November 2021 seems like a long time ago. This is when tech stocks were at the peak of a rally that lasted the better part of two months. In the same month, President Joe Biden signed the $1.2 trillion bipartisan infrastructure bill into law. But as of May 17, only $110 billion, or less than 10%, of the funds had been allocated. Consequently, many infrastructure stocks are still poised to get a tremendous boost from the legislation in the months and years ahead.

The law allocates a great deal of money to roads and bridges, specifically $111 billion. But less well-known to many investors is that the law also allocates $66 billion to rail, $8.3 billion for “Western water infrastructure,” and $9.5 billion to clean hydrogen projects.

To benefit from the federal government’s meaningful allocations, investors should buy the following infrastructure stocks:

Infrastructure Stocks to Buy: Caterpillar (CAT)

Based in Illinois, Caterpillar (NYSE:CAT) is the leading maker of construction equipment in the world. It is exceptionally well-positioned to benefit from the infrastructure law. Of course, the company’s construction equipment, such as asphalt pavers and backhoe loaders, can be used to create everything from railroad tracks, dams, roads, bridges, and runways. The law allocates $25 billion for the development of airports.

Moreover, given the law’s “Buy America” provision, Caterpillar won’t have to worry much about competition from its major foreign peers, such as Japan’s Komatsu (OTCMKTS:KMTUY).

As a kicker, Caterpillar is a leading seller of mining equipment and also offers multiple products for oil and gas exploration companies. Given the sky-high price of many commodities, especially oil and gas, those businesses should be doing exceptionally well.

The forward price-to-earnings ratio of CAT stock is a very reasonable 15.95.

Plug Power (PLUG)

Like Caterpillar and all of the names on this list, New York-based Plug Power (NASDAQ:PLUG) will benefit from the infrastructure law’s Buy America requirement. And with the company becoming a global leader in selling green hydrogen and the electrolyzers used to make the fuel, Plug is poised to get a big lift from the $9.5 billion that Washington plans to spend on hydrogen.

But the prognosis gets even better for Plug. That’s because $8 billion of the funds allocated to hydrogen will be used to subsidize “hydrogen hubs.” Plug is already a member of a leading hydrogen hub. In a February press release, the White House explained that “Regional Clean Hydrogen Hubs […] will create jobs to expand use of clean hydrogen in the industrial sector and beyond.”

Luckily for Plug Power and holders of PLUG stock, the company is already a member in good standing of a hydrogen alliance with a great deal of potential. Specifically, Plug is teaming up with a number of other companies and the states of New York, New Jersey, Connecticut, and Massachusetts. Given the substantial size of those states and the tremendous influence they collectively have in the Democratic Party, the partners should get a sizeable portion of the $8 billion allocated to the regional groups.

As I’ve noted in past columns, many other major governments and companies are embracing green hydrogen, leaving PLUG stock well-positioned to capitalize on the trend.

Infrastructure Stocks to Buy: Evoqua Water Technologies (AQUA)

The United States Environmental Protection Agency plans to give states $9.6 billion for water infrastructure projects. In the current fiscal year, states will receive a total of $3.2 billion for such projects.

Evoqua Water Technologies (NYSE:AQUA) “provides water and wastewater treatment systems and technologies, and mobile and emergency water supply solutions and contract services for industrial, commercial, and municipal water treatment markets in the United States.” And the company is based in Pittsburgh, enabling it to meet the “Buy America” criteria of the infrastructure law.

Moreover, Evoqua is growing quickly and it is profitable. In its fiscal second quarter, the company’s revenue climbed 23% year-over-year to $426.7 million and its net income jumped 45% year-over-year to $7.4 million. Evoqua ‘s second-quarter EBITDA, excluding certain items, came in at $73.2 million. The firm’s forward price-to-earnings ratio is somewhat elevated at 40.16, but its enterprise value/EBITDA is a more reasonable 23.8.

Also importantly, analysts are probably underestimating the profits that the company will generate from projects funded by governments. Consequently, Evoqua’s actual valuations are more attractive than the numbers I listed above since those valuations are based on analysts’ average estimates.

Westinghouse Air Brake Technologies (WAB)

As I mentioned earlier, the infrastructure law reportedly allocates $66 billion to rail. Even in today’s age of tremendous spending by the U.S. government, that’s a great deal of money. According to another report, by an advocacy organization called Transportation for America, the total is actually much higher: $102 billion.

Transportation for America stated that “$41.5 billion of the law’s $102 billion for rail will go to Amtrak.” This is lucky for Westinghouse Air Brake Technologies (NYSE:WAB), better known as Wabtec, and its shareholders. This is because ten years ago, the company signed a deal to provide “130 new passenger cars […] for Amtrak.” As a result, there’s a good chance that Wabtec was Amtrak’s main contractor for railcars and still maintains that status.

Additionally, in 2014, General Electric (NYSE:GE) reported that “most of Amtrak’s long-haul passenger trains today are powered by locomotives that GE custom-designed for the railroad.” Since Wabtec acquired GE’s locomotive business in 2019, Wabtec is very well-positioned to provide locomotives for the many new trains that Amtrak will undoubtedly buy.

Of course, Wabtec can also supply passenger cars and locomotives to the many other commuter train systems in the U.S. that are likely to receive tens of millions of dollars as a result of the infrastructure law.

Additionally, the forward price-to-earnings ratio of WAB stock is a fairly low 17.27.

On the date of publication, Larry Ramer was long GE stock.