President-elect Barack Obama has promised the biggest infrastructure upgrade America has seen since the 1950s. This is great news for those in the nuts-and-bolts business of construction and repairs. Chris Mayer says Astec Industries (NASDAQ:ASTE) and Northwest Pipe (NASDAQ:NWPX) are two strong companies set to benefit from an Obama stimulus.

This from The Rude Awakening:

In the market, of course, we have endured a sort of destructive khamsin blowing through the market and economy in recent months. The longer it blows, the more it seems to make brittle and destroy. The severe drop in commodity prices, for example, is worrisome for commodity investors. But more worrisome is how long it goes on.

Financial strength is not an unlimited reservoir, and many companies never had much to begin with. Even those that looked okay months ago are now scrambling. So even though the market crash has created a lot of bargains, I think the market still looks treacherous. The biggest risks now are financial, such as the inability of a company to finance itself through this crisis.

Something might look dirt-cheap, but if it can’t make it through the credit crisis, it’ll get a lot cheaper…and might even go out of business. So investors should be looking to buy stocks that are like camels – creatures that can cross the desert without needing to refuel. At least with these stocks, even if the prices go down a bunch, you have a good shot at making your money back, and then some, later. You could still wind up with a good return over a period of years. You can’t do that if the thing dies in the desert.

So financial strength is going to be very important in 2009. I also think it will be crucial to stay in essential industries and/or industries that have a well defined, long-term future, as opposed to businesses that can grind to a near halt.

One such company is Astec Industries (Nasdaq:ASTE). It has no debt at all. And it’s in an area — infrastructure — in which there are clear needs and a bright future. Astec, like most of the stocks of companies that build highways, bridges, water pipes and wind towers, should perform very well, even in a sluggish economic environment.

Astec Industries is in great position to benefit from the rebuilding effort just announced by President-elect Obama. The company just released an outstanding earnings report, posting a 39% increase in earnings per share. Backlog remained healthy. Astec’s “green” lineup of products, like its asphalt recycling equipment, plays well to politically minded buyers – besides saving folks some money and making better asphalt. And remember, Astec is also an international story. Overseas sales grew 37% in the third quarter and made up 43% of total sales.

Then there are natural gas pipelines that require products from Astec. Gas pipelines are not suffering from years of neglect or poor maintenance. Rather, the building boom in natural gas pipelines reflects all the new supply from America’s new shale regions and the nation’s growing appetite for natural gas. This year, we added some 4,400 miles of new pipeline. That’s more than 2.5 times last year’s figure. It is the biggest addition to the network in the 10 years in which we have data.

Those additions help meet a greater reliance on natural gas for fuel. But the pipeline companies are struggling to keep up. It’s not easy building new pipelines, especially in the dense and developed Northeast. Earlier this year, El Paso Corp. canceled plans for a 7.8-mile pipeline in Massachusetts because it couldn’t win approval from local authorities.

Other companies have had similar problems. Take Islander East Pipeline. Local authorities rejected its 50-mile pipeline that was to stretch across the Long Island Sound. Where folks expect to get natural gas, I’m not sure. No one seems to want to build anything, but people complain when prices rise. Anyway, this situation makes existing right of ways and pipelines enormously valuable.

In addition to repairing roads and bridges, the Obama plan will almost certainly direct funding toward water infrastructure projects as well. That’s just one more reason to like a company like Northwest Pipe (NASDAQ:NWPX), which makes large-diameter water pipes.

But even without any help from Obama’s new infrastructure spending plan, Astec and Northwest Pipe are two solid examples of companies that can withstand the khamsins that stock market blow our way.

Source: Shooting Stocks in a Barrel