I’m recommending a triple play of puts on infrastructure stocks. I’ve noted many times that these stocks have enjoyed a spectacular run on the expectations of a flood of fiscal funding for spending on roads and bridges.

I expect them all to trade lower as reality sets in that even the most anti-establishment government gets stuck in bureaucracy. A report on Feb. 23 that the Trump administration was considering a delay until 2018 for its infrastructure spending bill sent the stocks lower.

While the companies below have oozed optimism about the loosening of government purse strings, those dollars have yet to appear. Reports to date from most infrastructure stocks have been tepid at best. Jacobs Engineering and Aecom both reported earnings for the fourth quarter.

Backlog, the most critical indicator of future growth, showed little life for Jacobs and Aecom, when they reported fourth quarter earnings. I expect Chicago Bridge & Iron, who reports on Feb. 28, to mirror these mediocre growth rates.

I have chosen three of the most expensive stocks in the sector. Each trades with a P/E well above its expected earnings growth rate and should drop as the market resets expectations for 2017 growth.

Buy to open the March 24, 2017 put on Chicago Bridge & Iron (CBI) with a strike price of $33.50 at $1.40 or lower. Symbol (CBI170324P33.5)

Buy to open the April 21, 2017 put on Aecom (ACM) with a strike price of $35.00 at $1.40 or lower. Symbol (ACM170421P35)

Buy to open the April 21, 2017 put on Jacobs Engineering (JEC) with a strike price of $55.00 at $1.75 or lower. Symbol (JEC170421P55)

Event: Chicago Bridge & Iron is one of the last infrastructure stocks to report. Its earnings will be on Feb. 28 after the market close with a call at 5pm.

Call: The webcast will be available on the Investor Relations page of www.CBI.com.

The conference call also can be accessed by telephone at 1-800-301-8321 (U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID # 65287464.

Listen For:

Backlog- How much is it up or down from last year and how much is expected to be recognized over the next year. Companies often have very long term backlogged orders that can be adjusted or cancelled. We want to know how much will help 2017 profits.

Note: Shortly after publishing this alert, these puts were trading slightly above my price limits. The revised limit prices above reflect my latest guidance on this trade.