Aussie Trifecta May Win Big This Year

02/16/2007 12:00 am EST

Focus:

Neil George

Editor-in-Chief, Income Publication and Products, Agora Financial

Neil George goes down under for investment opportunities, choosing three related Australian companies as his big favorites for 2007...

Neil George's 2007 Predictions:

2007 High 2007 Low 2007 Close
Dow Jones Industrial Average 13,279 10,588 12,683
Standard & Poor's 500 1,521 1,189 1,449

 

 

Favorite Stock(s)--A combination of:
Macquarie Bank (Sydney MBL, OTC MQBKY)
Macquarie Infrastructure Group (Sydney MIG, OTC MCQRF)
Macquarie Infrastructure Trust (NYSE MIC )

Essential services--from power and distribution to the very stuff of life itself, water--are being gobbled up by companies from around the planet [that are] eager to own the basics of how we run our homes and businesses.

Sydney, Australia is where most of the capital is being pooled together to quietly gobble up deal after deal [in this area].

Macquarie Bank cut its teeth on financing and investing in several projects in its own backyard for years before taking its deal-making skills on the road. From mineral and other land development financing to roadways, the bank has been amassing a talent pool that understands not only the economic vitality of infrastructure but the best means to grab more of it for its investors.

To invest, start with one of its subsidiaries: The Macquarie Infrastructure Company Trust (NYSE MIC) was put together by its parent bank to acquire and run a collection of infrastructure facilities primarily in the US. The assets including roadways, airport facilities, and the ever-more-important parking garages on top of energy distribution and storage facilities.

The cash flows are generous, with a current dividend rate exceeding 6.5%, which should continue to advance, making it a perfect cash cow play. Editor's note: Next year, the trust plans to make dividend flows fully qualified for the lower 15% dividend tax rate in the US.

Then, add two other parts of the increasingly powerful Macquarie machine. Alongside the US infrastructure company, adds the broader global company that Macquarie puts together beyond just the US in its Macquarie Infrastructure Group (OTC MCQRF, Sydney MIG). It will add to your collection of US roadways and other resources of the more domestic-focused trust and will pay nearly as well at a dividend rate of over 6.1%, to round out your investment in the world's crucial facilities. Buy in the US OTC market, [but be aware] that in Australia--as in London--many blue-chip stocks commonly trade at lower per share rates, so don't think that it's a penny stock.

It's not just the facilities we want, but the dealmakers as well. So, to the other two operators of much of the US and world infrastructure, add the parent bank responsible for putting together the trusts as well as the financing for other deals (with the likes of Texas Pacific, Carlyle, and other majors of the private equity world): Buy Macquarie Bank (OTC MQBR, Sydney MBL) itself to complete the package.

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