While the details of the Obama economic stimulus package are still far from finalized, the prudent investor can look at the broad strokes and consider steps to capture some of the stimulus wave. Having the vision to recognize potential key players in the plan is critical to successful investing over the next twenty four months.
Two industry sectors call out to the insightful investor: Asphalt and SmartGrid Technology companies.
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Companies Vested in Asphalt Refining
Road and bridge repairs mean large contracts for laying tens of thousands of miles of asphalt. In recent years, despite an increase in the market price of asphalt, refining companies in general have been moving to refining processes that maximize gasoline production and minimize the byproduct, asphalt. When the nation invests in infrastructure, so can the smart investor.
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Two companies to look at in this field are NuStar Energy (NS), and Valero Energy Corp (NYSE: VLO).
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There are solid reasons to consider these companies. NuStar (NS), in a bold move in April of 2008 purchases one of Citgo’s remaining asphalt refineries. This gave NuStar (NS) a production capacity of 36 Million Barrels annually, making it the top producer of asphalt for the U.S. Market and third largest producer in the world.
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Valero (VLO) is the largest independent refiner of gasoline in the United States, and with the acquisition of Newhall-based Huntway Refining Co., became the second-largest asphalt refiner in California. The acquisition included asphalt refineries in Benicia and in Wilmington, near Los Angeles.
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Companies Vested in Power Generation Technology
Distributed power generation is encouraged by the energy components of the Obama economic stimulus package. The companies invested in the fuel cell technology that supports distributed power generation will have a distinct edge. One of the leaders in investing in Solid Oxide Fuel Cells is Siemens Energy (SI). They are strongly invested in the German wind-generated electrical market and a leader in smart distribution system technology. Many of their existing green technologies have a place in Obama economic plan investing, from wind-power to scrubbing technologies for fossil fuel plants.
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Some specialists in the field of SmartGrid or managed power grid technologies are Comverge (COMV), EnerNOC (ENOC) and International Rectifier (IRF). Comverge (COMV) is focused on providing peak-load and base-load management solutions to energy production companies in North American energy markets. They produce both the hardware and software for power grid management. EnerNOC (ENOC) is focused on software, analysis, and power management system design. A relatively small company at 335 employees, EnerNOC (ENOC) is one of the key leading-edge developers in SmartGrid technology. Finally, International Rectifier (IRF) develops and markets semi-conductor based, energy saving products for both the power grid and individual consumer use. With products as divergent as controls for the power grid to power-saving circuits for end-user devices such as air conditioners and compressors, this company is primed for growth.
Not every contractor, manufacturer or technology company will benefit in the early period of the Obama Economic Stimulus Plan. But by focusing on the leaders in the critical industries receiving attention in the proposed legislation, then the savvy investor can catch the wave.
An investment in an industry which Obama is behind could experience nice returns, but there are hazards as well. A prudent investor might consider hedging or protecting his/her Obama related investments with stock options. For example, a put option is analogous to “stock insurance“. And married put options combined with income generating stock options strategies can provide income with downside protection.
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[tags] Obama, Asphalt, SmartGrid, Road, bridge, Citgo, Huntway Refining, fuel cell, wind, green, energy, Economic Stimulus, IRF, International Rectifier Corp., NS, NuStar Energy L.P., SI, Siemens AG, VLO, Valero Energy Corp. (New), covered call investment strategy, investment strategy, iron condor, poweroptions, stock insurance, stock option trading, stock options [/tags]