While the government occasionally cuts spending or eliminates major new weapons programs, spending on the type of basic infrastructure and services URS provides is unlikely to be cut back. In fact, there is a growing trend for the military and government agencies to outsource some service and maintenance functions in an effort to cut costs. And there are plenty of costs to be cut -- Department of Defense spending on basic operations and maintenance has soared from $182 billion in 2005 to an estimated $301 billion next year.

That trend plays right into the hands of URS. And even if the U.S. economy slows down further, federal spending dollars should keep flowing.

Outside the federal market, URS is a key player in several key infrastructure businesses. The company designs and builds roads, public transport networks, airports, ports and water and wastewater facilities. Much of the basic infrastructure in the U.S. is aging and will need to be replaced in coming years. For example, after the tragic collapse of a key interstate highway bridge in Minnesota last year, the government determined that as many as one-quarter of U.S. bridges are "structurally deficient" and need repair or replacement.

And given high fuel prices, mass transit systems are reporting record passenger volumes. Many local systems are scheduled for expansion and upgrades to handle these rising volumes.

Finally, URS is a key player in the oil, natural gas and electric power markets. The company builds or assists in the building and maintenance of both fossil fuel and nuclear power plants. That includes retrofitting older coal-fired plants to comply with the newest emissions regulations. Strong growth in demand for power globally, and particularly in the developing world, should continue to support growth in this segment.

And in the oil and gas sector, URS builds refineries, liquefied natural gas (LNG) facilities, pipelines and even facilities for extracting and processing oil sands. With global energy prices soaring, there is strong demand for URS' energy-related engineering and construction services.

URS trades at 15 times forward earnings while sporting a long-term growth rate of
+15%. Thus, the stock trades in line with its growth rate despite the company's exposure to some of the world's most lucrative markets. Even better, the stock trades at a discount to its major competitors in the engineering and construction space despite its stable growth profile. URS looks like a good value under $50.

Paul Tracy
Editor
StreetAuthority Market Advisor

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About Paul Tracy

Paul Tracy co-founded StreetAuthority.com and became the firm's Chief Investment Strategist in 2001. He also co-founded TopStockAnalysts.com in 2006. Prior to that he spent several years as Managing Editor at a multi-million dollar financial publishing firm with over 150,000 subscribers. In addition to his role as managing editor and lead financial writer, he was also responsible for equity research and managing a team of seasoned professional financial writers, researchers and market commentators.

Paul's previous experience includes a position at Robert W. Baird & Co.'s full-service brokerage operations as well as economic research work on a Money and Banking project funded by the National Bureau of Economic Research. He has also spent time doing outside consulting and research for the University of Virginia, has appeared as a guest expert on several prominent financial radio shows, and has been a featured speaker at various investment conferences across the U.S.

Paul graduated with a B.S. in Finance and Management from the McIntire School of Commerce at the University of Virginia.

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