Four Stocks to Play a Global Building Boom
Governments around the world are pumping billions of dollars to build and repair their infrastructures—spending on roads, bridges, power grids and water systems.
With CIBC World Markets predicting countries will spend about $30 trillion on infrastructure over the next 20 years, Tom Anderson, associate editor of Kiplinger's Personal Finance, offered four stocks to potentially play the global building boom.
Fluor — Many contractors were disappointed last year when stimulus-related packages did not materialize as soon as expected, including for this energy infrastructure pick. But analysts predict that Fluor's engineering services will begin to pick up starting in June, Anderson said.
ABB — The company, which creates equipment that makes the power grid more efficient, "sits at the sweet spot of a massive grid upgrade," Anderson said. US utilities alone are expected to spend $85 billion over the next 20 years to make the power grid more efficient, which stands to benefit ABB—his favorite of all four picks.
Although the company's sales and earnings got hit in the first quarter, "we really feel like that's a bump in the road," Anderson said. "The fact of the matter is...that the US and the world has an aging power grid and you need to replace it. It's like putting a roof on your home."
Itron — Itron makes meters that measure energy usage in real time—a capability that fewer than 10 percent of the 350 million meters in North America have, Anderson said. What's more, the US stimulus package provided $4.5 billion in grants for investment in a smart grid, and the money must be spent by 2013.
"We think that Itron's going to be a beneficiary of that," he said.
Nalco Holding — Nalco commands 18 percent of the $6.5 billion clean-water business. Analysts expect strong sales in Asia to help Nalco generate 4 percent revenue growth this year, Anderson said.
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Disclosure information was not available for Anderson or his company.