economy through massive, country-wide projects.
The U.S. government did this in the Great Depression, and China uses this strategy often to stimulate its economy. Infrastructure projects are why Americans have access to interstate highways, electricity and running water — to name a few.
In many instances, infrastructure spending is at the core of economic activity. For example, roads constructed for former President Eisenhower’s Interstate Highway System became the backbone of our nation’s economy. The initiative also put people to work.
In short, infrastructure can change everything. And President Joe Biden’s plan to pump spending into American infrastructure is a good sign for certain sectors within the stock market.
On the cusp of these initiatives, there is a higher demand for building materials like steel and lumber. During the construction of the Interstate Highway System, there was increased demand for construction materials, equipment and machinery. Companies that provided those tools made huge profits.
I think we are going to see an increase in infrastructure spending here in the U.S. We won’t recover from the 2020 recession overnight. We need real economic activity.
This leads me to my stock pick of the week, which is, once again, nitty and gritty — industrial.
Boise Cascade Co. Will Help Supply the Infrastructure Boom
Boise Cascade Co. (NYSE: BCC) is a wood products company. It makes everything from two-by-fours to wood sheets — important materials for construction projects.
BCC rates exceptionally high on our Green Zone Ratings scale at 97 out of 100.
Boise Cascade Co.’s Green Zone Rating on February 18, 2021.
- Value — BCC rates highest on value, coming in at a 98. I believe value stocks will out-perform this year. Last year was a year for growth and momentum stocks, but, at some point, value will make a comeback.
- Growth — BCC also rates well on growth, scoring a 95. It’s unusual to have a stock that rates high on both value and growth. It’s not impossible, but it’s rare. Boise Cascade has been ramping up its sales in recent years, but it’s been overlooked by investors. President Biden’s infrastructure bill will help fuel this growth even higher as well.
- Quality — BCC rates a 94 in quality. We quantify quality in multiple ways, mostly through profitability and balance-sheet strength. This stock’s quality lies in its exceptional “return-on metrics,” which means it yields impressive returns on investments, assets and equity.
To safe profits,
Charles Sizemore is the editor of Green Zone Fortunes and specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.