Morningstar - Q3 2021 - 53

EXHIBIT 2
Think Nontraditionally
Though some investment opportunity remains in
traditional infrastructure, we think that, for
the most part, the market has already baked in the
potential impact of the American Jobs Plan.
The best bets for investors lie in companies
that are considered nontraditional infrastructure
( EXHIBIT 2 ). This part of the proposed
legislation is in the very early stages and has
a lot of vague language that will likely go
through multiple iterations before there is enough
detail to determine which companies may
benefit from new government spending.
But because of the lack of precedent on funding
for these programs, their inclusion in the
bill will likely face stiff Republican pushback.
Here's where our forecasts stand on companies
in four sectors that are not traditionally considered
infrastructure.
1. More Demand for Building Products and Fixtures
With the goal of producing and retrofitting
2 million affordable and sustainable places to live,
firms that specialize in developing multifamily
homes and home remodeling will probably benefit
from this program. However, the homebuilders
we cover, such as D.R. Horton DHI, Lennar LEN,
and Toll Brothers TOL, are unlikely to benefit much,
as they concentrate mostly on traditional
single-family construction, focusing on large-scale
developments as opposed to one-off home
rehabilitation projects.
If the infrastructure plan ends up subsidizing
new single-family rental communities, we
may re-evaluate these companies' valuations.
But for now, because they do not have a
significant enough proportion of their business in
the affordable multifamily category, we are
maintaining our projections.
We also expect the infrastructure bill to boost
demand for several subsectors:
gHome improvement, building products, and
furnishings Firms in this space, which include
Ferguson FERG, Fortune Brands FBHS,
Louisiana-Pacific LPX, Masco MAS, and
Sherwin-Williams SHW, would probably see an
Nontraditional Infrastructure Firms The best bets for investors lie in companies
outside the usual infrastructure plays.
Homebuilding and
Related Sectors
Company
D.R. Horton DHI
Lennar LEN
Toll Brothers TOL
Ferguson FERG
Fortune Brands FBHS
Masco MAS
Sherwin-Williams SHW
Carrier CARR
Fair
Morningstar
Rating
QQQ
QQQ
QQQ
QQ
QQ
QQQ
Q
QQ
Johnson Controls International JCI QQ
Lennox International LII
Q
Trane Technologies TT
QQ
Price
($)
Value
($)
89.66 84.00
96.98 98.00
Price/
Fair
Value
1.07
0.99
56.40 52.00 1.08
137.18 109.00 1.26
97.37 84.00
1.16
2.01
1.25
1.23
Moat
None
None
None
Probability
of Valuation
Impact
Low
Low
Low
Narrow High
Narrow Medium
57.75 62.00 0.93 Wide Medium
271.37 135.00
46.10 37.00
66.44 54.00
Narrow Medium
Narrow High
326.49 198.00 1.65
179.73 115.00 1.56
Auto Manufacturers and Suppliers-Electric Vehicles
Ford F
General Motors GM
Tesla TSLA
Volkswagen VWAPY
BMW Group BMWYY
Aptiv APTV
BorgWarner BWA
DuPont de Nemours DD
Lear LEA
American Electric Power AEP
Edison International EIX
Albemarle ALB
Livent LTHM
QQQ
QQQ
Q
Narrow High
Narrow High
Narrow High
Market
Cap
($B)
32.3
29.7
7.0
30.7
13.5
14.7
72.2
40.1
47.6
12.3
43.0
15.42 17.00 0.91
60.12 62.00 0.97
656.57 354.00 1.85
QQQQ 26.06 36.00 0.72
QQQQ 36.49 53.00 0.69
152.75 103.00 1.48
QQ
QQQQ 48.44 73.00 0.66
QQQQ 76.23 92.00 0.83
177.00 142.00 1.25
82.65 89.00 0.93
QQQ
QQQQ 55.01 70.00 0.79
QQQ 163.67 145.00 1.13
18.70 17.00 1.10
QQQ
Sociedad Quimica y Minera SQM QQQQ 46.12 58.00 0.80
Healthcare
AMN Healthcare Services AMN Q
Centene CNC
HCA Healthcare HCA
Humana HUM
Tenet Healthcare THC
AstraZeneca AZN
Johnson & Johnson JNJ
94.65 55.00 1.72
QQQQ 73.09 91.00 0.80
206.15 158.00 1.30
QQ
QQQ 438.46 420.00 1.04
68.04 37.00 1.84
57.98 55.00
QQQ
QQQ
QQ
Narrow Low
Narrow Medium
Narrow Low
Narrow Low
None
Low
1.05 Wide -
162.63 158.00 1.03 Wide -
morningstar.com/lp/magazine
4.5
42.6
68.2
56.6
7.3
152.6
428.3
53
None
None
Low
Low
Narrow Low
None
Low
Narrow Low
Narrow High
Narrow High
Narrow High
QQ
Narrow Medium
Narrow High
Narrow High
Narrow High
Narrow High
Narrow High
61.6
87.2
632.5
153.7
70.9
41.3
11.6
40.6
10.6
41.3
20.9
19.1
3.0
12.1
http://www.morningstar.com/lp/magazine

Morningstar - Q3 2021

Table of Contents for the Digital Edition of Morningstar - Q3 2021

Contents
Morningstar - Q3 2021 - Cover1
Morningstar - Q3 2021 - Cover2
Morningstar - Q3 2021 - 1
Morningstar - Q3 2021 - 2
Morningstar - Q3 2021 - Contents
Morningstar - Q3 2021 - 4
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Morningstar - Q3 2021 - Cover3
Morningstar - Q3 2021 - Cover4
Morningstar - Q3 2021 - M1
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Morningstar - Q3 2021 - M3
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Morningstar - Q3 2021 - M5
Morningstar - Q3 2021 - M6
Morningstar - Q3 2021 - M7
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Morningstar - Q3 2021 - M9
Morningstar - Q3 2021 - M10
Morningstar - Q3 2021 - M11
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