Now that we've had a month to reflect on the horrible aftermath of hurricane Sandy, one thing is very clear: our nation needs a new power grid.
"I think this storm was a wake up call to government officials and the utilities they regulate all over this country to finally start fixing our aging electrical infrastructure," said Jim Cramer.
One of the reasons why it took days or even weeks for people in New York and New Jersey to get their electricity back is because their power grid was outdated. The equipment should have been replaced ages ago.
And Cramer thinks after Sandy the nation will start to take the issue very seriously.
Of course losing power is inconvenient and it brings business to a screeching halt. The NYSE closed for 2 days. But far more important – the antiquated electrical grid is a security threat.
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"If, God forbid, a terrorist really wanted to do some damage, all they'd have to do is knock out a couple of power substations," reminded Cramer. "Thanks to Sandy we already know that should it happen, all of lower Manhattan would lose power."
However, amid the massive power outages there is a bright spot here - the nation's power grid pain could be your gain.
"That's where Quanta Services comes in," said Cramer.
Quanta is a leading specialty contractor that designs, installs, upgrades, repairs and maintains electric power networks, both for transmission and for distribution.
"Going forward, Quanta should ride a bull market in building out new electric power infrastructure, something that accounts for about two-thirds of the company's sales, Cramer said.
"Plus, Quanta also builds oil and natural gas pipelines, which we know is a good business in a world where North America is flooded with new oil and gas and we desperately need to build out additional infrastructure to transport the stuff."
In short, Cramer views Quanta as a post-Sandy play with a pipeline kicker.
Earnings seem to confirm the thesis. The last three times the company's reported, it's delivered a classic beat and raise each time.
"But because this is an infrastructure builder, what we really care about is their backlog of business and their new bookings," said Cramer. "Quanta's 12-month backlog rose to $4.17 billion, a new record, and their bookings increased by 17% from the previous quarter. Think about it like this: Quanta is a $5 billion company that has more than $4 billion worth of business over the next year."
What's the bottom line?
Our country needs to upgrade its power grid, and we need to do it soon.
"And in this one area, it seems like our state governments and our utilities are actually on the case, which is why Cramer likes Quanta Services, the company that builds out new electrical infrastructure and also has a killer pipeline business," concluded Cramer.
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