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Best Infrastructure Stocks

Written By Nick Hodge

Posted December 3, 2008

Infrastructure has been a very hot topic lately. And for good reason.

Projects to fix the nation’s crumbling water pipes, expand our inadequate highways, repair our failing bridges, and lay the groundwork for a next-generation energy distribution and management system are being hailed as the new deal.

A quick-fix, if you will, for a handful of our current problems.

Governors Grovel for Infrastructure Investment

You see, 41 of the 50 states represented by their governors at a meeting yesterday will be facing budget shortfalls either this year or next.

And the governors made very clear what they thought the best and most urgent solution to their woes should be: infrastructure investment, and lots of it.

The Governator (who has been mentioned as a choice for Secretary of Energy) made the case very clear, saying there is $136 billion worth of infrastructure projects that can be started right away.

In California, he said:

We have $28 billion of projects that are ready to go, literally putting the shovels into the dirt within a few months. I mean, America has not done anything when it comes to real serious infrastructure building in the last four decades. I think it’s time that we get our act together and do it. This is a good opportunity, not only because it will build infrastructure, but also it creates great jobs and it gets the economy stimulated.

And stimulation may be just what Arnold gets via a possible new, equally expensive, economic stimulus.

Not-yet-President Obama has told Congress to have another $700 billion stimulus package ready for him to sign when he takes office early next year.

What’s guaranteed to be in the package?

I’ll yield to the Governor from Montana, Brian Schweitzer:

We are going to build and entire new energy system in America. And we’re going to create 5 million new jobs. Some say, ‘Well, with the price of oil dropping from $100 plus to $50 a barrel, that the imperative is gone.’ Au contraire. Now, we have so many people that are unemployed, this is a great program to build a permanent new energy system, including transportation, and use the people that are currently unemployed to build it.

This is shaping up to be one heck of an investment opportunity, with the Federal Government as your co-signer.

Energy Infrastructure Stocks

Last week, I told you about six infrastructure stocks that were on my radar. Below is a list of those stocks, along with their percentage change since I mentioned them exactly seven days ago:

  • ABB Ltd. (NYSE: ABB), -3%

  • Fluor Corp. (NYSE: FLR), +8%

  • Jacobs Engineering (NYSE: JEC), +18%

  • American Super Conductor (NASDAQ: AMSC), +20%

  • Foster Wheeler (NASDAQ: FWLT), +21%

  • The Shaw Group (NYSE: SGR), +9%

You can bet that mounting word of an infrastructure-centric stimulus has had something to do with these nice gains.

That’s exactly why I told you about them. I knew something good was brewing here. And, had you heeded my advice, you’d be sitting on a few stocks well into the green in just a few short days.

But don’t worry if you missed this run. There is still plenty more to come, especially if you believe incoming White House chief of staff Rahm Emanuel, who recently told a group of reporters that any new stimulus measures would focus heavily on money for infrastructure.

"The top priority is to invest in these areas," he said, citing roads, bridges, high-speed rail, water infrastructure, transportation systems, and green infrastructure as possible areas of major investment.

And there’s still time to get your portfolio positioned to take advantage.

Since they’ve had a nice run over the past week, I’d hold off on all the previously mentioned companies until they sell off a bit. But ABB still looks attractive at current levels.

Here are few more of the possible beneficiaries of an infrastructure boom that haven’t spiked lately and are still at buying levels:

  • Emerson Electric Co. (NYSE: EMR)

  • Eaton Corp. (NYSE: ETN)

  • Robbins & Myers (NYSE: RBN)

  • ITC Holdings Corp. (NYSE: ITC)

  • United Technologies (NYSE: UTX) and

  • Brookfield Asset Management (NYSE: BAM) (thanks to a reader for that tip)

Here’s a six-month chart of those companies. Each has been knocked down over the past few months. But a new infrastructure bull is about to begin:

best infrastructure stocks

Plenty of time remains to get yourself in position to take advantage of the first industry to rise from the ashes of financial disaster.

I expect most of these infrastructure stocks to track the progress of the new stimulus packages. That means they’ll slowly accelerate over the next few months, and really take hold if the package comes to fruition early next year.

Members of my Alternative Energy Speculator are already gearing up for the boom. We’ve been building an infrastructure position in that portfolio for a while now.

It’s there where I guide smart investors trying to stay ahead of the curve. I don’t just give them companies, I also offer full research reports and rationale, as well as strict buy and sell prices, and target prices.

If you’re serious as all about making money from the imminent infrastructure and renewable energy booms, then you need to join this group of thousands of other elite investors.

We’re going to be making money. Are you going to come along with us?

Call it like you see it,

nick hodge