Try Infrastructure Plays After the Election

Without a doubt, we have just experienced a historic election. For months, investors, analysts and market strategists have been trying to handicap businesses and industries that will do well under each candidate. While history has shown that certain industries benefit from a Republican or Democrat at 1600 Pennsylvania Ave., our current market environment has left pockets of opportunity regardless of who occupies the White House.

The credit market is slowly thawing. Unfortunately, the consumer is still hurting, and the new chief executive is well aware of this. In an economy where two-thirds of GDP is consumption, stabilizing the U.S. consumer is a top priority. As a result, the following businesses are worth a closer look -- an economic rebound would help them greatly. I always stay true to my value investing roots, so these businesses are also trading at good prices.

Repairing the Economy

More than 760,000 jobs have been lost as a result of the economic turmoil, and the number is climbing. The painful credit crisis was caused by one fundamental activity: businesses were all deleveraging at once without any counterparty willing to lever up to balance the process out. Not until the government decided to lever up did the situation ease at the end of October. The government's balance sheet was the only one big enough to do this.

Similarly, no corporation or private institution can create 760,000 jobs -- or even a fraction of that -- on its own. But the companies can begin to add to the rolls if the government funds infrastructure repair, and that looks likely no matter who's in charge. The nation's bridges, roads and pipes are hurting, and there is enough work to be done to create meaningful employment.

While there are hundreds of infrastructure plays, a few stand out from the rest. The first two are Vulcan Materials (VMC - commentary - Cramer's Take) and Martin Marietta Minerals (MLM - commentary - Cramer's Take), two businesses that provide the aggregates that are used to produce cement and other materials needed by construction companies. These businesses enjoy competitive advantages from their business models -- there's no risk of technological obsolescence, and the companies have superior pricing power.

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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].