“We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s.”
With these words then President-elect Barrack Obama pledged to upgrade schools and improve the energy efficiency of federal buildings, while improving healthcare and access to the internet.
Clearly, President Obama intends to stimulate the flagging economy, while improving America’s essential services. His promises mean that the government will inject money into the economy. Our country needs an upgrade, he says. In the process, this new infrastructure initiative should provide millions of jobs for the unemployed as well as plenty of work for American businesses.
What companies stand to profit the most from this initiative? Likely beneficiaries include engineering firms, building materials providers, and construction-related companies. There are probably opportunities here for copper miners and fabricators too, because their products go into almost all new construction, and these goods are also in demand in China. The stocks of many of these companies have been battered in the slump of 2008, and there may be real value here for the astute investor.
Jacobs Engineering (JEC) is a company that provides technical services to global clients. They are involved in construction projects, scientific projects, and in building and maintenance. The stock is selling at a depressed price, having gone down through most of 2008, but is off its worst lows.
Caterpillar (CAT) is another big name in infrastructure. It has a division that designs, makes, and sells forestry, mining, and construction machinery; another division that manufactures and sells engines, and one that is involved in financial products. The stock is on sale, at about 40% lower than a year ago.
United Health Care (UNH) is a health care services provider. Right now it provides a variety of services to about 70 million Americans. If there is a push to expand health care availability, UNH might profit from it. The stock price has been just about cut in half over the past year.
The new president intends to improve the nation’s infrastructure and provide jobs, at the same time providing financial assistance to an assortment of financial companies and to homeowners in trouble.
This is great stuff. But if pumping out all this money turns out to be a bit inflationary, investors might want to try some good old gold stocks, like Denver-based Newmont Mining (NEM) Toronto-based Yamana (AUY) or even Phoenix-based Freeport-MacMoRan (FCX) which also has interests in metals used in industry and construction, such as copper and molybdenum. All of these shares are selling at very good prices, at least for now.