It has been about six months since then President-elect Barack Obama said that his top priority was to get a new economic stimulus plan passed and China announced its own $600 billion stimulus plan with an emphasis on infrastructure and public works.
Now that a few months have passed which stimulus stocks will continue to outperform?
The Tech, Consumer Discretionary, Materials and Telecom sectors have all had positive gains since November. Some of the biggest gainers in these sectors since November 1 are:
- Sun Microsystems up ~94%
- SanDisk up ~51%
- Consumer Discretionary
- Ford Motor up ~178%
- Auto Nation up ~136%
- Freeport McMoran up ~75%
- Newmont Mining up ~62%
- Sprint Nextel up ~73%
- Qwest up ~51%
Joshua Duitz, Portfolio Manager of the Alpine Global Infrastructure Fund, believes these government steps will serve as a catalyst that will accelerate infrastructure investment. "Government spending will be the first phase of a two part process, one short term and the other longer term," Duitz said. "For the short term, the stimuli should kick in during the second half of 2009 and in 2010. At first we saw gains in defensive plays from utilities and pipelines. Now we have seen more beta come out of the construction sector as the economy starts to improve."
His strategy seems to be playing out as his fund has been the top performer amongst its peers since November.
Note: Data per ThomsonReuters. Per Morgan Stanley, the -50.81% price change in its fund since Nov. does not take into account a $4.566/share capital gains distribution paid at the end of 2008.
For the longer term, Duitz is focusing on where the infrastructure spending is going to occur. He is targeting an allocation across infrastructure plays as follows:
- Utilities: 20-30%
- Telecom / IT Infrastructure: 20-30%
- Transports: 20-30%
- Energy: 5-15%
- Construction: 5-15%
Now that we are tuning the corner on the economy, some of the stocks Duitz likes (and owns in his fund) include:
- ITC Holdings
- Union Pacific
- NuStar Energy
- El Paso Pipeline Partners
- FPL Group
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