67 WALL STREET, New York - April 18, 2013 - The Wall Street Transcript has just published its Building Materials, Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: North American Electrical Transmission, Energy infrastructure companies, Infrastructure spending
Companies include: Quanta Services Inc. (PWR), MasTec, Inc. (MTZ), MYR Group, Inc. (MYRG), Willbros Group Inc. (WG), Dycom Industries Inc. (DY), General Cable Corp. (BGC), AZZ incorporated (AZZ), Powell Industries, Inc. (POWL), Acuity Brands, Inc. (AYI), Hubbell Inc. (HUB-B), WESCO International Inc. (WCC), EMCOR Group Inc. (EME), Belden, Inc. (BDC), Anixter International Inc. (AXE), TETRA Technologies Inc. (TTI), AT&T, Inc. (T) and many others.
In the following excerpt from the Building Materials, Construction and Housing Report, expert analyst Noelle Dilts discusses the outlook for the sector for investors:
TWST: What are the big investment trends you are seeing in this electricity infrastructure area?
Ms. Dilts: I have what I call kind a thematic approach to my infrastructure coverage. I try to find what I believe will be powerful infrastructure investment trends and then orient my coverage around companies that will be significant beneficiaries of these trends.
I am following two key themes, or markets, right now. The first is electric transmission and distribution infrastructure, which I touched on with contractors. Electric transmission is the movement of electricity across the high-voltage electrical network. We are entering the third year of a strong investment trend in this market. I estimate that the electric transmission market has essentially doubled over the 2010 to 2012 time frame. During that time, it has gone from about $11.2 billion in 2010 to $22 billion in 2012, and we are forecasting continued high teens growth in 2013 and 2014. We are seeing more of that growth coming from Canada in 2013 than we have seen over the past two years.
The increased spending on transmission that we have seen recently is a function of a few things. First, I believe that the U.S. has underinvested in the grid for decades. Infrastructure needs tend to get attention when there is a catastrophe or an issue, which raises the awareness of the problems. There has been a lot of coverage of power shortages internationally, in India and China, but here in the U.S., we had a couple of blackouts in the early 2000s that raised awareness of grid issues.
After the problems in the early 2000s, the government started paying more attention to the fact that the grid was aging, overstressed - was very congested in certain areas. The government came out with the Energy Policy Act in 2005, which really incentivized the utilities to invest in transmission infrastructure. We started to see a little bit of a pickup in transmission investment ahead of the recession, but really most of the growth there has occurred post-2009. This acceleration has raised transmission project activity to levels that have really not been seen for the past 30 years or more.
Another very important trend I'm following that is really powerful is energy pipeline; again, this includes oil, natural gas and NGL pipelines. This is a market that's really been driven by the development of the shale plays and the need for infrastructure to transport those products across the U.S. As a result, you are seeing an absolutely - a massive buildout of pipeline infrastructure to support the developing shale plays. The infrastructure is at the site of the shale plays, with gathering systems as well as transporting in or transporting out, which involves midstream and long haul pipes.
Right now, there is a lack of takeaway capacity for oil both in the Bakken and at the Cushing hub, so we are seeing the construction of a number of pipeline projects aimed at alleviating those capacity constraints. We are forecasting an increase of about 56% growth in pipeline spending in 2013...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.