As American companies move operations back to U.S. soil, they aren’t alone. Foreign direct investment is also picking up. In fact, the United States is attracting capital at a rate not seen since the 1990s — prior to China joining the World Trade Organization, according to UBS. “Over the last 2yrs, the U.S. has attracted 24% of global foreign direct investment (FDI), an 800 bps spike vs prior decade levels and equating to more than $100B of incremental annual investment into the country,” analyst Chris Snyder wrote in a note Wednesday. That investment is on top of the reshoring boom that is already underway , as U.S. companies return operations back home, partly to ensure the safety of supply chains. More than 101,000 jobs were created by reshoring and foreign direct investment in the first quarter alone, up 11% year over year, according to the Reshoring Initiative . UBS’s Snyder is bullish on reshoring’s impact, and points out that it is not because Asian facilities will be closed and reopened in the U.S. Instead, he’s focused on where incremental investment will flow. “We continue to think the scales are tilting toward the U.S.,” he said. UBS sees a two-fold tailwind for the U.S. industrial economy from reshoring. First, companies are spending money on facility construction, equipment purchases and broader infrastructure needs, Snyder said. Second, the U.S. will boost its share of global industrial production as facilities come on line, he added. While Eaton is Snyder’s top pick on the reshoring theme, he highlighted several other underappreciated names that stand to gain as well. Here are some of those names. Keysight Technologies benefits from the buildout of semiconductor capacity in the U.S., Snyder said. Its equipment is needed for big semi manufacturing plants as companies test chips after they are produced. In fact, there has been a big uptick in reshoring announcements from semiconductor manufacturers, up 40% year over year in the second half of 2022, according to UBS. That upswing came about in part due to the CHIPS Act, which includes $52 billion for U.S. companies producing computer chips and billions more in tax credits, as well as tensions between China and Taiwan, Snyder said. “KEYS is a top beneficiary of these trends given its exposure [to] advanced node capacity expansion,” he wrote. Meanwhile, Amphenol is benefits two ways from the boom in electric vehicle manufacturing. Its automation business will profit from the construction of new auto production facilities and then, once the buildout is complete, its EV business will benefit when vehicles need the company’s interconnect systems, Snyder believes. Overall, auto reshoring announcements grew 30% in the second half of 2022 from the year prior, according to UBS. Lastly, climate-control company Trane Technologies ‘ CEO Dave Regnery said at a UBS-sponsored conference in June that he sees opportunities to place its HVAC equipment in new microprocessor and electric vehicle battery plants, as well as data centers. “It’s tremendous opportunities with these ‘megaprojects’ as they are being called,” he said, noting that they won’t dry up in 18 months or even four years. “People forget that we’ve been integrating into Asia, China specifically, for over 50 years. That just doesn’t switch like a snap of a finger here,” Regnery said. — CNBC’s Michael Bloom contributed reporting.
