This week’s Fortune contains an article titled Cash in on the Rebuilding Boom in which the author, Katie Benner picks several companies she feels will benefit from upgrading the United States’ aging infrastructure. She picked Granite Construction (NYSE: GVA), for their road, bridge, and mass transit construction business, Greenbrier (NYSE: GBX) for their railcar leasing operations, General Cable (NYSE: BGC) for their wire and cable business, and Wesco (NYSE: WCC) for their business distributing electrical supplies and equipment.
I agree that our nation’s infrastructure is in need of a massive upgrade and repair. However, given my expectation of continued increases in the price of gasoline, I avoid investing in roads and bridges, although mass transit picks would be great, so long as they do not also have large road building businesses. I’ve already said why I like General Cable, but Greenbrier and Wesco also are very interesting. I particularly liked her characterization of Wesco:
Because Wesco deals in building supplies, its stock was hammered amid the general worries about the housing slump. But it has limited exposure to the weak residential market.
It’s not often that you can buy a company like Wesco, which is set to benefit from the renewable energy boom which trades at a P/E of 10. My clients and I don’t own any yet, but I expect to buy after a little more due diligence. Greenbrier is also on my watch list, since I see a growing role for rail transport (although it will be constrained by the difficulty in building new lines.). However, at a P/E of 20, I’ll wait and see what happens to GBX’s stock price for a while.
DISCLOSURE: Tom Konrad and/or his clients have positions in the following stocks mentioned here: BGC.
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