Market Needs Rest - Also Included: Infrastructure Special

George Brooks |

Ben Bernanke President Barack ObamaBrooksie’s Daily Stock Market blog  -  an edge before the market opens

Thursday, September 1, 2011        9:09 am EDT

DJIA: 11,613.53          S&P 500: 1218.89

Wall Street’s current focus is on President Obama’s speech next Thursday, and on the Fed’s meeting on the 20th.  These two events offer hope for reviving the economic recovery that started in late 2009, but has lagged recently.

One problem for buying today is the fact the DJIA is already up 860 points in less than two weeks.  Another problem is, no matter what the President proposes, there is no assurance he will get the support from the Republican controlled House needed to implement his recommendations.

With a long weekend looming, and the President’s speech a week away, I expect the market to sell off by the close Friday, even though the Jobless Claims reported  this morning were down and in line with projections and institutions have cash that must be invested for clients.

Infrastructure Spending :

(note: for new readers who visit every day, I will repeat this section on the infrastructure from time to time).

As the recession and bear market were intensifying in the fall of 2009, I speculated that  infrastructure spending would get a high priority for a recovery. I wrote articles for Equities Magazine and compiled information I anticipated would be useful.

I was wrong, infrastructure spending  got a low priority, and today I am sure the administration has its regrets.

Infrastructure may yet get a play.

What is attractive about this kind of spending is it stands to employ a lot of people and it can be funded by some government spending, but to a greater degree by private investment.


When I did my initial research on the nation’s infrastructure, I was surprised  to find it encompassed 15 different categories: Aviation, Bridges, Dams, Drinking Water, Energy, Hazardous Waste, Inland Waterways, Levees, Public Parks and Recreation, Rail, Roads, Schools, Solid Waste, Transit, Wastewater.

In 2009, the American Society of Civil Engineers  (ASCE) gave each category a “grade" (A through D-)

I was shocked to learn the GPA for all categories averages a “D,” with an estimated need for an  investment of $2.2 trillion !

Their 140 page study is available on the following web site.  (Some pages are in full color, so copy with care or it’ll chew up your color ink)

http://www.infrastructurereportcard.org/sites/default/files/RC2009_full_report.pdf

These infrastructure categories  encompass most of the United States. Addressing their vast deficiencies would employ a significant number of workers at all skill levels for many years. Every politician  in both Houses should drool at the potential in the districts they serve.

With all categories of our infrastructure begging for attention, it is beyond comprehension that  our nations priorities are squandered abroad. Time to come home.

There is a move afoot to establish a facility for funding infrastructure projects sponsored by  Senators John Kerry (D), Mark Warner (D) and Kay Bailey Hutchison (R).  The vehicle would be the BUILD Act, introduced earlier this year by Senator Kerry and modeled after the  Export-Import Bank Created during the Great Depression.

Whether this will be a facility for funding infrastructure investments is unknown.  Whether Congress approves  additional infrastructure spending is unknown. I thought the following information would be helpful in the event our government decides to pursue this route for job creation while addressing an enormous need.

So what’s the best play ? An ETF may sound like an easy answer, however one of the problems with Infrastructure ETFs is they are generally loaded with utility stocks, ergo not  pure plays.

I compiled a list of 39 stocks  (not recommendations) with exposure to various categories of infrastructure spending. but have not crunched numbers – a massive job and I currently don’t recommend stocks.  But, this is a start.

There is no guarantee that the government will address the issue, or that any of these companies will benefit enough to have a significant impact on its stock. Eight of the ten largest highway builders are privately owned.

For the most part, these are meat and potatoes companies, NOT alternate energy companies.

ABB Ltd. (ABB), Aecom Tech (ACM), Alamo Gp (ALG), Ameron Int’l (AMN), Astec Inds. (ASTE), AZZ Inc. (AZZ), Caterpillar (CAT), Chicago Bridge & Iron (CBI), Cemex (CX), Colfax  (CFX), Deere (DE), Dover (DOV), Eaton (ETN), Emcor Gp. (EME), Gardner Denver (GDI), General Electric (GE), Gorman-Rupp (GRC), Granite Const’n (GVA), Idex (IEX), Insituform Tech. (INSU), Jacobs Eng. (JEC), Joy Global (JOYG), KBR (KBR), Layne Christensen (LAYN), Lindsay (LNN), Manitowoc (MTW), Martin Marietta (MLM), Mastec (MTZ), MYR Gp (MYRG), Pike Electric (PIKE), Primoris Svcs (PRIM), Shaw Gp.(SHAW), Sterling Const’n (STRL), Terex (TEX), Thompson Creek Metals (TC), Transcanada (TRP), Unites States Lime & Mnrls (USLM), URS Corp. (URS), Valmont (VMI), Vulcan Materials (VMC).

 George Brooks

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The writer of Brooksie’s Daily Stock Market blog, George Brooks,  is not registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GRC Gorman-Rupp Company (The) 32.43 1.26 4.04 113,870
GVA Granite Construction Incorporated 60.40 0.08 0.13 520,999
DE Deere & Company 103.62 -0.30 -0.29 3,164,330
VMI Valmont Industries Inc. 155.40 0.30 0.19 129,349
MTW Manitowoc Company Inc. (The) 6.20 0.02 0.32 3,177,562
GE General Electric Co 31.78 0.25 0.79 31,227,376
HDP Hortonworks Inc. 8.47 0.00 0.00 481,059
STRL Sterling Construction Company Inc 8.35 -0.24 -2.79 270,937
KBR KBR Inc. 17.60 0.23 1.32 1,212,214
JEC Jacobs Engineering Group Inc. 61.57 0.68 1.12 1,064,611
MLM Martin Marietta Materials Inc. 231.16 0.44 0.19 482,047
MYRG MYR Group Inc. 39.68 0.27 0.69 137,460
EME EMCOR Group Inc. 72.75 -0.29 -0.40 437,166
ETN Eaton Corporation PLC 69.53 0.55 0.80 1,988,048
LNN Lindsay Corporation 88.37 -0.72 -0.81 108,527
ALG Alamo Group Inc. 75.91 0.01 0.01 49,257
ABB ABB Ltd 20.98 0.06 0.29 1,090,224
PRIM Primoris Services Corporation 24.29 0.29 1.21 499,703
TC TC n/a n/a n/a 0
ACM AECOM 40.12 -0.01 -0.02 1,014,903
VMC Vulcan Materials Company (Holding Company) 128.51 -0.59 -0.46 1,054,215
ASTE Astec Industries Inc. 69.42 -1.19 -1.69 238,501
TEX Terex Corporation 31.82 -0.52 -1.61 1,065,190
AZZ AZZ Inc. 63.95 0.80 1.27 193,280
USLM United States Lime & Minerals Inc. 75.97 -0.28 -0.37 20,754
IEX IDEX Corporation 93.73 -0.55 -0.58 247,976
TRP TransCanada Corporation 44.62 -0.45 -1.00 692,488
MTZ MasTec Inc. 39.90 0.00 0.00 602,429
CFX Colfax Corporation 39.21 -0.07 -0.18 689,345
CBI Chicago Bridge & Iron Company N.V. 35.50 0.73 2.10 1,721,492
CAT Caterpillar Inc. 95.53 -0.74 -0.77 6,550,220
DOV Dover Corporation 76.82 0.56 0.73 845,099
LAYN Layne Christensen Company 10.49 0.05 0.48 462,621
CX Cemex S.A.B. de C.V. Sponsored ADR 8.77 -0.16 -1.79 11,913,975

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