"infrastructure" - how to invest

[DemonD]

Re: "infrastructure" - how to invest

These are good ideas - but I have my doubts as to whether infrastructure plays can really be used to stave off the final economic reckoning.

In particular, it will be years, perhaps even a decade or two before major projects are funded, designed, built, then operational to the point of profitability.

The guess here is that infrastructure is running neck and neck with alternative energy for the next "bubble." So when we have a ka event (like stock market 2000-2002), when you want to re-enter stocks is with infrastructure plays.

My personal opinion is that there is already a mini-bubble in alt energy. P/E ratios for many alt energy companies are astronomical, we've already got the legislation for all the subsidies that have been around for a few years - the alt energy bubble is here. The infrastructure bubble isn't, at least not in the US.

BTW I wouldn't sell short technical abilities of construction and engineering firms (minnesota notwithstanding). Roads can be built better and faster than ever nowadays. Engineering continues to improve and there is no reason to think that engineering (civil, mechanical, electrical, environmental) won't continue to progress.

One final guess: It will be very profitable to have an engineering degree for the next 30 years.

[DemonD]

Mueller Water Products - MWA and MWA.B

MWA.B - Mueller Water Products
Closing price 8/7 - 12.12
52 wk low - 11.86
52 wk high - 16.20
P/E - 12.91
Dividend (yield) - 0.07 (0.58%)

Water - check
Infrastructure - check!

Supporting article from a light-hearted (yet respected) investing site:
http://www.fool.com/investing/small-...or-future.aspx

...Walter hadn't yet spun off Mueller Water Products (NYSE: MWA-B), the largest water infrastructure products manufacturer. Ninety percent of the 55,000 U.S. water systems use Mueller products.

Here is the business summary from Yahoo Finance:
BUSINESS SUMMARY
Mueller Water Products, Inc. manufactures and sells various water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, and gas distribution and piping systems in the United States and Canada. It has three segments: Mueller, U.S. Pipe, and Anvil. The Mueller segment manufactures dry-barrel fire hydrants; gate, tapping, check, butterfly, ball, and plug valves; iron valves, meter bars, and line stopper fittings; pipe repair products, such as repair clamps and couplings used to repair leaks in water and gas distribution systems; municipal castings, such as manhole covers and street drain grates; and patterns used by the foundry and automotive industries. It also provides machines and tools for tapping, drilling, extraction, installation, and stopping-off. This segment markets its products under Mueller, Mueller Canada, James Jones, and Viking Johnson brand names to various end-users, including municipalities, publicly and privately owned water and wastewater utilities, gas utilities, and construction contractors through distributors. The U.S. Pipe segment manufactures and sells a line of ductile iron pressure pipe, restraint joints, fittings, and other cast iron products. Its ductile iron pressure pipe is used primarily for potable drinking water distribution systems, small water system grids, water and wastewater transmission and collection systems, and reinforcing distribution systems, including looping grids and supply lines. This segment offers its products to water works distributors, contractors, municipalities, private utilities, and other governmental agencies. The Anvil segment provides various pipe fittings and couplings, pipe hangers, pipe nipples, and related products. It sells its products to commercial construction contractors through distributors. The company is headquartered in Atlanta, Georgia.
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DemonD's comment:

Incidentally, I cannot find a reason why MWA and MWA-B lost 6% Monday 8/7. Their earnings were hurt by the housing downturn, and the housing slump will be the main drag on the company ongoing, as a lot of their products go towards setting up water systems into new homes and communities. I think it's definitely possible that they will have an earnings contraction, but I further think that as a "pure infrastructure" and "pure water" play, you can't find anything better.

Other negatives I see are that they have no international presence that I can find, and it is imminently possible that a company like GE will expand their water infrastructure business if it sees that water industrials will be a growth division for them.

Also buyer beware as there are two classes of shares, MWA and MWA.B. There is no difference in dividend and the company has repeatedly stated that the shares will be merged in the near future, which represents an arbitrage opportunity (as the B shares sell at a significant discount to the A shares).

Disclaimer: Invest at your own peril, do not take this post as a recommendation but rather an impartial analysis of a stock that fits the description of "pure play water infrastructure."

[zoog]

Re: Mueller Water Products - MWA and MWA.B

Well, that's the most convincing infrastructure investment I've yet seen posted here, as far as I can recall. Doesn't exactly get me excited, but I guess that's the time to buy in, when no one is really interested.

[Tet]

Re: Mueller Water Products - MWA and MWA.B

MWA.B - Mueller Water Products
Closing price 8/7 - 12.12
52 wk low - 11.86
52 wk high - 16.20
P/E - 12.91
Dividend (yield) - 0.07 (0.58%)

Spinoffs scare the crap out of me, if it's so good why'd Walter spin Mueller off? Walter doesn't appear to be doing very well either and looking at the chart of Mueller it looks like it wants to head lower still, but it's hard to tell since you only have a years worth of history to look at. Good luck with this one.

[DemonD]

Re: "infrastructure" - how to invest

Tet - I have to double check my facts on this but I believe what Walter Industries did is they bought out companies and used their their own divisions for the specific purpose of creating a pure "water infrastructure" company. To me this is a very forward thinking and smart idea because there really aren't any other companies out there that are "water only" type companies (most of the other companies that do water infrastructure do lots of other things like roads and walls and bridges and electricity etc).

Incidentally my buy order went through (small position, as pretty much all my positions are small I'm not exactly in the high net worth category).

Funny though, I'm actually more inclined to favor spinoffs.

https://www.joim.com/abstract.asp?Is...ed=1&ArtID=107

Predictability of Long-Term Spinoff Returns
John J. McConnell and Alexei V. Ovtchinnikov

Investment strategies of buying and holding recently spun off companies and their parents have received significant attention from the investment community in the recent past. Despite their popularity, the existing evidence on the attractiveness of spinoffs appears piecemeal. In this paper, we examine in detail the stock price performance of spinoffs and their parents on a comprehensive sample that covers the last 36 years.We show that excess returns are indeed positive for both subsidiary and parent companies over almost all holding periods considered. For subsidiaries, the results appear both economically and statistically significant after various adjustments for risk. This evidence is consistent with investors earning an above normal rate of return by investing in recently spun off subsidiaries. For parents, however, after correcting for one very large positive outlier, returns are not statistically or economically different from zero.

[lobodelmar]

Re: "infrastructure" - how to invest

I would love to see a list of all of the infrastructure stocks like was suggested previously...but part of the problem might be that many companies that specialize in building roads, bridges, etc. are closely held. Not sure how to profit on this.

But again, more news proving there will *NEED* to get government involved.

http://news.yahoo.com/s/nm/20070808/...transport_dc_3

[dbarberic]

Re: "infrastructure" - how to invest

I caught Cramer last night for a few minutes on CNBC.

I thought I was about to die when I actually heard him saying that infrastructure plays are the next big thing.

He was pushing Shaw Industries and Chicago Bridge and Iron. Also a few other names I can't remember.

[zoog]

Re: "infrastructure" - how to invest

I caught Cramer last night for a few minutes on CNBC.

I thought I was about to die when I actually heard him saying that infrastructure plays are the next big thing.

He was pushing Shaw Industries and Chicago Bridge and Iron. Also a few other names I can't remember.

Oh no, the infrastructure bubble is already over!:eek:

[DemonD]

Re: "infrastructure" - how to invest

I will apologize to everyone right now, I'm far too busy with my own portfolio analysis to create an encompassing "infrastructure" list.

I will say the ones I like the most are GE and MWA, and also I like Buffett's idea of "backdoor infrastructure" investing by investing in railroads, and of course for infrastructure to be built you need raw materials (FCX, PCU, NTO, SLW - 3 copper miners and a silver miner), and you also need fuel to get it there (ECA, CNQ, SU - canadian oil companies).

When I create a list, I will share it with the community, but it's going to take time because there are hundreds if not thousands of companies that may be involved in "infrastructure" building.

I do not think there is a hurry though because after MWA, I'm not buying anything until at least next year, I'm about 50% cash and hoping for a dead cat bounce to liquidate even more.

FYI in case anyone missed it Australia CB raised interest rate 25 basis points to 6.0%. I'm seriously considering opening an everbank account with an australian cd... if not I'll go with treasurydirect. Remember even if we have severe monetary inflation, dollars will still buy more stocks if the market crashes (and as a stock-loving guy, that's my big focus).

These are just my current thoughts.

Do not expect a full list before September (a rather large event happening in NW nevada in a few weeks is taking up most of my free time right now).

[zoog]

Infrastructure Spending May Bolster These Funds

Do not expect a full list before September (a rather large event happening in NW nevada in a few weeks is taking up most of my free time right now).

How's that list coming along?:p

I caught Cramer last night for a few minutes on CNBC.

I thought I was about to die when I actually heard him saying that infrastructure plays are the next big thing.

He was pushing Shaw Industries and Chicago Bridge and Iron. Also a few other names I can't remember.

Oh no, the infrastructure bubble is already over!:eek:

And furthering that theme, here's a fairly recent article about investing in infrastructure, mostly via mutual funds and ETFs.

http://www.smartmoney.com/fundinsigh...story=20070830

Oh no, people outside of iTulip are onto this infrastructure investing secret! Quick, sell everything! Oh wait... I haven't even bought any infrastructure plays, whew.

Really, I'm still having a hard time "buying" this future infrastructure investment bubble thing. Most of the companies that might be considered seem to be well-established, lethargic behemoths. Not exactly the kind of stocks you'd expect to rocket into outer space. There's a few small companies on the new-technology side of things, but... enough to drive a bubble? I remain interested, but skeptical.