The Profit Potential of “Gravy Train” Investing

[Inside Wall Street with Nomi Prins]( Managing Editor’s Note: Longtime readers know it pays to follow Washington’s money trail. And one key policy that Inside Editor Nomi Prins put on our radars is the Infrastructure Investment and Jobs Act. That’s what today’s guest insight is about. It comes from colleague and income investing expert Brad Thomas. And it has to do with what Brad calls “gravy train” investing. “Gravy train” investing is a way to profit from the flow of government spending. And it can be very profitable… if you know where to look and how to play it. Brad gets into the basics of gravy train investing below. Plus, one such investment that he’s put on his readers’ radars… --------------------------------------------------------------- The Profit Potential of “Gravy Train” Investing By Brad Thomas, Editor, Intelligent Income Daily [Jeff Brown] When Joe Biden signed the infrastructure bill – officially known as the Infrastructure Investment and Jobs Act – in November 2021, most people noticed the price tag. And with good reason. At $1 trillion, it was one of the most expensive pieces of legislation in history. Now, I’m not here to debate the merits of the bill or what this type of government spending will do to the long-term fiscal situation of the country. What I am interested in is identifying which companies could potentially benefit from this level of spending. And one section of the legislation caught my eye. It’s called the Broadband Equity, Access, and Deployment (BEAD) program. BEAD was created to expand high-speed internet access. It has $42.5 billion in funds to hand out to companies willing to bring broadband connections to rural and underserved parts of the country. Today, let’s discuss policy investing. Or, if you prefer, feel free to call it “gravy train investing.” And it can be very profitable. When Government Spends Whatever you think of government spending, reckless or otherwise, there’s no denying it can create distortions in the market, pushing up certain stocks. For an example, look no further than the Affordable Care Act (Obamacare), passed in 2010 under the Obama Administration. This was advertised as a landmark legislation that provided health coverage to over 20 million Americans. But put another way, that legislation forced 20 million Americans to buy health insurance… Insurance that’s very profitable for those companies providing it. Three of the largest U.S. insurers are UnitedHealth Group (UNH), Cigna (CI), and Humana (HUM). UNH is up some 1,600% since that legislation was signed. CI gained 970% in the 14 years since. And HUM is up “only” up 650%. The new law wasn’t the only reason for that rise, but there’s no denying that government policy was a tailwind, one that was very profitable for a few investors. And so, the question is, are there any government tailwinds inside the BEAD program? Recommended Link [The 2024 TECH RESET]( [image]( [Are we on the edge of the biggest ‘TECH RESET’ in decades?]( The expert who called the dot-com crash of 2000, says: [“A $17 trillion stock market panic could FORCE America’s most-loved tech stocks to MELTDOWN.]( Ultimately, dragging down thousands of other stocks in their wake – in what will be an unprecedented market panic.” This is why a staggering 31 billionaires are selling their stocks, right now, at a record pace. [Click here for the step-by-step details.]( -- Almost Out of Limbo In typical government fashion, money for the BEAD program has been stuck in limbo for years as bureaucrats squabbled over how to dole it out. But the wait is almost over. Late last year, Louisiana was the first state to complete all the requirements for the program, unlocking its $1.3 billion share of the money. Since then, Kansas, Nevada, and Virginia have also unlocked their funds from the BEAD program. Most of the other states are missing just one final step. But Florida, Maryland, Minnesota, Mississippi, and Rhode Island still have two steps to complete. That means money will finally start flowing. But it doesn’t mean we’re done with the red tape yet… because this is just the “initial approval” and it only releases 20% of the promised money. Next, the states have to go through a “challenge process” and submit a final proposal within one year. Once that’s approved, the remaining 80% of the money will be available. That’s likely to happen in 2025 or 2026. Then, the states will have four years to spend it. The gravy train’s just getting started. And it’s going to keep chugging along through the rest of this decade. Even though programs like BEAD are open to all who apply, the reality is that a large chunk of the awards end up going to just a few companies. That’s because the large national telecommunications companies are the ones with money to invest and the experience to navigate all the rules and regulations that come with government programs. They also have lobbyists to influence where the government funds go. One company we’re keeping an eye on is Comcast (CMCSA). Comcast is one of the country’s largest internet providers. It serves more than 32 million customers. The company has been preparing to participate in BEAD for more than a year. The market has been worried about Comcast’s growth slowing down. That’s why it trades at just 9x earnings – 44% below its average of 16x earnings over the past decade. But billions of dollars in money from BEAD could help the company gain more customers. Comcast’s chief financial officer expects that the BEAD program could open opportunities for the company to expand its network in 2025 and beyond. For now, we’re keeping Comcast on our watchlist as a potential sleep well at night investment. If we ever officially recommend it, paid-up subscribers to our Intelligent Income Investor service will be the first to hear about it. Happy SWAN (sleep well at night) investing, Brad Thomas Editor, Intelligent Income Daily --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. 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