Hear that sound? It’s the revving of bulldozers, the clattering of jackhammers, and the beeping of cranes.

President Biden in 2021 signed a $1 trillion infrastructure bill, which invests in roads, bridges, railroads, water systems, and other projects. The massive federal funding already is providing more work for construction firms.

Infrastructure spending enjoys a bipartisan coalition of support, because it entails state and local spending that both red and blue states require. That’s why the legislation actually passed, despite the bitter divisions that roil Congress.

Now’s the time to position your portfolio, to profit from the multi-year building boom to come.

The urgent need to fix infrastructure is a headache for government leaders but a huge bonanza for investors who choose the right infrastructure stocks.

Below, I pinpoint two top infrastructure stocks to buy now. In my view, they’re the best-of-breed. Not only do these two equities face superb long-term growth prospects, but they’re reasonably valued to boot.

America’s trillion-dollar repair bill…

The following chart depicts the extent of the country’s urgent infrastructure needs:

Even if Biden’s federal initiative had failed to pass Congress, states and localities already were gearing up to boost their respective infrastructure initiatives.

According to the National Organization of State Budget Officers, most governors have successfully pushed through big increases in infrastructure spending for 2023, financed by bond issues, toll increases, special taxes and other means. These state leaders haven’t waited for the feds; they’ve been proactive and innovative.

The research consultancy Infrastructure USA reports that several states and local jurisdictions are now reconstructing or proposing to reconstruct highways and bridges without the help of federal grants. Another state-level trend is the authorization of public-private partnerships for transportation projects.

What’s more, public works spending is booming internationally, especially in the form of China’s “Belt and Road” initiative.

Infrastructure stocks, defined…

Publicly traded infrastructure companies are responsible for developing the basic facilities and systems of a country, city or region. These companies are vital for economic development and growth; they build and repair the “backbones” of modern cities.

Infrastructure is a single broad term used for all physical systems, including sewage, water, and electrical systems, communications, and transportation. Some infrastructure companies even own entire shipping ports or the very bridges and roads that we drive on. Infrastructure also encompasses waste disposal, educational facilities, and public health delivery.

Infrastructure companies are tapped into basic human needs that will always exist, regardless of economic ups and downs or the gyrations of the stock market. As such, they make prudent long-term investments.

Infrastructure stocks especially thrive when the overall economy is expanding, and we’re seeing signs that the Federal Reserve will soon end its interest rate tightening cycle, which in turn would fuel an economic and stock market recovery.

Read This Story: Latest CPI Report Spells The End of Tightening as We Know It

The aforementioned trends are providing powerful tailwinds for two infrastructure stocks in particular:

• Fluor (NYSE: FLR): A construction and engineering colossus that’s well connected to public works departments around the world.
• AECOM (NYSE: ACM): Logistical consultant, architect and engineer for a wide variety of infrastructure projects.

How do you determine what qualifies as a top infrastructure stock? As with any stock market investment, infrastructure equities worth buying must demonstrate growth in corporate earnings and revenues, combined with reasonable valuations.

Infrastructure firms must grapple with the enormous capital costs associated with the building and maintenance of complex structures. Billions of dollars in heavy equipment and a well-paid workforce are on the line, requiring solid balance sheets and plenty of cash on hand.

As such, quality infrastructure firms generate some of the steadiest cash flows of any industry. Investors looking for reliable growth are well-served by looking into the sector.

Each of my two recommendations meet these vital criteria. Let’s examine the infrastructure stocks with the best growth potential for 2023 and beyond.

Fluor

With a market cap of $4.6 billion, Texas-based Fluor provides engineering, construction and project management services around the globe.

The company operates in five segments: Oil & Gas; Industrial & Infrastructure; Government; Global Services; and Power.

Fluor has its fingers in many mammoth transportation projects, with a revenue mix that provides a measure of stability. Fluor also is a major player in nuclear power, which is enjoying resurgence due to concerns over climate change and fossil fuel pollution.

Fluor has ample cash on hand (most recent quarter) of $2.31 billion. The company’s forward 12-month price-to-earnings ratio (FPE) is 16.37, higher than the construction sector (13.2), but lower than the S&P 500 (19.1), and a compelling bargain compared to its projected earnings growth.

The average analyst expectation is that Fluor’s year-over-year earnings growth will reach 230.80% in the current quarter; 614.30% next quarter; 112.20% in the current year; and 40.80% next year. Those are stellar numbers, especially in light of the S&P 500’s anemic projected earnings growth for the second half of 2023.

Fluor’s stock currently trades above its 50- and 100-day moving averages, which indicates an upward trajectory with momentum.

AECOM

California-based AECOM is an acronym for Architecture, Engineering, Consulting, Operations and Maintenance, an apt summary of its many interests.

With a market cap of $12 billion, AECOM is a global provider of planning, consulting, engineering, architectural, and construction management services for highways, bridges, airports, mass transit systems, government and commercial buildings, water and wastewater facilities, and power transmission.

AECOM continues to benefit from a ballot initiative passed November 2016 in its home state of California that calls for a half-cent sales tax increase to plow $120 billion into rail and bus expansions over the next few decades, in addition to street upgrades and pedestrian walkway improvements.

The average analyst consensus is for AECOM to rack up year-over-year earnings growth of 10.50% in the current quarter; 11.20% next quarter; 6.60% in the current year; and 18.10% next year. The stock’s 12-month FPE of 19.96 is reasonable considering its growth prospects. Cash on hand totals $1.07 billion. The stock trades above its 50-, 100-, and 200-day moving averages.

If you’re looking for long-term growth investments that are resistant to broad market ups and downs, turn to any (or both) of these infrastructure stocks. They offer value and steady growth, in an overall stock market that’s rebounding but still uncertain and volatile.

Editor’s Note: As I’ve often written, companies that provide innovative solutions are among the most attractive investments. But it’s important that you don’t overpay for that competitive advantage and, where possible, buy at a discount.

My colleague Jim Pearce has found such a company. Jim is the chief investment strategist of our flagship publication, Personal Finance.

Jim has found the optimal way to cash in on the artificial intelligence (AI) super-boom. It’s an obscure “picks-and-shovels” play that you won’t hear about on CNBC. The company’s leading-edge technology has the power to withstand economic ups and downs, or the whims of Fed policy.

Jim’s AI investment lets you get started for about $100…and it generates regular cash payouts of up to $5,397. Want to learn more? Click here.

John Persinos is the editorial director of Investing Daily.

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