America needs rebuilding, and Barack Obama wants to give us a stimulus. How do you profit from this trend in your stock picking?

The first problem with capitalizing on an idea like this one is that other people have probably had the same idea. Since the election such an obvious infrastructure supplier as Caterpillar has done relatively well (that is, has fallen less than the market) as investors have anticipated the new business that is likely to come from an economic stimulus plan.

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The next hazard is that you may be right about one trend but overwhelmed by another. Alternative energy is a theme that could pay off in the Obama Administration, but the stocks have been drowned in a pool of cheap oil.

The alternative energy plays I recommended in my last column have done poorly: Trinity Industries (14, TRN) is off 55% and EnerSys (9, ENS) is off 50%, against a 35% decline for the S&P MidCap 400. I expected oil to fall well below its $147 summertime peak, but I did not expect it to plunge all the way to $41.

If you bought these, stay put. (And if you didn't buy them, now is a good time.) The primary business of Trinity is making railcars and that of EnerSys is making lead-acid batteries for industrial use. Those businesses are still generating strong profits. For these companies alternative energy is just icing on the cake.

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Promoting greater use of alternative energy is one of President-elect Obama's top priorities. Rebuilding our transportation infrastructure is another. On his Web site Obama outlines a plan to create an infrastructure reinvestment bank and fund it with $60 billion in taxpayer money over ten years.

He claims it will stimulate the economy and create 2 million new jobs, about the same number as were lost in 2008. Yet $60 billion will be only a beginning. The American Society of Civil Engineers, which gives U.S. infrastructure a grade of D, says $1.6 trillion over five years will be needed to get all our public works into good condition.

You can question whether Obama's plan will succeed, but don't doubt that a lot of money--at least at the federal level--is going to be spent on infrastructure projects during his Administration. Here are two undervalued midsize companies that stand to benefit from all this expected spending.

Terex Corp. (16, TEX) is a construction-equipment manufacturer that specializes in cranes and aerial platforms (those work stands that scissor up into the air). It also makes concrete and asphalt paving equipment for constructing and maintaining roads and bridges.

Terex's stock climbed steadily from 2003 to mid-2007, but it has sunk like a stone since then as investors began to anticipate a slowdown. Although third-quarter revenue of $2.5 billion was up 14% from 2007, net income fell by 38% to $94 million, or 96 cents per share.

Nonetheless, Terex remains extremely profitable. Excluding additional restructuring charges, full-year earnings, which will be reported in February, should be near $570 million, or $5.70 a share.

Still, management has been reducing head count in anticipation of a slowdown, and, given the recession, analysts are reducing their earnings estimates. They currently project only $4.05 per share for 2009. But if Obama's spending plan gets off the ground, Terex will easily beat that. At two times trailing earnings and only 14% of revenues, it's a steal. The average price/sales ratio over the past decade has been 50%.

URS Corp. doesn't manufacture any equipment, but it, too, stands to profit from infrastructure spending. It's a publicly traded engineering consulting firm. Transportation is one of its biggest markets.

URS can handle all aspects of a project's life cycle, including planning, engineering and construction management in both the public and private sectors. More than 60% of its revenues comes from federal, state and local governments, and despite strained municipal budgets the company has not yet experienced any slackening in business.

Of course, in this bear market that hasn't kept investors from selling the stock. It's down 40% from its late 2007 high.

Thanks to a $3.3 billion acquisition in late 2007, third-quarter revenue more than doubled from 2007 to $2.6 billion and net income climbed 70% to $66 million, or 79 cents per share. The stock is not as cheap as Terex, but the growth prospects are better. URS can be had for 15 times trailing earnings and 0.3 times sales.

Vahan Janjigian is the editor of Forbes Growth Investor and Special Situation Survey and author of Even Buffett Isn't Perfect. Visit his home page at www.forbes.com/janjigian.

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