President Barack Obama's promised investment in infrastructure came too late to stem the carnage in the stocks of its expected beneficiaries. The case for infrastructure stocks, which we laid out in The Great Global Building Boom, remains sound: Over the next 20 years, it will cost trillions to build and maintain roads, bridges and other infrastructure around the world. What's more, Obama wants to make infrastructure spending a big part of his economic-recovery program.
But for now, the primary megatrend is the global market meltdown, which infrastructure stocks could not escape. Over the past year through January 9, an exchange-traded fund we recommended, iShares S&P Global Infrastructure Index (symbol IGF), dropped 39%. During the same period, Standard & Poor's 500-stock index fell 35%.
Mueller Water Products (MWA) performed well, relatively speaking. The shares of the maker of high-quality pipes, valves and even fire hydrants lost 8%. But our other picks bombed. Macquarie Infrastructure Co. (MIC), which invests in U.S. assets, owns airport parking lots and airport-services businesses, among other things. Hurt by a slowdown in travel, Macquarie cut its dividend, contributing to an 85% plunge in the stock. At its January 9 close of $5.49, the stock yields nearly 15%. Meanwhile, shares of El Paso (EP), which owns pipelines and also produces natural gas, sank 53%. The big culprit: problems obtaining financing for planned projects. We still like Mueller and the iShares ETF, but we've lost confidence in El Paso and Macquarie. We advise selling the stocks.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Our growth-stock recommendations in Make More, Keep More, in the same issue, also performed poorly. Data-storage giant EMC (EMC) fell 30%; online data tracker ComScore (SCOR) tumbled 60%; and Hologic (HOLX), a maker of diagnostic equipment for breast and cervical cancer, plummeted 84%. We still think all three are good businesses and that their stocks will eventually rebound.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Fed Cuts Rates Again: What the Experts Are SayingFederal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
-
Stock Market Today: Stocks Retreat Ahead of Nvidia EarningsMarkets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in FocusNvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
-
Stock Market Today: Dow Hits New Record Closing HighThe Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole SpeechFed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
-
Stock Market Today: Stocks Drop Ahead of Powell's Jackson Hole SpeechSentiment turned cautious ahead of Fed Chair Powell's highly anticipated speech Friday at the Jackson Hole Economic Symposium.
-
Stock Market Today: Stocks Rise After Jobs Data Lifts Rate-Cut OddsPreliminary data from the Bureau of Labor Statistics shows job growth was lower than previously estimated.
