Global urbanization fuels infrastructure investment, especially in higher-growth emerging markets, as the number of people living in urban centers has grown threefold since 1960 to 3.5 billion and is projected to grow to 60% of the world’s total population by 2015, says Joshua Duitz, Portfolio Manager at Alpine Woods Capital Investors, LLC.
“The reason [companies] need to invest in infrastructure is because it helps facilitate the growth of the economic infrastructure. We think there are great opportunities globally to invest in the owners of infrastructure, especially in emerging markets where there is much higher growth rates than here in developed markets,” Duitz said.
Duitz says Brazil has deadlines for infrastructure build because of the upcoming 2014 World Cup and the 2016 Summer Olympics in Rio de Janeiro, providing investors with clear-cut investment thematics. Brazil also provides infrastructure companies inflation adjustments and minimum guarantees, and allows rates to raise with inflation.
“CCR (CCR03.SA) and EcoRodovias Infraestrutura e Logistica (ECOR03.SA) are my two favorites in Brazil,” Duitz said. “The valuations are inexpensive, and they both should have earnings growth above 20% because they have had traffic growth between 7% to 11% this year, and they’ve had toll increases of 9.7% because of inflation in Brazil.”
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