The New York City area is home to more than 25 million people --
and nearly 1 in 10 Americans traverse its highways, byways and
transit systems. As any resident of the areawill tell you, the
region's transportation infrastructure is getting older by the
That's why many are relieved to hear that construction has begun
on a replacement of New York's Tappan Zee Bridge. The project will
cost an estimated $5 billion to $6 billion, but failure to replace
the bridge could cost the localeconomy much more in the long run
and could even pose a danger.
Leading civil engineers consider this to be a rare victory for
our nation's infrastructure, and in a
, they suggested that the United States would need to invest $3.6
trillion by 2020 to bring the nation's infrastructure to an
acceptable level. That's nearly double the current projected
These engineers gave our infrastructure a grade of D+, which
remarkably, is better than their last report, which I wrote about
In their current report, they slapped a C or D grade on most
aspects of our infrastructure, and only our solid waste treatment
plants received a grade higher than a C. Schools, roads, transit
systems and drinking water systems all received a D grade, and
these are among the most expensive areas to fix.
In recent years,funds for the repair and maintenance of aging
schools have shrunk. The report suggests that at least $270 billion
would be required to bring the nation's schools up to code.
Let's be frank: The dysfunction of our government implies that
we lack the political will to invest in the infrastructure we need
and deserve. At this point, we can only hope that spending rises
enough to bring the national grade to at least a C. Still, we are
talking about hundreds of billions in annual spending to reach that
a follow-up piece in late 2012 with suggestedinvestment angles.
While the picks in that column still look like savvy plays on our
nation's aging infrastructure, I've come across a few more ways
1. Infrastructure-focusedmutual funds
These funds have similar portfolios, and their long-term
performances are unlikely to diverge.
Morgan Stanley Global Infrastructure (Nasdaq:
Cohen & Steers Global Infrastructure (Nasdaq:
Forward Global Infrastructure (Nasdaq:
T. Rowe Price Global Infrastructure (Nasdaq:
2. Low-costexchange-traded fund (
focus on the global opportunity, including:
iShares S&PEmerging Markets InfrastructureIndex
iShares S&P Global InfrastructureIndex (NYSE:
SPDR FTSE/Macquarie Global Infra 100 (NYSE:
Partly due to the poor grade our nation's drinking water systems
received and partly due to increasingly frequent droughts
throughout the U.S. Southwest, it's wise to add water-focused
stocks to your portfolio.
American Water Works (NYSE:
generates roughly $3 billion in annualsales through its management
of more than 1,000 facilities for water treatment, storage and
Waters Corp. (NYSE:
makes water-quality monitoring systems and generates more than
$300 million in annualfree cash flow (on a sales base of less
than $42 billion).
Watts Water (NYSE:
is a global provider of water flow control technology that helps
aid conservation and boost water quality.
Lindsay Corp. (NYSE:
makes highly efficient irrigation equipment. The company's sales
base doubled from fiscal 2007 to fiscal 2012 (to about $560
million), andanalysts expect sales to rise 20% this year.
Risks to Consider:
Continued neglect of our infrastructure wouldmean another lean
year for these companies.
Action to Take -->
The longer the United States waits to address its infrastructure
needs, the greater those needs will be over time. Policymakers
appear to be making headway on contentiousissues such as
immigration andMedicare spending as part of a possible "Grand
Bargain." If they succeed, lawmakers can move on to key challenges
such as infrastructure, which appears to have bipartisansupport .
That makes this a good time to brush up on key infrastructure
investment opportunities, as they may soon emerge as a key growth
-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
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