Ahead of the Bell: Boost seen in public spending

Analyst Avram Fisher of BMO Capital Markets said in a note to investors he expects a stimulus package of between $30 billion and $35 billion to repair and rebuild bridges, highways and other public works.

"While this will not create a 21st century national infrastructure or bridge the funding gap, it does move the needle in the near term," he said. "Given the likelihood of a stimulus package heavy in infrastructure spending, today's irony is that in the teeth of a recession, one of the most pro-cyclical industries is now an attractive and investable theme. The question, in light of this potential stimulus, is how attractive and how investable."

During a coming lame-duck session, Congress will take up a second economic stimulus package in an effort to stop the economy's downward slide. President-elect Barack Obama has said his priority when he takes office Jan. 20 is such a package if Congress fails to pass the legislation or if Bush vetoes it.

Fisher said he believes federal infrastructure spending already is "priced in" to Granite Construction Inc., URS Corp. and Tetra Tech Inc., but is not yet priced in for Aecom Technology Corp., Jacobs Engineering Group Inc. or Perini Corp.

Aecom has good exposure to transportation, road and highway work, he said.

However, Jacobs Engineering has only 10 percent exposure to public infrastructure and its mix has shifted toward oil, gas and refining businesses in which bookings rates are likely to decline, Fisher said.