Friday, January 11, 2008

Infrastructure Companies Cleaning Up on Contracts

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While the market is pricing everything to implode and the End of Days, let's look at the real world that people will be analyzing once they realize the whole world does not end just because our financial institutions are a lightly regulated, financial innovating joke.

The Infrastructure Group is locking up contracts left and right - I don't currently hold Fluor (FLR) but based on this week alone you have to be impressed.

Fluor
5 year, $334M Contract in Kuwait
5 year, $4B Contract with US Dept of Energy to maintain nuclear stockpile; potentially Renewable to 10 year, $8B

Foster Wheeler
Company making entries into China energy market

Jacobs Engineering Group
3 year, $480M Air Force Contract

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I keep coming back to this group - pricing power, visibility (huge backlogs), and most important customers flush with cash - (a) petrodollars in the Middle East, (b) countries with huge trade surpluses and (c) another group with unlimited cash due to printing presses running 24/7 - The U.S. Gov't.

One day these facts will again be recognized and cherished, and investors will continue to flock to this group as these companies mint profits for years and years to come. But for today, and last week, and the week before we can fret that they will be losing profits, are terrible, stink, and don't deserve to be priced higher than $10 - because of the US consumer and a subprime US financial system. I've been saying for months - agriculture and infrastructure. If you, reader, plan to stick around this blog in the future.... well I am going to bore you to tears since I'll keep saying the same for quarters to come. [12 New Stocks to Buy on a Pullback]

Long Foster Wheeler and Jacobs Engineering in fund; long Foster Wheeler in personal account (and I'd be long Fluor as well if I had room in the fund)

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