Reindustrialization fuels multi-year growth beyond tech: Thompson Research CEO

Frank Holland (Anchor) 00:00.070

alright so you're looking at the I I J A that big infrastructure bill you say was about three hundred billion about one seventy has been spent in over one thirty to grow and you said that's tantamount to really a big tailwind for the material sector

Kathryn Thompson (Partner & CEO) 00:12.150

yeah you know in in what i'd say frank is i look at it in three buckets so the public you're right it is we've got incredibly positive outlook even though the bill expires in september only fifty percent of the dollars have even been spent another really big bucket to watch

Kathryn Thompson (Partner & CEO) 00:27.110

which i think is misunderstood is the non res bucket most people think about that with like your your mall your office space and and lighter construction but what is driving the the the modern re industrialization of mega projects so it's data centers we've been talking a lot

Kathryn Thompson (Partner & CEO) 00:46.670

about data centers but it's also the energy build out it's not just office space but it's also but you look in our backyard of of nashville tennessee where we're based the oracle headquarters are being built it's going to be over a billion dollar headquarter to be built and it

Kathryn Thompson (Partner & CEO) 01:04.160

only starts next year and so that's another great market so really the only end market that's kind of has a mad look at going into next year is residential so we're incredibly strong outlook as we think about that construction phase the modern industrial base it's res it's non

Kathryn Thompson (Partner & CEO) 01:23.400

res and public that are underpinning it all right you're

Frank Holland (Anchor) 01:25.960

hitting on something i wanted to talk to you about i speak to a lot of transport ceos and they say that their customers are telling them to expect to see more onshoring coming up in twenty twenty six and also more greenfield development it sounds like that's what you're talking

Frank Holland (Anchor) 01:36.720

about with the oracle headquarters what stocks benefit directly from that if we do really see more onshore in the idea of new buildings coming up because companies have to bring more of their operations here

Kathryn Thompson (Partner & CEO) 01:47.390

yeah so we circle before we circle around and see no ten bombs for the holiday season a couple of stocks for people to think about first bucket are basic materials so what you talked about initially one thing that you need for every single construction project are crushed rock

Kathryn Thompson (Partner & CEO) 02:03.190

cement concrete and asphalt so some of those names to keep an eye out would be martin marietta vulcan materials and CRH there's some smaller name tunes names too that have underperformed like knife river sake enough but you've also got great names and construction partners and

Kathryn Thompson (Partner & CEO) 02:23.710

granite construction so that's like one bucket another bucket that you can focus on is distributors you know and what i would say is not all distributors are created the same think value add those those companies can take on really big projects so two of them will highlight

Kathryn Thompson (Partner & CEO) 02:42.550

today are on the water infrastructure side ferguson and coramain but don't discount companies like a wesco which is one of the electrical side that's another terrific name to think about with distributors and then finally the last bucket is what's these what's these projects are

Kathryn Thompson (Partner & CEO) 03:02.790

finished up got to maintain them and so two great names for that would be APG and tic all right catherine

Frank Holland (Anchor) 03:10.350

we always love that you always come with the picks so a number of different picks and different phases i want to talk to you about a note that came out from raymond james earlier saying that they need to see economic data that supports a cyclical rally mentioning materials is

Frank Holland (Anchor) 03:22.350

one of the areas why have we seen materials kind of lag as we continue to see not recently obviously but just in previous years as we continue to see the AI build out the idea of not only onshoring but near shoring in mexico that was a very big trend do you see a big catalyst

Frank Holland (Anchor) 03:38.310

for a rally going into next year or do you see investors maybe going back to the trade that worked this year for most of the year the AI trade

Kathryn Thompson (Partner & CEO) 03:44.390

yeah you know the thing is with AI you can pick certain winners but if you're buying if you're buying the if you're investing stocks in the industrial sector you it is tantamount to investing in the reindustrialization of america so you don't have to pick a winner so really you

Kathryn Thompson (Partner & CEO) 04:02.310

need to focus if i were if i were investors let's say where is the growth coming it's in the southeast and southwest what are the biggest material players based in the southeast and southwest and names like martin marietta and CRH and vulcan materials are going to bubble to the

Kathryn Thompson (Partner & CEO) 04:16.990

top so instead of picking you know a single horse in tech you get to invest in an entire trend with these stocks

Frank Holland (Anchor) 04:26.390

speaking of trends obviously rate cuts can be a catalyst for cyclical sectors including materials you gave us a couple buckets heavy materials distributors also testing an inspection which one of those buckets benefits the most if we continue to see rate cuts