Tech Stocks for the Stimulus Plan

Companies benefiting from Obama's massive proposed spending may include broadband, infrastructure, and environmental outfits

By Aaron Ricadela

As businesses hunker down for another year of malaise, a few sectors of the economy are poised to benefit from the incoming Administration's proposed elixir.

Short-term beneficiaries of President-elect Barack Obama's economic stimulus plan will probably include tech companies involved in a broadband expansion; engineering and construction companies that provide the services to repair the nation's physical infrastructure; and green energy and building materials companies, which could receive grants, incentives, and contracts under the proposal's energy-efficiency planks.

The Obama Administration hasn't detailed the plan aimed at restarting the stalled American economy, but the President-elect has said the goal is to create 2.5 million new jobs. Economists have said that the total spending could hit between $700 million and $1 trillion over two years. Obama's transition team hopes Congress will pass the coming bill shortly after it reconvenes in January. Obama and his advisers have laid out a few broad ideas, including proposals to rebuild roads and bridges, improve the power grid to cut carbon emissions, introduce more energy-efficient roofs and more accurate power meters for homes, and modernize the nation's health-care system with computerized medical records and other technology. The President-elect has also proposed spending new federal money for wiring schools and libraries for Internet access.

Tech Cheerleader

Companies that could benefit from the spending are seeing their stock prices rise. Shares of Intel (INTC) have risen 4% since Dec. 11 on anticipation the plan would boost government spending on information technology. Memory-chip maker Micron Technology's (MU) stock also got a lift last week from the news. "There's a common thread through Obama's policy positions: a strong recognition of the role that technology plays," says Don Whiteside, vice-president for global public policy at Intel.

It's not just tech that is benefiting. Shares of heavy equipment makers Caterpillar (CAT) and Deere (DE) and construction company Fluor (FLR) have posted sharp gains in the past month as investors expect them to reap new stimulus-related contracts. And companies involved with energy-efficient materials and renewable fuels are hoping for a burst of green jobs created as a result of new government spending.

To be sure, even companies that could benefit from the plan are hurting now. Intel and Cisco Systems (CSCO), supplying much of the equipment used to build data networks, recently issued dour forecasts. The U.S. economy is staggering toward the end of a yearlong recession that could last into 2009. Jobless claims recently rose to a 26-year high, and companies including AT&T (T), Citibank (C), and Dow Chemical (DOW) are laying off tens of thousands of workers.