FA Alpha Daily

This company will be protecting assets while the U.S. ramps up the infrastructure investments

The U.S. grapples with deteriorating infrastructure, emphasized by crumbling bridges and aging assets, worsened by the pandemic. The $1.2 trillion Bipartisan Infrastructure Law signals a renewed focus on revitalization. Mistras Group (MG) is prepared to address the rising demand for tech-enabled asset protection solutions. In today’s FA Alpha Daily, we will explore the urgent need for infrastructure renewal and MG’s pivotal role in providing advanced protection solutions.

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The U.S. infrastructure, both public and private, has seen minimal investment over the past two decades. As a result, infrastructure across the country has slowly deteriorated or disappeared completely.

More than 7% of bridges are considered structurally deficient, and there is a water main break every two minutes, resulting in billions of gallons of treated water lost daily.

Corporate assets are also aging, with the average age of assets at their oldest level in over 20 years. After focusing on investment internationally over the last 15 years, corporate infrastructure in the U.S. is now historically old.

The ratio of net to gross property, plant, and equipment (PP&E) has declined from nearly 59% in 2001 to currently 54%. It will take over $500 billion to bring asset values back to 2001 levels.

This lack of investment caught up to companies during the pandemic as outdated and inefficient infrastructure struggled to meet surging demand as the economy reopened. It was a wake-up call for businesses to invest to be more resilient and responsive.

With geopolitical tensions highlighting supply chain vulnerabilities, the U.S. is poised for a major infrastructure investment cycle encompassing both repairs and upgrades using new smart and electric technologies.

This modernization process will be expensive but critical for the country’s infrastructure.

For example, the $1.2 trillion Bipartisan Infrastructure Law passed in 2021 aims to rebuild aging infrastructure across the United States.

This unprecedented level of investment is expected to generate sustained demand for industries involved in building next-generation infrastructure over the next decade.

Areas like construction, engineering, electric grid components, transportation manufacturing, and telecommunications are poised to benefit.

Mistras Group (MG) is a company that can capitalize on these tailwinds.

The company is a leading “one source” multinational provider of integrated technology-enabled asset protection solutions, helping to maximize the availability and performance of critical assets in challenging industrial environments.

These solutions are crucial for any manufacturing facilities that operate heavy equipment.

Through Mitras’ non-destructive testing, predictive maintenance, and mechanical integrity software like PCMS, owners and operators of manufacturing facilities can predict potential damages and failures in their critical equipment before they happen.

This enables facilities to schedule maintenance during planned shutdowns rather than emergency shutdowns, maximizing equipment uptime and minimizing unplanned downtime.

By implementing Mitras’ integrated asset protection programs, facility owners can avoid unexpected equipment breakdowns that would require immediate replacement.

This saves the owners a significant amount of money that would otherwise have to be spent on emergency equipment repairs or replacements. It also improves workplace safety by identifying and addressing issues before resulting in accidents.

With the ongoing supply chain supercycle driving continued investment and expansion of domestic manufacturing capacity in the U.S., the demand for Mitras’ solutions is expected to increase as more facilities look to protect their critical assets and maximize asset utilization through proactive maintenance programs.

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

This portfolio analysis highlights the same insights we share with our FA Alpha Members. To find out more, visit our website.

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