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Dec.09

9:09 AM ET

Tuesday, 9 Dec 2008

Breakout Stimulus Stocks

Posted By:Giovanny Moreano | Ariel Nelson

Topics:Economy (U.S.) | euro | Currencies | Yen | Stock Market

As President-elect Barack Obama prepares to take office, the severity of the economic slowdown is pressuring the incoming administration to fuel infrastructure spending as a way to propel the economy. During NBC’s Meet the Press on Sunday, Mr. Obama discussed the possibility of a half-trillion dollar stimulus plan aimed at creating the largest infrastructure program in the United States since the creation of the interstate highway system during the Eisenhower administration.

The US currently invests approximately $400 billion per year in infrastructure improvements related to transportation, utilities, as well as various public facilities. Of that amount, the largest expenditures are designated to improving transportation infrastructure, which accounts for roughly $60 billion of federal financing annually.

According to estimates by Robert A. Sunshine, Deputy Director of the Congressional Budget Office, capital spending on transportation already exceeds $100 billion annually. Mr. Sunshine's projections, based on reports by the Federal Highway Administration, the Federal Aviation Administration, among others, suggest that capital spending on transportation infrastructure alone would approximately cost an additional $20 billion per year to maintain national highway systems among other transportation services at their current levels.

Yesterday, the S&P 500 Materials Sector was the biggest gainer, jumping 7.7% for the day, while the Industrial Sector gained 4.23%. Both sectors are up 17%, and 15% respectively since the week ending November 21, as major government spending is expected to benefit some of the companies involved in such projects.

Companies involved in the infrastructure industry include:

Many of these stocks have just broken through their 50-day moving averages, and some like Granite Construction have broken through their 200-day moving average and are hitting new 52-week highs.