A bridge in Washington collapsed recently, once again exposing the state of this nation’s aging infrastructure. Replacing dangerous spans such as this one is complex and difficult. But AECOM Technology Corp (NYSE:ACM), Chicago Bridge & Iron Company N.V. (NYSE:CBI), and Fluor Corporation (NEW) (NYSE:FLR) are three companies that can handle big infrastructure jobs.
Too Many Failures
When it comes to a bridge, a single collapse is one too many. Luckily, the Washington bridge failure didn’t result in any deaths. According to Bloomberg, however, 44% of the key bridges in The United States are “structurally deficient.”
To put a perspective on that percentage, Bloomberg reports that Federal Highway Administration data reveal the number of “deficient” bridges to be around 8,000. Note that the Washington bridge was inspected in November and found to be “somewhat better than minimum adequacy to tolerate being left in place.”
From an investment perspective, there are only just so many companies capable of assisting with the replacement of bridges and our other vital and crumbling infrastructure. Contracts will eventually be handed out for this work, and these three players could profit:
An Industry Giant
Fluor Corporation (NEW) (NYSE:FLR) provides engineering, procurement, construction, maintenance, and project management services around the world. It has a more than $10 billion market cap, making it one of the largest players in the industry.
The company’s top line fell for two years during the 2007 to 2009 recession, but it’s now well above its level prior to the economic soft spot. That said, the company’s profit margin is in the low single digits and varies greatly from year to year. So bottom-line results are volatile. Still, even with such low profit margins, the company earned over $2.70 a share in 2012. Its dividend, while resulting in a mere 1% yield, has been increased a few times over the past decade.
Credit: Fluor Corporation (NEW) (NYSE:FLR)
Not Quite American Anymore
Chicago Bridge & Iron Company N.V. (NYSE:CBI) sounds as American as apple pie, but this company, founded in 1889, is now based out of the Netherlands. While its big focus is in the energy space, that infrastructure needs just as much tender loving care as our bridges and roads. Like the other companies here Chicago Bridge is a global player.
The company provides integrated engineering, procurement, and construction services to the energy, petrochemical, and natural resource industries. Chicago Bridge & Iron Company N.V. (NYSE:CBI) has grown organically and through acquisitions, like the early 2013 purchase of The Shaw Group.
The company’s earnings peaked in 2008, fell for two years, and have grown for the last three. Earnings, meanwhile, have gone from around $1.80 a share in 2009 to over $3 last year. A token dividend was initiated in 2011.
Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s shares fell sharply during the recession, but have since resumed their upward climb and are now at all time highs. This one is most appropriate for momentum investors right now. That said, purchases like the Shaw Group could keep the top- and bottom-lines growing nicely, which may interest growth investors, too.
A Growing Player
AECOM Technology Corp (NYSE:ACM) operates around the world, with about 60% of its business coming from foreign markets in 2012. It provides its services to both public and private clients, including planning, consulting, architectural and engineering design, and program and construction management. Some key areas in which it specializes are highways, airports, bridges, and power transmission and distribution.
Founded in 1990, AECOM has grown revenues steadily over the last decade. This is impressive given the nature of such expensive, contract driven work. The company’s success has come from a mixture of organic growth and acquisitions. Most recently, the company has been reaching into emerging markets with acquisitions in Asia and Africa.
The company’s bottom line had been heading higher for five years up until fiscal 2012, when it dipped into the red. However, a non-cash writedown of $2.88 per share was the reason for the poor showing. Europe’s continued economic struggles and the swift troop drawdown in Iraq were to blame. In short, its 2012 results weren’t as bad as they look at first glance.
The company’s shares have had an impressive run over the past year or so, and are now at the high end of a multi-year trading range. Investors should wait to see whether they break out of that range before jumping aboard. If they don’t trade over roughly $35 a share, a drop into the high teens might present a buying opportunity.
Watch for the Spending
None of the companies here are cheap, but they are all positioned to benefit if this country gets serious about fixing its infrastructure. While there isn’t yet a big push for such spending, keep an eye out for it and continue to watch these stocks. While we may put off such expenses as long as possible, we can’t do so indefinitely.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of Fluor Corporation (NEW) (NYSE:FLR). Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Will We Finally Rebuild America’s Aging Infrastructure? originally appeared on Fool.com and is written by Reuben Brewer.
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