Monday, June 21, 2010

Research Recap: "US Infrastructure Construction Growth to Peak in 2011" (ABB; BGC; FLR; FWLT; PWR)

The symbols in the headline are not mentioned in the story but are among the strongest in the business.
From Research Recap:
Business Monitor International is forecasting a return to growth for the US infrastructure sector this year following five years of decline. We are pleased to offer a complimentary download of BMI’s latest comprehensive United States Infrastructure Report Q2 2010.
Selected Excerpts:
In 2010, we are forecasting the construction industry to grow by 2.4% year-on-year (y-o-y) in real terms, to reach a nominal value of $519.6bn. This growth is notable; however, it must be taken into context of the 13.2% decline estimated for 2009.
Beyond 2010, we are forecasting growth to remain positive, as the American Recovery and Reinvestment Act continues to stimulate the construction industry. The nature of infrastructure projects is long term, with construction taking a year or more, depending on the project. As such, the construction industry value will be supported by the ARRA for a number of years.

We estimate that 2011 will be the peak in construction industry real growth, when 6.5% y-o-y growth will be registered. Growth will gradually decline from this point on over the forecast period, falling to between 3 and 4% between 2016 and 2018. Between 2010 and 2018 we are anticipating average real growth of 4.5% y-o-y.
Growth will mainly be fueled by the disbursement of funds from the $787bn ARRA. A year on from its start date, the two year stimulus package has yet to have a significant impact on the construction industry, although the majority of funds for infrastructure projects have been assigned, they have yet to be disbursed as the ARRA has focused on emergency economic measures like tax relief during the first year.
The allocations continued over the past quarter, with $8bn in funding for high speed rail (or as it ended up being – a mixture of high speed and speeding up inter city railways) being awarded....MORE
We haven't spent much time on the group recently.
Here are some of the more recent posts:
Who is the World's Top Infrastructure Investor? (Hint: It's not even close)
Private Equity: "Rough Road For Infrastructure Funds" (ABB; CAT; FWLT; FLR; PWR)
Feb. 8: Utility Infrastructure: Addressing the Aging Electric and Water Systems (ABB; BGC; PWR)
The three I'm most interested in are ABB, General Cable and Quanta. Although there's no immediate catalyst to greater-than-market returns right now they are on the screen....
Here's What the Future of America's Infrastructure Might Look Like

From Popular Science:
25 new technologies that will transform America's systems

Step 1: Transportation

Defeating soul-deadening gridlock, monster potholes and dangerous road ice

Roads, Bridges & Trains Paul Wootton
Chicago road crews are scrambling to fill 67,000 potholes a month. Communities in Pennsylvania rely on 100-year-old water pipes made of wood. Squirrels still cause widespread blackouts. The country’s 600,000 bridges, four million miles of roads, and 30,000 wastewater plants desperately need attention. The solution isn’t patches, it’s an overhaul. Soon roads and power lines will fix themselves, and we’ll mine energy from sewage. America’s 21st-century tune-up won’t happen overnight, but we could start reaping the benefits (faster broadband! cleaner water!) within the next few years.

Cars that Report Potholes

Task: Fix the third of major roads that are in poor shape
Status: Three years to a prototype...