It’s A Big World Out There



Posted 7/18/2008

In some parts of the world, the construction boom is alive and well.

Take Dubai, where street after street of new houses, townhomes and apartments are dwarfed only by the luxury hotels and fanciful-looking skyscrapers rising fast in the skyline.

The slowing economy, mortgage meltdown and tightening government budgets are hitting the U.S. building market. But the heavy construction industry — firms building the biggest, most complex projects around the world — are finding plenty of work overseas.

High oil and gas prices is spurring infractors projects at home and abroad. Dubai is building new cities out of the desert — and entire new islands off its coast. Developing markets are building new roads, ports and skyscrapers at a pace the world has never seen.

Thanks to the lumpy nature of revenue from some of these massive projects, the heavy construction group shows some promise. But slowing growth at home and higher materials costs make for difficult near-term head winds.

“They’re tough stocks to buy with a one-quarter view, given the volatility,” said Steven Fisher, a UBS analyst analyst who covers the sector. “But with a 12-month view, we think they’ve a pretty good places to invest.”

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