This from Fleet Street Invest:

If you’re looking for a new investment trend for 2009, look no further than infrastructure.

Around the world, diggers are mobilizing, cement lorries are loading up, and armies of road and rail workers and builders are gearing up for action.

From America to London, China to Chile, governments are ready to build their way out of the global recession with huge stimulus packages which will focus to a large degree on new infrastructure.

On 6 December, US President-elect Barack Obama outlined a plan to create millions of jobs in the U.S. by “making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s.”

Obama’s plans include investments in roads and bridges as well as work to make public buildings more energy-efficient, modernize schools and improving Internet-based communication and its availability around the country.

Meanwhile, here in the UK the government has also announced a £18 billion stimulus plan – with huge chunks of money for infrastructure. News agency, AFP, also reports “a massive public spending plan to pump more than $32 billion into Argentina’s infrastructure.”

A dominant investment theme for 2009

And as American colleague Chris Mayer puts it, this is a dominant theme for 2009: “Think of it as a kind of contagion. Soon every government with a slowing economy from Capetown to Moscow, from Brasilia to Bangkok, could follow suit.”

Robert Markman, portfolio manager of the Markman Global Build-Out Fund, concludes that Governments around the world “are making plans to jump-start their economies by throwing hundreds of billions of dollars at infrastructure projects”.

This could lead to a great 2009 for companies that make cement, steel, asphalt, and anything else you can think of that goes into building things. Not to mention the companies that supply the machinery which the many infrastructure projects will need to get things built.

Now’s the time to start looking for ways to play this emerging mega-trend, especially as share prices for these kinds of companies have – along with everything else – corrected so sharply in the past year, many of them now look very cheap.

So, how to play it? Well, we’ll be conducting some in-depth research here at Fleet Street on the best ways to profit from the coming infrastructure boom. We’ll pass on our best ideas when we’ve worked things through.

But we have some early thoughts that we’ll be following through to see if they stack up…

Long-term investors keen to buy into the market might consider the kind of companies that will be at the forefront of the building projects. Companies like US-listed Caterpillar (NYSE:CAT) should be in great demand as building gets underway.

According to a recent report from Associated Equipment Distributors, a construction industry body, for every dollar spent on highway construction, an estimated 6.4 cents will be used toward the purchase or lease of equipment or on major repair and maintenance. The report also predicts that, 12 cents out of every dollar spent on water infrastructure projects will go towards construction equipment. That’s good news for companies like Caterpillar.

Eight months ago, Caterpillar was trading at over $85 dollars, but you can pick up shares now for a little over $45. With this kind of planned demand, Caterpillar looks pretty cheap on its current single-digit P/E ratio – one certainly worth taking a closer look at.

Closer to home, another beneficiary could be Zurich-based ABB ltd (ADR:ABB) The company is the global leader in the business of building, refurbishing, and creating the supplies for industrial, municipal, and national power supplies. It should also be a huge beneficiary of China’s $586 billion stimulus package, which is aimed at infrastructure build-out. We’ll be checking that one out, too.

As I said, we’ll be looking closely at this growing trend in the months ahead. When we have found the individual shares that we believe are best placed to deliver solid gains from the global infrastructure boom, we’ll let you know.

Battered ETFs offer an easy way in

In the meantime, consider some of the many tracker investments that have been created for exactly this kind of investment story. In recent years, there have been lots of infrastructure-related exchange traded funds (ETFs) launched. This was as a direct result of investor appetite for an easy way to play the long-term global infrastructure boom driven by emerging-markets countries.

Of course, this boom looked like it had been derailed in 2008 following the credit crunch and the huge slowdown in global growth. Suddenly, emerging markets fell out of favour.

But the smart investor will realise that this is only a temporary setback. Emerging markets will get back on track and keep emerging. And the coming stimulus shock from all around the world will keep countries building new roads, railways, bridges, schools and broadband internet infrastructure.

ETFs investing in industries including construction, engineering, utilities, building materials, industrial equipment and metals may have been battered in recent months. But they could be due a very powerful rebound in the months and years ahead.

Source: Revealed : The Biggest Investment Trend Of 2009

This from Taipan Daily:

“Dr. Copper” is known as the metal with a PhD in economics.

This is because the use of copper is so widespread throughout our lives. Most of the appliances in your house use copper: the fridge, the dishwasher, the microwave, and the washing machine just to name a few.

By the time you add up the electrical wiring, pipes and so on, the average home uses 400 pounds of copper. And your car? Another 50 pounds.

We also know that, on average, 40% of annual copper consumption goes to building construction.

So copper prices have something to say about global construction trends.

As you can see from the chart, copper went on an extended bull run starting in 2003, topped out below $4.00 per pound, and then fell off a cliff.

The severity of the drop was registered almost all in one month – October 2008. That’s an indicator as to what degree the entire global economy slammed on the brakes as a result of the credit crisis.

But now that copper has retreated back to 2005 levels – and other base metals back to 2003 levels – what does it mean?

I can think of two plausible explanations. Either the global infrastructure boom is well and truly dead, or the panic-driven sell-off as a result of the credit crisis was overdone.

China Picks Door #2

On Sunday, November 9th, China sent a clear message that infrastructure is not dead. We still need it, China said in so many words, and we’re going to build like crazy.

In more official terms, Beijing approved a 4 trillion Yuan “stimulus plan,” with most of the funds slated for infrastructure spending between now and 2010. (In dollar terms, 4 trillion Yuan is roughly $586 billion.)

Not everyone was impressed by the news. While some called it a major development, others shrugged. China was going to spend this money on infrastructure anyway, the shruggers said. The announcement was meant more as a booster shot – a tonic for global sentiment.

My view, though, is that it doesn’t really matter whether China’s “mass stimulus plan” is truly a big shift or just new gloss on an old agenda.

The point is, that money – more than half a trillion dollars –  will be spent on infrastructure. Beijing has confirmed it aggressively and openly: the global building boom is not dead.

We Still Need It

Everything the world needed before the credit crunch, it still needs now. Bridges, roads, ports, airports, refineries, you name it. And China, a country sitting on $2 trillion in reserves, has just pledged to open up the checkbook and spend like crazy.

It’s true we don’t need any more houses in the U.S. or Britain just now – but even in the aftermath of the housing bust, countries like China and India and Brazil are on a residential upswing.

And by the way, what we do need in the U.S., and need badly, are repairs and upgrades.

America’s infrastructure – everything from sewer pipes to interstates – is on the verge of falling apart. We are looking at long-term repair and upkeep charges that run into the tens of trillions.

Basic Comforts

In sum, I like the base metals here. (I like precious metals too, but that’s a different story.) If you’re looking for good, safe places to put your money, I would consider some of the well-run base metal producers.

To recap:

• Base metals (also known as industrial metals) have been unduly crushed by the credit crisis.

• The market is acting as if the global infrastructure boom is dead and buried.

• China’s 4 trillion Yuan (nearly $600 billion) “mass stimulus plan” says infrastructure spending is not dead. Maybe they were going to build like crazy anyway… but that’s the point.

• It’s the world, not just China, that has plenty of building left to do. In due time we will see a return to global growth, and a return to pre-crisis trend patterns.

• The U.S. might have a housing glut, but we are looking at huge outlays on the maintenance and upkeep side of things. The longer we put off these repairs, the more pressing they become.

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A Quiet Oil Hedge

Oh, and one more thing. Another modest benefit of base metal producers is their negative correlation to oil prices.

In other words, if you’re holding any long energy positions in your portfolio – and who wouldn’t be with the bargains out there now – you have exposure to slumping oil prices right?

As heavy users of diesel fuel and electricity, the base metal miners can actually benefit from weak oil prices (which lower their production cost).

As I said, not a huge factor… but a modest diversification benefit for an energy-biased portfolio.

The “Lethargy” Strategy

When will base metals prices start to rise again? I don’t know. But I’m not buying these producers for a trade, so I don’t have to know. I can be patient.

In the past Warren Buffett has joked that “lethargy” (laziness) is a key component of his investment strategy. I’m taking a page from the Buffett book here.

In practice, that means I’m on the lookout for high quality base metals producers with strong balance sheets, plenty of cash in the bank, good cash flow, smart management, and low share prices to boot.

When you come across a company with the above characteristics, you can just buy a good chunk of shares, throw the position in a drawer, and sit back to wait for the inevitable double or triple.

Source: What China’s “Mass Stimulus Plan” Says About Where to Invest Now