Barron’s “Investor Soapbox” feature has an item from D. A. Davidson observing some specifics on transportation projects.
Poll Results Spur Infrastructure
Voters approved billions in state capital projects, which could boost engineering and construction companies.
VOTERS APPROVED BILLIONS of dollars in state bond issues backing major proposed infrastructure projects and programs across the U.S. as well as other initiatives, which we expect will have positive long-term implications for select companies in our coverage universe.
Although the timing of construction on these projects is not likely to begin for several months or years, and is also contingent on demand for new issues in the municipal bond markets, we believe several companies within our coverage universe could ultimately benefit. We highlight some of the major approved propositions and potential beneficiaries within the Engineering & Construction and Construction Products groups below.
California voters approved the issuance of $9.95 billion in bonds related to construction of the first phase of a high-speed passenger rail system between San Francisco and Los Angeles. Construction is not expected to begin until at least 2011. We believe potential beneficiaries could includeGranite Construction (ticker: GVA), URS (URS), Perini (PCR) and others. Additionally, Powell Industries (POWL) is a leading supplier of traction substations and switchgear for transit applications.
California voters approved Proposition 3, authorizing the state to sell $980 million in bonds for capital improvement projects at various California children’s hospitals. We believe potential beneficiaries could include Perini and Jacobs Engineering Group (JEC).
Voters approved a plan for the state of Hawaii to move forward with a mass transit system on Oahu, the largest planned public works project in the state’s history. Recent estimates put the cost of the 20-mile system in excess of $4.3 billion, exclusive of proposed extensions. We expectAmeron International (AMN) will benefit as construction of the rail line as well as ancillary structures such as garages, stations and parking lots is anticipated to consume significant aggregates, concrete and other heavy building materials on the islands. Construction is not anticipated until at least late 2009.