Infrastructure Stocks
I read the business news every day. I start with the Wall Street Journal. Once a week it’s Barrons. Mix in a few dozen magazines and periodicals on specific industries, and you’ll sample my weekly reading. Lately, I’ve noticed a shift.
A while back everyone was writing about what to buy. The best strategies to invest your money. The next great stock. That trend has given way to commentary on with the economy. Don’t buy this, stay away from that.
Tales of caution abound.
Let’s put all that aside and talk about a stock that has a bright future. Today, I want to talk to you about a great investment idea I have. But first, let me explain what I’m thinking.
Let’s start with a few simple observations.
We have a new president-elect. Senator Obama from Illinois is set to take office in January. This is only a few short weeks away. With him come a brand new administration and a refreshed congress. Their mandate is to drive the US economy.
We’re seeing it already with the president’s transition team.
His cabinet members are being appointed at record pace. His first were clearly focused on the economy. That’s no surprise. Right now, the US economy is in a slump, as is the global economy. It doesn’t take a genius to see it. Just look at the global markets. All of them are down and down big for the year.
Governments around the world are cutting interest rates trying to drive economic growth.
It’s widely accepted, the biggest mistake during the great depression was the lack of government action. When the economy started faltering the government at first did nothing. They sat by as the financial markets collapsed and banks started closing. The entire economy ground to a halt.
After unemployment rates started climbing to scary levels the government started taking action. At that time, they started the largest government works projects ever.
Now President-Elect Obama’s taking a page from history.
He’s looking to start a government works program of his own. And he’s sending the solution right to the states. He’s asking state officials to present works projects that could receive immediate funding.
He hopes to use this program to increase employment by 2.5 million people.
What could these works projects be? Almost anything… New or updated highways and bridges, water treatment facilities, waste processing facilities, new government facilities… the list is endless.
The key here is they need to be kicked off almost immediately.
What Obama’s proposing isn’t some small handout. It could be the largest government works project in the last 50 years.
So enough of these observations. How do we make money?
Who’s going to benefit the most from this government stimulus package? In my mind the biggest winners will be construction and engineering service companies. They provide the services states and local government need to kick off these big construction plans.
I’m sure there’s a number of companies who will benefit. The one I like the best is Shaw Group (SGR).
They specialize in providing engineering and construction services to both private and public entities. They do everything from nuclear power generation to watershed maintenance. The list of projects they can handle is amazing. They’re the first call many state governments should make when starting a new project.
Shaw was founded in 1987 and is headquartered in Baton Rouge, Louisiana. With more than 26,000 employees around the globe, they have the capabilities to help jumpstart many of the state level projects.
Last year they did more almost $7 billion in revenue and kicked off profits of more than $140 million. Believe it or not, the stock at one time traded just shy of $70 a share. Now you can buy all you want for around $18.
Consider grabbing shares of Shaw as a way to capture your piece of the next government stimulus package.
Category: Stocks
