Infrastructure stocks don't typically catch investors' attention. Lately, the spotlight has been on technology companies like Nvidia or companies in the weight loss space like Novo Nordisk.

However, Andrew Slimmon, senior manager at Morgan Stanley Investment Management, suggests that those looking to diversify their portfolio should consider the infrastructure sector.

A sector with great growth potential

In an interview with Street Signs Asia on October 2, Slimmon called the infrastructure sector in the United States “very powerful.” He cited increased government spending and the need to rebuild after Hurricane Helene as two key factors driving his optimism.

“There is enormous spending on infrastructure by governments, both at the national and state levels. Also, although it is sad, the reality is that a large part of the country has been devastated. Areas in North Carolina, Georgia and East Texas will have to rebuild their roads and bridges,” Slimmon explained.

Consequences of Hurricane Helene

Hurricane Helene severely affected the Big Bend region of Florida on September 26. It caused the collapse of roads, extensive damage to infrastructure, flooding and a death toll of more than 200 as of October 4.

United Rentals, an action to consider

Among the stocks in the sector, Slimmon highlights United Rentals, one of the largest equipment rental companies in the world. Headquartered in Connecticut, the company has 1,520 locations in North America, 38 in Europe, 23 in Australia and 19 in New Zealand.

United Rentals shares are listed on the New York Stock Exchange and are up more than 40% so far this year. In the last 12 months, they have increased more than 80%.

Strategic acquisitions drive growth

United Rentals has been recognized by analysts at KeyBanc Capital Markets as an “interesting” company in the acquisition field. Its history of achieving good returns with large acquisitions makes it a benchmark in the sector. An example is the purchase of Yak Access, a construction company and supplier of wooden platforms, acquired in March.

“We believe the company will continue to pursue deals in specialized, higher-margin areas, strengthening its competitive advantage,” the analysts said.

FactSet data indicates that of 24 analysts covering United Rentals, 11 recommend buy or overweight, while 7 maintain a neutral stance and 6 suggest sell. The average price target is $759.47, which would imply a drop of 4.6%.