Water Infrastructure Investments

Nick Hodge

Updated January 14, 2009

Here’s a free tip: Buy Itron Inc. (NASDAQ: ITRI)

It’s trading below $60.00 right now, but it’ll go to at least $90.00 in no time.

Here’s why.

Upgrading U.S. infrastructure is going to be a common theme the next few years. You’ve probably already heard about the coming $850 billion infrastructure stimulus being planned by Congress. It’ll be ready to sign in a month or so.

You’ve probably also heard growing murmurs about projects that are "shovel ready," and in desperate need of financing. That’s the goal of the coming stimulus: fund country-wide infrastructure projects that are ready to go. In the process, the aim is to get thousands of Americans back to work and send billions to the balance sheets of domestic companies.

Itron is one of those companies.

In a research note the other day, Piper Jaffray had the following to say about the situation:

Based on proprietary interviews with some of the largest US utilities as well as checks with several other utilities across the US, we expect significant investments in the Smart Grid for building out the automated metering infrastructure (AMI) over the next several years, especially as renewable sources (wind, solar, and geothermal) increase as a percentage of energy sources.

The message also indicated that U.S. utilities are expected to spend between $60 and $75 billion over the next five years on AMI and Itron will "be one of the key beneficiaries."

That note was issued on January 12th. Five days prior, on January 7th, I recommended Itron for purchase to readers of my Alternative Energy Speculator as part of my plan to take full advantage of this infrastructure boom.

They also got nine other companies that are sure to benefit from the event.

Of course, one research note from Piper isn’t enough to fuel this bull, so let’s take a look at some other goings on in the infrastructure industry.

Water Infrastructure Investments: Small Projects Add Up

When it comes to infrastructure projects, all the small things matter. Thousands of infrastructure projects are currently underway or being planned in the U.S. Their million-dollar price tags may not seem like much individually, but multiplied out their dramatic effect is much more apparent.

Here are a few water infrastructure projects I’ve come across in the past week that are playing vital supporting roles in the infrastructure boom:

In Shreveport, LA., city councilmen have authorized the sale of $10 million in bonds to purchase computerized meters for over 3,000 commercial water customers. Officials say the city is losing $350,000 annually due to faulty water meters.

The City of Mansfield, OH recently made a similar decision when they opted to buy a new $2.75 million water meter system. It will be paid for by the city’s sewer fund, which is made up of collections from monthly sewer bills. Mansfield’s utility collection manager said the system will "pay for itself" because it will eliminate the millions of gallons of ‘lost’ water that can’t be tracked with current technology.

The local paper in Fontainebleau, MS recently announced that "a pair of $5.2 million southwest Jackson County wastewater projects are slated for completion within the next 13 months." One of those projects will finish placing sewer lines in a neighborhood where a previous project was cut short. The other will build a new return sewer line to the nearest treatment facility. According to the paper, these projects are part of a $600 million, five-county plan funded by Community Development Block grants. The grants were established after Hurricane Katrina and are state and federally funded.

Those three small projects will put revenue on the balance sheets of smart meter companies, pipe companies, engineering companies, and construction companies. Hundreds of people will be working and millions of dollars will be changing hands. That’s the essence of economic stimulation.

The coming federal infrastructure stimulus has the same goals, only on a much grander scale. More spending. More projects. More jobs. And, if you play it right, more profits for you.

Infrastructure Stimulus: Getting Your Share

The three projects I chose to highlight happen to be water-related, but the coming infrastructure stimulus won’t discriminate—water, electric, and transportation upgrades are all on the list to get government money.

In fact, CNBC ran a story just today citing a Merriman Curhan Ford analyst that said, "We see this as a massive investment opportunity over the next three to five years. The important thing about this space right now is, what’s going to happen with the Obama stimulus plan."

He also happened to recommend Itron. But there are many other companies that you can bank on as this market event really gets going. My readers are prepared to capitalize, are you?

You can have to same report they received alerting them to buy Itron a week before major analysts put the pieces together. In it, you’ll learn all about how beat up our nation’s infrastructure systems are. You’ll also learn what the incoming administration is doing about it, and how you can ride government investment to personal profit.

To stay in the know about the world’s most profitable commodity, visit Alternative Energy Speculator and sign up today.

All the details are right here.

Call it like you see it,

nick hodge


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