Did you know that Canada is set to undergo a massive infrastructure boom?
According to a recent PwC report, Canada is expected to spend $4.7 trillion on infrastructure over the next 25 years, outpacing most peer countries.
AI is a major contributor to the boom. Canada has 159 data centres planned or under construction, the purpose of which is to support the development of AI in Canada. These data centres are a major part of the infrastructure boom underway.
Canada’s vast number of data projects lend credence to PwC’s prediction that Canada will spend trillions on infrastructure in the coming years. Because of this, I am considering upping my investments in Canadian infrastructure companies like Brookfield Corp (TSX: BN). Such companies have the potential to earn many billions of dollars from Canada’s trillion dollar infrastructure boom. In the ensuing paragraphs, I’ll explore why I think they are worth investing in.
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Scale of the opportunity
One major reason why I find Canadian infrastructure interesting is the simple scale of the opportunity. An opportunity worth $4.7 trillion over 25 years is large enough to be game-changing even for Canada’s biggest companies. Let’s consider Brookfield Infrastructure Partners (TSX: BIP.UN), a partially owned subsidiary of the aforementioned Brookfield Corp. Brookfield Infrastructure Partners has $172 billion in assets and does $35 billion in annual revenue. It’s not easy to find opportunities big enough to move the needle for a company operating at this scale. However, adequate opportunities most likely will be found in Canadian infrastructure, as the sheer scale of the country’s AI buildout lends itself to many large projects. Brookfield Infrastructure Partners will be involved and will likely grow its revenues and earnings significantly as a result.
Brookfield Infrastructure Partners isn’t the only company that will make money off of Canada’s infrastructure boom. Many industrial REITs and financial institutions will as well. Brookfield Corporation’s asset management arm will also likely profit from the infrastructure buildout. This is one of the reasons I hold Brookfield Corp stock rather than Brookfield Infrastructure Partners: the parent company is more diversified and has more than one way to profit off the growth in Canadian infrastructure.
Profitability
A large opportunity set is a major plus for companies that will build things in that set, but it doesn’t mean much if the opportunities aren’t profitable. Many big asset classes struggle to generate profits for their investors, notably Chinese residential real estate. So we need to know whether Canada’s infrastructure boom will be profitable for the companies that build it.
If history is anything to go off of, then Canada’s infrastructure buildout will be a profitable opportunity.
First, Canadian companies involved in infrastructure, such as Brookfield Infrastructure Partners, are already profitable.
Second, much of the infrastructure being built is being used in high tech applications, serving deep-pocketed tech clientele.
Third and finally, past Canadian infrastructure booms generated profitable opportunities for the companies involved.
For the reasons above, it’s quite likely that Canada’s infrastructure boom will drive considerable profit for the companies involved in making it.
Foolish bottom line
Canadian infrastructure is a major growth sector right now, and many companies are set to make money off it. I’m personally invested in the Canadian infrastructure boom, and many others are moving in the same direction.
