A long-awaited infrastructure bill passed the House over the weekend and is now headed to President Joe Biden for his signature. That package, with more than a $1 trillion price tag, includes new funding for projects from bridges and roads to broadband and utilities.
The PAVE infrastructure ETF fell back Tuesday, easing after rallying on Monday. It has also outperformed the S&P 500 this year, climbing more than 35%.
Ari Wald, head of technical analysis at Oppenheimer, says it has more room to run.
"I think that the infrastructure ETF is a great way to gain exposure," Wald told CNBC's "Trading Nation" on Monday. "We're bullish on that industry because it is indeed reclaiming its leadership. You can see that in the relative ratio of the PAVE ETF versus the S&P 500. Rising line indicates it's outperforming versus its benchmark."
Wald highlights diversified motion and control parts manufacturer Parker-Hannifin as one stock at the top of his watch list.
"Parker-Hannifin … jumped last week post-earnings, that strength marking a breakaway from six months of consolidation. I think that is a breakout to buy in. That one goes higher," he said.
Shares have jumped this month, rising by 11%. The broad-based S&P 500, by comparison, is up just 1%.
Nancy Tengler, chief investment officer at Laffer Tengler Investments, prefers to play the group through individual stocks rather than the PAVE ETF. She picked out three names she believes have upside potential.
"Xylem is a beneficiary of the $55 billion water spend that's been allocated in the bill," she said in the same interview. "This is significant spending for water. The state appropriation bills are somewhere in the $2 [billion] to $2.5 billion range annually. This is $55 billion over five years."
"Then, for the highways portion of the bill, we like Jacobs Engineering. So think about the $40 billion that's being spent for bridges, that's going to benefit engineering and construction companies, and then Martin Marietta, which is obviously just the asphalt for the road," said Tengler.
Xylem, Jacobs and Martin Marietta Materials have all outperformed markets this year — all are up by at least 30%, while the S&P 500 has climbed 25%.
"I think you can't go wrong with any one of those," she said.
Disclosure: Laffer Tengler Investments holds shares in Xylem, Jacobs Engineering and Martin Marietta.
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