Why the Federal Budget is good for the Transurban (ASX:TCL) share price

The FY21 Federal Budget has dropped. Here's why I think there's good news for the Transurban Group (ASX: TCL) share price.

| More on:
Australian flag with stethoscope on it

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Federal Budget has dropped and Australia is headed into deep debt thanks to strong deficit spending. That could be good news for infrastructure groups and, as such, I've got my eye on the Transurban Group (ASX: TCL) share price.

Why is the Federal Budget good for the Transurban share price?

There was plenty to unpack from last night's Federal Budget announcement by Treasurer Josh Frydenberg.

The government is set to push Australia into $1 trillion of debt but all that money has to go somewhere. $10 billion of that is earmarked for infrastructure to go with the government's existing $100 billion plans.

That could mean major infrastructure players like Transurban could benefit. I think the Transurban share price will be one to watch when the market opens today.

More infrastructure spending could mean more subsidies and project support for major employers and spenders like Transurban.

It's not just the Aussie toll road operator that I'm watching. I think other infrastructure shares like Lendlease Group (ASX: LLC) are worth a look.

The Federal Budget showed the Coalition is serious about spending Australia out of a recession. I was already quietly bullish on the Transurban share price but I think this helps cement that even further.

High-quality assets are hard to come by, especially at scale. That means major operators like Lendlease and Transurban could benefit from a cash splash.

When times are tough, it's good to have a strong balance sheet to fall back on. Even if share prices fall, I like the comfort of hard assets compared to growth that supports valuations for the likes of Afterpay Ltd (ASX: APT).

Foolish takeaway

There's plenty to take away from last night's Federal Budget. I think the increased $10 billion for infrastructure spending is good news for infrastructure players in general.

The Transurban share price is down 4.2% this year but could be worth watching in 2021.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »