Try Infrastructure Plays After the Election

It costs a lot to ship rocks any great distance, which leads to very localized markets. Even if the quarry 40 miles away is charging less per ton of rock, transporting the rock 40 miles will wipe out any pricing differential even with lower fuel costs today.

These stocks, especially Vulcan, are priced today for a severe economic contraction. The current entry points provide great upside when -- not "if" -- the infrastructure demand kicks in. And any hint of an improved residential construction market is a big plus.

Water, Water Everywhere

Another battered stock worth a close look is Mueller Water Products (MWA - commentary - Cramer's Take), the leading supplier of water infrastructure parts like hydrants, pipes and valves. The vast majority of its products occupy the No. 1 or No. 2 market share. Plus, the company has the largest installed infrastructure base: more than 50% of hydrants in the ground are Mueller's. This means when it's time for repairs or upgrades, Mueller gets the business.

The country's water infrastructure is leaking badly and in desperate need of repair. The American Society of Civil Engineers has graded water infrastructure a "D." Today's water systems are serving two or three times more people than originally intended.

Mueller's business is split 50-50 between the public sector and residential construction. At $6 a share, shares are at an all-time low and have completely discounted the residential part of the business. The company just reported quarterly earnings of 15 cents a share with no benefit from the housing sector or added public investment. Mueller's appeal goes beyond the numbers, as you have to account for the dominant market position it holds.

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At the time of publication, Gad was long Vulcan Materials, although positions may change at any time.

Sham Gad is the managing partner of the Gad Partners Fund, a value-centric investment partnership modeled after the original 1950s' Buffett Partnerships. Previously, Gad was a writer for The Motley Fool and a securities analyst for UAS Asset Management, a small, value-focused fund in New York City.

Gad also runs a value investing blog inspired by the teachings of Benjamin Graham and Warren Buffett. Gad is working on a value investing book (title forthcoming) to be published by John Wiley and Sons in the summer of 2009. Reach Gad at [e-mail].