Go!
According to a study by the Urban Land Institute, firms that build and maintain roads, bridges, and other infrastructure will likely see increased profits in the near future, thanks to the United States' need to spend how much on infrastructure by 2010?

A.)  $589 million
B.)  $1.0 billion
C.)  $1.3 billion
D.)  $2.2 billion
E.)  $1.6 trillion
Published: December 16, 2007

The correct answer is      (E.)  $1.6 trillion


A 2007 study by the Urban Land Institute indicated that the U.S. will need to spend that much by 2010 on aging roads, bridges, and water-related infrastructure. This spells unprecedented profits for the firms that do the planning and construction of such projects.

In fact, some investors may not realize the construction boom that is ongoing in the United States, since much press is devoted to the sagging housing market. Millions of investors routinely ignore the "other side" of the construction business -- non-residential construction. The firms that build power plants, roads, bridges, water treatment facilities, and even commercial office buildings are still seeing great growth.

But an important thing to remember about non-residential construction is that its demand has little to do with the housing market. For example, state, local, or even federal governments typically finance roads -- this means that spending often remains steady, even during recessions.

Companies in several sectors of the non-residential construction industry are particularly well-positioned for the coming windfall of government spending. For instance, the demand for power is growing both in the U.S. and abroad, which is creating a seemingly never-ending demand for new power plants, including traditional coal-fired facilities, hydroelectric projects, and modern nuclear plants.

Likewise, U.S. roadway construction spending rose sharply from 2005 to 2007 as local and federal governments tried to tackle the nation's gridlock problems. In addition, the devastating collapse of the I-35 bridge in Minneapolis during the summer of 2007 drew attention (and repair efforts) to the 75,000 other bridges nationwide that were certified as "structurally deficient." That means big spending.

Another infrastructure sector seeing big spending is water. Cities deal with contaminated water every year, and aging pipes and reservoir systems waste water and worsen drought restrictions. To boot, a whopping 3,500 dams in the country are considered inadequate and potentially unsafe.

With all of these points in mind, the companies that build and design infrastructure projects stand to benefit from a wave of spending in the coming years -- but some sub-sectors (and some companies) will benefit more than others. In a recent issue of the premium StreetAuthority Market Advisor newsletter, Editor Paul Tracy and his staff took an in-depth look at two favorable plays in the infrastructure construction boom. Both of these firms have earnings growth rates of over +12% and provide a perfect way to benefit from the $1.6 trillion that needs to be spent. To learn the names of these companies, and to learn more about the Market Advisor newsletter, please visit this link.
 

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