Editor's note: Ask TheStreet is designed to answer questions about the market, terms, strategies and investment methods. Please email us to ask a question, but keep in mind that we cannot offer specific investment- or stock-related advice.
Just what kind of company would be considered an infrastructure play? -- Z.P.
The roads we drive on, the electricity we use, even the lines of communication that bring Web sites like this to our computers: infrastructure is a major part of our everyday lives. These days, though, the private sector is becoming increasingly responsible for infrastructure. Does this make infrastructure a good investment? Let's take a look.
What Is Infrastructure?
Generally speaking, infrastructure is the group of facilities that support networks and systems in our society. To be more specific, infrastructure includes things like transportation systems, communication networks and utilities. And while we often attribute the building and ownership of infrastructure to governments, you might be surprised at just how many companies have a hand in the creation, maintenance, and ownership of infrastructure, both domestically and abroad.
Because infrastructure encompasses so many different kinds of networks and areas of expertise, it can be hard to define the types of companies that deal with infrastructure. Of late, there has been a push to invest in companies that control transportation infrastructure (for example, roads and highways), but we will get into those companies in a little bit. For now though, let's look at what makes infrastructure a new "it" investment.
Why Is Infrastructure a Good Play?
There are a few factors that help make infrastructure a special investment case. First is the need for the private support of infrastructure. While things like road and sewage systems have, in the past, been supported by public funds, there are a lot of infrastructure elements that we're accustomed to using that are actually private investments.