A bridge in Washington collapsed recently, once again exposing the state of this nation’s aging infrastructure. Replacing dangerous spans such as this one is complex and difficult. But AECOM Technology Corp (NYSE:ACM), Chicago Bridge & Iron Company N.V. (NYSE:CBI), and Fluor Corporation (NEW) (NYSE:FLR) are three companies that can handle big infrastructure jobs.
Too Many Failures
When it comes to a bridge, a single collapse is one too many. Luckily, the Washington bridge failure didn’t result in any deaths. According to Bloomberg, however, 44% of the key bridges in The United States are “structurally deficient.”
To put a perspective on that percentage, Bloomberg reports that Federal Highway Administration data reveal the number of “deficient” bridges to be around 8,000. Note that the Washington bridge was inspected in November and found to be “somewhat better than minimum adequacy to tolerate being left in place.”
From an investment perspective, there are only just so many companies capable of assisting with the replacement of bridges and our other vital and crumbling infrastructure. Contracts will eventually be handed out for this work, and these three players could profit:
An Industry Giant
Fluor Corporation (NEW) (NYSE:FLR) provides engineering, procurement, construction, maintenance, and project management services around the world. It has a more than $10 billion market cap, making it one of the largest players in the industry.
The company’s top line fell for two years during the 2007 to 2009 recession, but it’s now well above its level prior to the economic soft spot. That said, the company’s profit margin is in the low single digits and varies greatly from year to year. So bottom-line results are volatile. Still, even with such low profit margins, the company earned over $2.70 a share in 2012. Its dividend, while resulting in a mere 1% yield, has been increased a few times over the past decade.
Fluor Corporation (NEW) (NYSE:FLR) shares dropped during the recession and haven’t yet regained the lost ground. Around $70 a share looks like a key resistance point to watch. If the shares break above that level, growth and momentum investors might want to take a look. Otherwise, a drop into the mid-$40s would represent a nice buying opportunity.
Credit: Fluor Corporation (NEW) (NYSE:FLR)
Not Quite American Anymore
Chicago Bridge & Iron Company N.V. (NYSE:CBI) sounds as American as apple pie, but this company, founded in 1889, is now based out of the Netherlands. While its big focus is in the energy space, that infrastructure needs just as much tender loving care as our bridges and roads. Like the other companies here Chicago Bridge is a global player.
The company provides integrated engineering, procurement, and construction services to the energy, petrochemical, and natural resource industries. Chicago Bridge & Iron Company N.V. (NYSE:CBI) has grown organically and through acquisitions, like the early 2013 purchase of The Shaw Group.
The company’s earnings peaked in 2008, fell for two years, and have grown for the last three. Earnings, meanwhile, have gone from around $1.80 a share in 2009 to over $3 last year. A token dividend was initiated in 2011.
Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s shares fell sharply during the recession, but have since resumed their upward climb and are now at all time highs. This one is most appropriate for momentum investors right now. That said, purchases like the Shaw Group could keep the top- and bottom-lines growing nicely, which may interest growth investors, too.
A Growing Player
AECOM Technology Corp (NYSE:ACM) operates around the world, with about 60% of its business coming from foreign markets in 2012. It provides its services to both public and private clients, including planning, consulting, architectural and engineering design, and program and construction management. Some key areas in which it specializes are highways, airports, bridges, and power transmission and distribution.