The strategists of the Bank of America Merrill Lynch are very serious about the upcoming changes in the world's economy and politics and urge their clients to consider the industries that are normally far from being popular investment choices such as infrastructure, defense and real assets.
In a recent report, BofAML talks about the qualitative changes in the world's economy and politics that are brought about by the society going away from globalisation and capitalist trends and turning to a more populist political ideology. They mention the U.K. referendum as a clear example of the society looking for more populist political solutions that today's economy is not prepared for.
"Electorates are increasingly voting for policies to address wage deflation, immigration and inequality. The capitalist, monetarist, globalist consensus of recent decades is now under threat and policies that are more socialist, Keynesian, and protectionist are being promised," wrote Michael Hartnett, the Chief Investment Strategist at BofAML.
Next to that, due to the long-term borrowing rates in the developed economies being close to their all-time lows, the economists say that governments will be playing a major role in boosting the economy. What does it mean in practice? The experts say that it's time for the investors to look at the industries that rely on taxes as they are likely to benefit the most from governments' attention. According to CNBC the bank's team said that transportation and information infrastructure industries have been showing low interest rates, what could make them particularly attractive investment choices for the government.
The BofAML's analysts have identified 150 stocks that are likely to benefit from the changes in politics:
"Infrastructure and construction companies dominate, comprising 61 percent of the list; 15 percent of the likely beneficiaries are in technology, networking, and cybersecurity. Energy, defense, and healthcare companies represent 12 percent of the other fiscal beneficiaries," he wrote Bloomberg.
Bloomberg lists 35 American companies that fall under the descriptions of the analysts and have exposure to the sectors of infrastructure and defence that we all should keep an eye on:
- Vulcan Materials (NYSE: VMC) $119.45
- Martin Marietta Materials (NYSE: MLM) $195.15
- Ball (NYSE: BLL) $80.53
- Armstrong World Industries Inc. (NYSE: AWI) $44.78
- Owens Corning (NYSE: OC) $54.49
- Blueknight Energy Partners LP (NASDAQ: BKEP) $5.80
- NextEra Energy (NYSE: NEE) $124.27
- Thermo Fisher Scientific Inc. (NYSE: TMO) $154.55
- Illumina Inc. (NASDAQ: ILMN) $172.79
- Lockheed Martin Corp. (NYSE: LMT.WD) $253.82
- Raytheon Co. (NYSE: RTN) $141.18
- Northrop Grumman Corp. (NYSE: NOC) $214.50
- General Dynamics Corp. (NYSE: GD) $152.15
- Boeing Co. (NYSE: BA) $134.14
- L-3 Communications Holdings Inc. (NYSE: LLL) $147.08
- Union Pacific Corp. (NYSE: UNP) $96.01
- CSX Corporation (NASDAQ: CSX) $28.53
- Kansas City Southern (NYSE: KSU) $99.04
- Delphi Automotive PLC (NYSE: DLPH) $67.86
- General Motors (NYSE: GM) $31.90
- Ford Motor Co. (NYSE: F) $12.42
- AECOM (NYSE: ACM) $32.69
- HD Supply Holdings Inc. (NASDAQ: HDS) $36.27
- Terex Corp. (NYSE: TEX) $24.28
- Caterpillar Inc. (NYSE: CAT) $84.01
- United Rentals Inc. (NYSE: URI) $82.12
- AT&T Inc. (NYSE: T) $40.85
- Verizon Communications (NYSE: VZ) $52.63
- Frontier Communications Corp. (NASDAQ: FTR) $4.65
- Windstream Holdings Inc. (NASDAQ: WIN) $8.3
- Texas Instruments Inc. (NASDAQ: TXN) $69.98
- Analog Devices Inc. (NASDAQ: ADI) $63.8
- NXP Semiconductors NV (NASDAQ: NXPI) $88.86
- Maxim Integrated Products Inc. (NASDAQ: MXIM) $40.97
- Autodesk Inc. (NASDAQ: ADSK) $63.46