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Penny Stock Profits From President Obama’s Infrastructure Projects

Posted on | January 25, 2009 | 3 Comments

   

I wish President Obama the best of luck.

Ultimately, the economy and the markets will prevail, healing themselves according to their own timetable.

And you know my view: We’re already in a depression that it’s going to get worse before it gets better and that the outcome is going to be hyperinflationary, for a variety of reasons that I’ve discussed in previous columns.

But as dire as it all is, that doesn’t mean there’s no money to be made.

In my opinion, by itself, it does not.

During the Great Depression, for example, Roosevelt’s New Deal put 7 million people back to work between 1933 and 1937, building highways, dams, and bridges.

Meanwhile, the Federal Reserve’s Index of Industrial Production hit its lowest point of 52.8 in July 1932, just before the New Deal.

Certainly, I don’t want to sound like every other eternal bull out there.

Nonetheless, there are undoubtedly going to be many successful infrastructure projects and huge profits made via the hundreds of billions of dollars in infrastructure spending that’s about to be thrown at economies worldwide.

The U.S. public transit system needs even more money, an estimated $250 billion annually, to improve its D rating from the American Society of Civil Engineers.

In 11 short years, 80% of the locks on the nation’s waterways will be functionally obsolete, according to the Army Corps of Engineers.

The country’s airports and air navigation systems are desperately in need of updates.

By 2020, every major U.S. container port is projected to be handling at least double the volume it was originally designed to handle, requiring an almost immediate $10 billion to jump start updating the shipping infrastructure.

Clearly, the $90 billion that has been earmarked for this infrastructure category is just a drop in the bucket compared to what’s needed.

Call it "the invisible infrastructure" if you will, but the digital highways of today are critical to the economy.

Between 1995 and 2002, for instance, Information Technology (IT) was responsible for two-thirds of the growth in U.S. labor productivity, a huge boost to the country’s GDP.

And while the U.S. has some of the best digital infrastructure in the world, it lags well behind countries like Japan, Singapore, South Korea, and in 3G cellular networks, even behind China.

A wind-powered car oil prices at $160 per barrel a 200% to 300% rebound in shipping stocks these are just a few of the startling predictions that StreetAuthority Market Advisor has just revealed for 2009.

Meanwhile, digital traffic in the U.S. is expected to increase 500% by the year 2020 as demand for multimedia applications increases.

But it’s not just limited to entertainment.

Increasing wired high-speed broadband service now used by big business, smaller companies, and consumers across America.

Increasing the transmission speed and reach of wireless service to nearly every nook and cranny of the country.

Total estimated investment needed over the next five years: At least $30 billion.

Obama’s current budget for this category: At least $6 billion.

This is a no-brainer.

Not one single refinery or nuclear reactor has been built in the United States since the 1970s.

In 1981, the U.S. had 324 refineries with a total capacity of 18.6 million barrels of refined oil per day.

The grid’s infrastructure is woefully out-of-date, unreliable and inefficient.

Moreover, the current grid can’t transmit renewable power sources, such as wind and solar energy, without what’s called a "smart grid" infrastructure.

Rebuilding and modernizing the electrical grid is essential to creating a smarter, better, more reliable distribution of power, and is vital as we move in the direction of alternative energy.

Bottom line: I don’t think you can dispute the fact that under Obama, for the first time ever, the U.S. energy infrastructure — including alternative energy — has a real shot at getting major government support.

Expect biofuels, nuclear energy, refineries, clean coal technology, utility construction and more — to get a major boost.

Making money on infrastructure plays is not as easy as it sounds.

Right now is not the time to aggressively buy infrastructure plays.

Although I have previously forecasted that the Dow is in a bottoming out phase, more confirmation is needed before getting aggressive in anything but gold and key natural resource stocks that I have recommended in my Real Wealth Report.

Plus, infrastructure plays should be viewed as long-term holds, companies whose shares you plan on holding for three years plus.

Fluor is one of the world’s largest and best engineering, procurement, construction and project management companies.

One of the largest construction companies in the U.S. specializing in the telecommunications sector, MTZ builds, installs and maintains aerial, buried copper, fiber optic cable, underground conduits, and manhole systems related to the telephone and telecommunications industry.

A provider of construction and technical management services for infrastructure projects ranging from roads, bridges, mass transit and airports to power generation and transmission.

This construction company specializes in products and services related to highways, bridges, roadways, water pipes and wind towers.

Astec is also involved in natural gas pipelines, a segment of the construction industry that has been growing despite the economic downturn.

HW specializes in products that increase the energy efficiency of buildings.

There are also ETFs to take advantage of infrastructure plays, as well as mutual funds, like my favorite: U.S. Global Investors Global MegaTrends Fund (MEGAX).

For my specific buy signals and recommendations to profit from natural resources and the soon-to-begin infrastructure boom, be sure to subscribe to Real Wealth Report.

 

New report: Infrastructure investment = American jobs

The manufacturing sector will account for about 10 percent of the total spending resulting from infrastructure investments, corresponding to the 10 percent share of employment increases. With the manufacturing sector, …   Read more…

Infrastructure Investments

Green Chip editor Nick Hodge discusses the coming $750 billion infrastructure investment by the US Gov’t and how investors can take advantage.   Read more…

The Washington Monthly

It’s going to be good for construction workers, and they definitely need a bailout too, but let’s not get too carried away here in our expectations for infrastructure investments. They’re temporary in nature, rarely produce new …   Read more…

Water Infrastructure Investments

Wealth Daily editor Nick Hodge discusses Obama’s infrastructure stimulus and how it will affect water investments and other related stocks.   Read more…

Leaking Progress: $40M in Grants for Georgia Water Infrastructure …

A year later, water has evaporated as a legislative priority, and some $40 million in grants for communities to invest in water infrastructure and management have disappeared, as well, due to budget cuts. …   Read more…

MichaelMoore.com : Obama Details Recovery Plan

Major infrastructure investments include enhancing security at 90 major ports and modernizing the nation’s water system by launching 1300 wastewater projects, 380 drinking-water projects, and 1000 rural water and sewer system projects. …   Read more…

Manufacturing stimulus: Infrastructure investment is the best way …

A new study delivered by the Alliance for American Manufacturing (AAM) finds 18000 jobs are produced for every $1 billion in new infrastructure spending, and can help help revitalize the domestic manufacturing base.   Read more…

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Comments

3 Responses to “Penny Stock Profits From President Obama’s Infrastructure Projects”

  1. Bob Astor
    April 2nd, 2009 @ 12:14 pm

    You make some very good points in this article and i feel that obama can do it but it will take some luck and hopefully the economy will turn for us.

  2. Richard Kurtz
    April 4th, 2009 @ 5:14 pm

    Thanks, this is some really valuable information.

  3. Jacinta Lamaack
    May 5th, 2010 @ 2:01 pm

    I have been looking at Apple and Goldman Sachs primarily. The last Goldman fall helped me make a lot money with my puts but I kept Apple for the longer term, I think it has longer term prospect. Congratz for your revealing articles and keep them coming.

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