The Housing Market And Construction

The housing market is one of the main factors holding the economy down and of course there are different views on how to revive it. On one hand, Don Hays, the president and the chief investment strategist of Hays Advisory, said on Yahoo Breakout, that the government should stimulate the construction industry which has 2.2 million people out of work. This will give them jobs, start money moving into the economy.

On the other hand, are people who say not to give stimulus to banks that are holding unpaid mortgages. I must agree with them. There are so many houses out there. The banks should sell them and cover the mortgage, or the majority of the mortgage. When the banks gave mortgages, they took risks. Now the chickens are coming home to roost, deal with it.

The government could help by making mortgage payments income tax free for people who need financial assistance. These people are buying houses to live in, not investment properties. It could give similar tax breaks to current homeowners in financial difficulties. These incentives would help people to buy existing houses which are “underwater” and at the same time help people in need.

Additionally, not all is bad in the construction market. A company that looks like a solid investment is the Fluor Corporation. It has projects in several countries such as working with the Caspian Pipeline Consortium in Kazakhstan and Russia. They are also working with SSPCO, a joint venture company formed by Evonik Industries and Saudi Acrylic Acid Company in Jubail, Saudi Arabia. Fluor also has a contract with BHP Billiton Iron Ore in Western Australia developing the Port Hedland Inner Harbour. In addition, British Columbia Mining Joint Venture (BCMJV) which is 50% owned by Fluor, has made an agreement with Terrane Metals Corp to work on a copper and gold project.

Fluor has a marketing capitalization of $9.76 billion which is fairly large in the construction industry. Its P/E ratio is 27.13 and its net profit margin is 2.12. Earnings per share are 2.02. The CEO is David T. Seaton. He has been with the company since 1985 and during those 26 years has held ten positions giving him wide exposure to the various operations of the company. Alan Boeckmann is the new non-executive Chairman of the Board and D. Michael Steuert has been the CFO since 2001.

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]