A worker checks alignments on one of the foundations for the new Dubai Metro system.
Another popular name lately is Quanta Services. The Texas-based company has had its ups and downs over the years, as it changed its business model and digested acquisitions. But the acquisition of rival InfraSource Services in August positioned the company for "mega projects," according to Alex Rygiel, an analyst with Friedman, Billings, Ramsay. By the end of 2007, the firm snagged a $750 million deal with Northeast Utilities, a big New England power generator, to build out transmission infrastructure. In its power sector, orders are growing at a 10 percent clip, and the firm's backlog could close in on $6 billion in the coming quarters. Rygiel expects solid 10 to 15 percent growth for the company, with earnings growth of 25 percent. He called it "one of the few infrastructure plays that should see meaningful earnings per share growth in the coming years."
Oil prices matter for large chunks of the infrastructure boom, too, Hoedt says. He points to KBR, the Halliburton subsidiary spun off in 2006, as another example of how closely tied many infrastructure firms are to energy prices. KBR's success in getting decent prices for constructing liquefied natural gas facilities comes care of the two-year surge in crude prices, which has prompted investment in alternatives to crude. Hoedt sees the firm shifting more attention to that sector from its other incarnation as one of the largest outsourcers for the American military. He calls a recent $2.8 billion contract with Skikda LNG a "game changer" for the company.
While these stocks have taken a beating along with the rest of the market lately, Hoedt says the recent sell-off doesn't reflect on the long-term opportunity: "The longevity of the cycle is something the investment community doesn't fully appreciate."
