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 recent report, 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
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 point.
I wrote 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 toprofit .
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: KGIAX)
T. Rowe Price Global Infrastructure (Nasdaq: TRGFX)
2. Low-costexchange-traded fund (ETF) route
focus on the global opportunity, including:
iShares S&PEmerging Markets InfrastructureIndex
Fund (Nasdaq: EMIF)
iShares S&P Global InfrastructureIndex (
SPDR FTSE/Macquarie Global Infra 100 (
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 (
generates roughly $3 billion in annualsales through its
management of more than 1,000 facilities for water treatment,
storage and wastewater management.
Waters Corp. (
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 (
is a global provider of water flow control technology that
helps aid conservation and boost water quality.
Lindsay Corp. (LNN)
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
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 niche.
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