We are starting to hear a lot of talk about infrastructure in the United States. Thanks to the economic slowdown caused by the credit crisis, many states and local government have put off updating their roads, bridges, water and electrical systems.
The boom in shale gas has created the need for pipeline and delivery systems to get this valuable low cost energy to the marketplace. Airports and train stations are in need of upgrades, as are thousands upon thousands of miles of railroad track around the United States.
The need for infrastructure spending is going to become more of a hot button as we get closer to the November elections as well. Not only are the repairs and replacements badly needed, but infrastructure spending can also create badly needed jobs to help the economic recovery gain additional traction.
It won’t be too long before Wall Street jumps on this a hot new investment trend. It is too good a story for them not to put the marketing machine to work designing products and pushing stocks designed to benefit from infrastructure spending.
As good as this story is, investors need to remember that the money has not been spent yet, and if you want to invest in the rebuilding of America you have to pay attention to the fundamentals of the companies themselves. Start your rebuilding America portfolio with the stocks that are scoring solid grades from Portfolio Grader right now and plan to add those that are upgraded when the cash starts flowing.
One of the best companies in the space right now comes with a bonus feature that allows you to benefit from infrastructure investment all over North America. Stantec (STN) is a Canadian company that also has extensive operation in the United States.
The company offers professional consulting services, environmental sciences, project management, and project economics in the areas of infrastructure and facilities. It also offers transportation infrastructure services as well as municipal engineering. Stantec’s services cover all aspects of public and private infrastructure in both Canada and the United States.
Although the spending spigots have not yet been turned, on the company is seeing plenty of business because of its wide range of services. Earnings growth has been solid with a 34% year-over-year gain in the most recent quarter. The stock is currently ranked “B” by Portfolio Grader and is a “buy” at the current price.
Primoris Services Corporation (PRIM) is a specialty contractor and infrastructure company in the United States. It offers construction services, including installation of underground pipeline, cable, and conduits, as well as installation and maintenance of industrial facilities for petroleum, petrochemical, and water industries.
In addition, PRIM engages in construction of highways and designing, supplying, and installing high-performance furnaces, heaters, burner management systems, and related combustion and process technologies for clients in the oil refining, petrochemical, and power generation industries.
Business has been solid for the company with sales growth of more than 25% over the past five years. When infrastructure spending begins to pick up, this company is perfectly positioned to see earning soar and likely attract serious buying interest from institutional investors. The stock is ranked “B” by Portfolio Grader and is a “buy” at the current price.
The need for infrastructure spending makes for a great story, but as always rely on the numbers will tell the best story of all. For now, stay with those engineering and construction firms that have solid fundamentals and are well positioned to benefit when the boom finally gets here.
Louis Navellier is the editor of Blue Chip Growth.