7 Companies Set to Profit From the Stimulus Plan

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If you're like me, you start your morning with a cup of tea or coffee to stimulate your senses and get to work. Much like us, the nation is in need of a big cup of black coffee -- with about 10 shots of espresso and a NoDoz or two tossed in. In response, the government has proposed the biggest stimulus plan since FDR's New Deal.

Despite criticism surrounding the plan's makeup, it is bound to benefit some companies -- but which ones? First, let's break down the stimulus plan and the allocation of funds for respective industries. From there, we can determine which companies are most likely to benefit.

The plan calls for:

• $30 billion that will go toward bolstering energy efficiency, such as a new smart power grid and advanced battery technology
• $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.
• $29 billion for modernizing roads and bridges.
• $18 billion for clean water, flood control, and environmental restoration investments.
• $8.4 billion for investments in transit, and $8 billion for investment in high-speed rail.
• $7 billion for extending broadband services to underserved communities across the country.

The plan also calls for investments in energy efficiency upgrades in public housing, including new windows, furnaces, and insulation.

From this list, we can determine that alternative energy, industrials, materials, water, and broadband will likely benefit directly from this package. Now to focus on finding individual companies.

To find individual beneficiaries of the plan, I mined for stocks in the industrial and materials and construction industries, as I perceive those industries are most likely to directly benefit from the government's spending. To do that, I ran two separate scans using the Motley Fool's CAPS screening tool: one on the industrial industry and one on the materials and construction industries.

For both searches, I looked for companies with:

• CAPS ratings of five stars, the highest marks from our investing community.
• Current ratio of 1 or greater, to ensure that the companies have enough assets on hand to pay off liabilities in an illiquid environment.
• Market caps of $50 million or greater.
• Current price of $5 or greater.

Here are some of the candidates that popped up from my screen for companies in the industrial industry:

Company	Market Cap (in millions)	Current Ratio
ABB (NYSE: ABB)	$26,829	1.6
EnerSys (NYSE: ENS)	$507	2
Astec Industries (Nasdaq: ASTE)	$498	2.7
AZZ (NYSE: AZZ)	$265	3.1
Woodward Governor (Nasdaq: WGOV)	$1,172	3.4

And here are a couple of stocks from my screen for companies in the materials and construction industries:

Company	Market Cap (in millions)	Current Ratio
Apogee Enterprises (Nasdaq: APOG)	$291	1.5
Armstrong World	$890	2.9

Companies like industrial batteries maker EnerSys should benefit, since the plan calls for a piece of the energy-related $30 billion to fund advanced battery technology. Apogee Enterprises, which installs and renovates windows, storefronts, and entrances using coated glass for commercial buildings, is likely to cash in on energy efficient upgrades of buildings as well. Also, with $7 billion purported to go toward broadband, Verizon (NYSE: VZ) will most likely benefit by accelerating the buildout of its FiOS network.

While these companies will get a boost from the package, that shouldn't be the sole reason you invest in them. A potential investment needs to be the best in its league. The government will get the alternative energy and industrial sectors jumpstarted, for instance, but then it's up to the individual players to prove themselves through top- and bottom-line growth. Therefore, a screen like this should only be the first step in your due diligence. Remain mindful of the stock's valuation, fundamentals, and growth prospects.

Start reconstructing your portfolio at Motley Fool CAPS today! Let the collective wisdom of our 125,000-member-strong investment community help you make better investing decisions.

For related Foolishness:

• What's In the Stimulus Bill for You?
• The Stimulus Bill Could Bite These Companies
• What Obama's Stimulus Plan Suggests for Investors