If, as is being reported, President Obama makes the main focus of his State of the Union speech not the hot button, front of the discussion topics of debt, immigration and guns but instead the economy and infrastructure renewal in the United States, it will be a not-so-quiet statement that he’s taking his second term seriously. More seriously than many of his supporters and detractors, frankly.
Infrastructure improvement and renewal should be one of the foremost priorities of any elected official right now. It’s no secret that the infrastructure in the United States – the bridges, roads, dams and so forth – have been allowed to atrophy as national attention has been elsewhere. Billions, perhaps trillions of dollars worth of projects have fallen by the wayside. If the president is serious about proposing a new focus on such, it could have a serious impact on the country.
It could also have an impact on your portfolio. Infrastructure is, of course, an investment that brings returns at multiples of the original expense. But that doesn’t mean you shouldn’t try to profit from the actual construction itself. If you know where to go there’ll be real money to be made by some firms – and some investors – if the president refocuses the country’s strength on internal matters for a while instead of external.
URS Corp (NYSE:URS)
URS does some serious infrastructure work. It’s been consistently in the Top 100 federal contractors in the United States and also provides work overseas. If dams and other power-generating items are on the list for renewal or simply rebuilding, URS has to be considered in the mix to pick up some major dollars. The firm has bought some others lately and is interested in more. The stock has been up and down but generally flat. It’s up $8 since November but it was down prior, so no love there. I think the market is a bit down on URS right now without sufficient cause. A buy here could have serious long-term payoff.
AECOM Technology Corp (NYSE:ACM)
AECOM is a major player in both planning and executing major construction projects. Highways, airports, mass transit, you name it, AECOM can do it. There’s no way the federal government makes rebuilding the nation a priority without AECOM getting a very nice slice of those contracts. The firm’s earnings were down in the most recent quarter and that might put some people off. Despite that, the stock is still on the way up, gaining about 60% since November. I could wish it paid a dividend (don’t I always) but otherwise, if there’s infrastructure out there to be built, AECOM will cash in.
Jacobs Engineering Group Inc (NYSE:JEC)
Pasadena-based Jacobs is an established player in terms of building and maintaining large projects. The firm just got a $2 billion renewal of the contract for the Johnson Space Center and reported a good first quarter. There’s not a lot bad to report. Since June the firm’s shares have climbed 38% and there’s no reason to think that will stop. Major engineering projects are coming and I think Jacobs will do well. The market isn’t yet overbidding JEC as its P/E is still sitting right around 15. If you’re going to move, it’s time.