August 1st marks the one-year anniversary of the I-35W bridge collapse in my hometown of Minneapolis, Minn.
This catastrophic event put the entire country on alert with regard to our crumbling domestic infrastructure. The enormity of the problem, and amount of money required to fix it, provided a boost to companies that deal in heavy construction.
One of those firms is Fluer Corporation (FLR). Analysts speculated that the firm’s revenues would increase significantly as the entire nation opened its eyes to the enormity of its deteriorating its roads and bridges. They were right.
Big Business in Big Infrastructure
Fluer isn’t your run-of-the-mill construction company. These guys build big–refineries, mines, power plants and massive transportation infrastructures around the world. To put this in perspective, Fluer was awarded the sole contract to build Texas State Highway 130. This contract not only represents the single largest highway project in the Long Horn State, but in the entire United States. This 90-mile toll highway has 7 interchanges, 177 structures and will cost $1.3 billion to build.
Needless to say, in the aftermath of the 35W bridge collapse, shares of FLR have enjoyed a steady rise that shows no signs of deteriorating. Even with persistent fears of an economic recession, FLR’s stock has been steadily moving higher.
FLR’s long-term growth picture is built solid. Shares trade for over 20 times earnings on a current and forward basis, and at more than 6 times its book value. Fluer’s balance sheet is also very strong with little debt and more than 1.8 billion in cash.
In addition to building roads and bridges, FLR is a huge multinational company that has diversified into a wide variety of industries including the oil and natural gas industry–one of the strongest areas to be in right now. Rising oil prices will support growth in revenue for FLR (see also, “Get Rich From High Oil Prices.“)
And let’s face it, at the end of the day, our nation’s roads, tunnels and bridges still need to be fixed, and Fluer Corp. is the perfect company for the job.
Some other construction companies haven’t been as lucky as FLR.
Earlier this week, fellow heavy construction firm Chicago Bridge and Iron (CBI) pre-announced that earnings will miss the mark due to a $317 million cost overrun on two natural gas pipeline projects in the U.K. Shares of CBI fell some 20% on the news.
Will the same be true of FLR? It’s possible. I wouldn’t be surprised to see a similar announcement when FLR releases earnings on August 11. But this doesn’t mean the stock’s long-term performance will crumble. Rational Investors would be smart to use any performance weakness as an opportunity to buy more shares.
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