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The world needs to invest a jaw-dropping amount of money on infrastructure in the coming years. The global spending requirement on economic infrastructure projects alone (i.e., transport, water, power, and telecom) is a mind-boggling $3.7 trillion per year through 2035, according to a report by McKinsey Global Institute. On top of that, the North American energy industry must pour $800 billion into building new oil and gas midstream infrastructure over that time frame. Those market opportunities are so massive that investors won't want to miss them.
That's why investors should take a closer look at infrastructure stocks. Three worth putting on your watch list this month are Tallgrass Energy (NYSE: TGE), NV5 Global (NASDAQ: NVEE), and Quanta Services (NYSE: PWR).
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Keep an eye on these oil infrastructure projects
Matt DiLallo (Tallgrass Energy): Oil and gas midstream company Tallgrass Energy has invested more than $3.5 billion over the last several years to expand its energy infrastructure platform. These investments, including both acquisitions and expansion projects, have grown the company's earnings from $231 million in 2013 up to $860 million in 2018.
Tallgrass Energy is working hard to secure its next phase of growth and has three notable projects in development. First, the company is hoping to team up with energy infrastructure giant Kinder Morgan (NYSE: KMI) on a joint venture that would increase oil pipeline capacity out of the Rockies to Kinder Morgan's oil hub in Oklahoma. Tallgrass Energy is also developing the Seahorse Pipeline that would move crude from Oklahoma to the Louisiana coast, where it has proposed building the Plaquemines Liquids Terminal (PLT) to export this oil to global markets. The company has taken notable steps forward on each project, which increases the likelihood it can eventually start construction.
If successful in securing all three projects, Tallgrass Energy would be able to build a "wellhead-to-water" system capable of moving oil from newly drilled wells in the Rockies to seaborne markets via oil tankers filled at PLT. Meanwhile, with long-term contracts backing that integrated system, Tallgrass has the potential for a significant increase in its cash flow over the next few years. That intriguing upside potential is why investors should put Tallgrass on their infrastructure watch lists.
A serious "buy on the dip" opportunity
Jason Hall (NV5 Global): Mr. Market wasn't happy when upstart engineering company NV5 Global reported earnings, sending shares down a painful 32% following the release. And while plenty of buyers have helped offset some of those big losses for investors who've held, the stock price is still down about one-third from the all-time high reached late last summer: