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President Elect Barack Obama promises to rebuild America “calloused hand by calloused hand.” David Fessler says Airgas Inc. (NYSE: ARG ) is an great way to play an infrastructure boom. The company is the largest manufacturer and distributor of industrial, medical and speciality gases in the country. It’s business is well insulated from the economic slowdown, and it just hiked its dividend payment by 33%.

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The other day, a neighbor knocked on my door to ask me if I could do a welding repair on his riding lawnmower. Welding is tricky business, and it’s more art than science. Making a good strong weld takes many hours of practice making bad ones. I can personally attest to this.

My wire-feed welder surrounds the welding area with carbon dioxide gas (CO2), which keeps oxygen away from the weld site. This results in a strong professional looking weld.

As I started the job, I realized I was out of CO2, and would have to make a quick trip to my local distributor, Airgas Inc. (NYSE: ARG ) for a refill. The reasons I go there are the same as why you need to take a look at this unique company.

I’ve never been when they weren’t busy - this visit was no exception. And for good reason: Airgas is the largest distributor of packaged medical, industrial and specialty gases in the country. The company sells over 43 specialty gases from nearly 1,100 retail and service stores nationwide from their base in Radnor, Pennsylvania.

Airgas Inc. - The Largest Producer of CO2 & Nitrous Oxide

Founded in 1982, Airgas is the largest producer of CO2 (both liquid and gas), dry ice (frozen CO2) and nitrous oxide (more commonly known as laughing gas). Airgas maintains over 30 regional specialty gas research and development laboratories and operates more than 150 gas filling stations.

• CO2 in its various forms is used in the medical, industrial and food preparation industries.
• Nitrous oxide is used in the medical and dental industries as an anesthetic and also as an aerosol spray propellant.

Airgas manufactures its various gases at 14 air separation plants located around the country. They operate 19 plants that manufacture acetylene - a highly explosive, specialty gas used primarily by the chemical industry to synthesize other chemicals or for high temperature welding and cutting.

In addition, Airgas also sells gas related products such as regulators, flow meters, check valves, gauges, purifiers and gas detection equipment. It maintains a full line of welders and welding equipment as well.

Business Couldn’t Be Better For Airgas Inc.

Business couldn’t be better for Airgas Inc. - even in this tough economic environment . On October 23, Airgas announced record earnings and strong growth in sales and operating income for its second quarter ending September 20.

Quarterly earnings were up 44% to $72.8 million on a sales increase of 15% to $1.2 billion - fueled by acquisitions, an increase in same-store sales of 8% and a 12% hike in gas sales and cylinder rental.

Peter McCausland, the company’s CEO since its inception, said, “We are performing very well in a moderating economic environment, and our expanded offering that targets infrastructure construction has been successful in gaining new business, particularly in the power and energy sectors .

“About 40% of our sales come from our strategic products, which posted 11% organic growth in the quarter and are focused on the medical, life sciences, research, environmental and food and beverage markets.

“Acquisition activity has been strong in the first half of our fiscal year, with a total of six acquisitions and $142 million of acquired annual revenue to date. We are expanding returns by effectively integrating acquisitions and leveraging our extensive distribution infrastructure.”

Airgas Inc. Increases Quarterly Dividends

Things are going so well, in fact, Airgas Inc. reiterated its 2009 full year earnings guidance of $3.30 to $3.40 per share, and increased the quarterly dividend 33% to $0.16 per share.

The company continues to generate strong free cash flow, even while funding numerous plant projects that will be operational in the next year. Airgas is somewhat insulated from the economic slowdown since many of its products are used in maintenance and repair of aging infrastructure, and in the medical and food industries.

Shares of Airgas hit a 52-week low of $27.09 on October 24 and have soared 37% in just the last week. At present levels, the stock trades at a very respectable P/E of 12 and sports a 1.72% dividend yield.

As many of you who’ve been regular Investment U readers know, I’m a big fan of the infrastrucutre and energy sectors . As we wait for the broader markets to recover, the infrastructure service sector looks like it will be a great place to invest. Investors who want more exposure to this sector might want to consider adding a few shares of Airgas to their portfolio.

Warren Buffett is shopping for railroad stocks again. The ‘Oracle of Omaha’ increased his stake in Burlington Northern (NYSE: BNI ) to almost 20% last month. Fuel efficiency and road congestion are two key factors supporting a bullish outlook for the railroad industry, says Jason Simpkins .

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Last month, the iconic investing guru once again displayed his enthusiasm for railroad stocks by adding to his already sizeable stake in Burlington Northern Sante Fe Corp . (NYSE: BNI ). After picking up 7.85 million shares of Burlington in early October, Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A , BRK.B ) last week added another 825,000 shares to its holdings at a price of $79.65 apiece

Buffett has been bullish on railroad stocks for the past year. Buffett made his first move on Burlington Northern in April 2007, acquiring nearly 40 million shares – close to 11% of the railroad. That August, Berkshire went shopping again, loading on an additional 3.3 million shares of Burlington. He added another 6,000 in September.

Buffett continued the trend in 2008, adding 10,300 shares of Burlington to his holdings over a two-week period that ended Jan. 22.

With the purchases made last month, Berkshire’s total stake in the Fort Worth, Texas-based railway has climbed to 18.9%.

And Burlington Northern hasn’t disappointed. Just last month, the second-largest U.S. railroad reported a 31% increase in third-quarter profit. For the three months ended Sept. 30, the company reported net income of $695 million, or $2.00 a share – a 31% increase from the year-ago results of $530 million, or $1.48 a share last year. Revenue jumped 20%, reaching $4.91 billion.

“While we are all concerned about the current financial and economic situation, we continue to be optimistic about the future of our diverse franchise and we remain confident about our long-term prospects,” Matthew K. Rose, the company’s chairman, president and chief executive officer, said in a statement.

Warren Buffett is confident, as well, though not too long ago, Buffett himself wrote off the entire railroad industry as a poor investment.

“Warren and I have hated railroads our entire life,” Charles T. Munger, the vice chairman of Berkshire Hathaway, said last year. “They’re capital-intensive, heavily unionized, with some make-work rules, heavily regulated, and long competed with a comparative disadvantage versus the trucking industry, which has a very efficient method of propulsion (diesel engines) and uses free public roads. Railroads have long been a terrible business and have been lousy for investors.”

The reason for the change of heart can be attributed to three factors, says Burlington Northern’s Rose.

“I refer to it as a ‘three-legged’ stool,” Rose told BusinessWeek . “Fuel, congestion on highways, and carbon.”

Burlington Northern On Track

Diesel prices have more than doubled in the past five years, and trains use only just a quarter of the fuel that trucks do. Even with the recent decline in oil prices, Rose says railway transit will maintain an advantage over trucking as long as crude stays above $25 a barrel.

Just to be on the safe side, Rose acquired 200 fuel-efficient locomotives from General Electric Co . (NYSE: GE ). The engines burn 20% less fuel than their predecessors, BusinessWeek reported. Additionally, Burlington Northern next year will become the first company in the industry to deploy a hydrogen-powered locomotive.

More fuel efficiency not only shields Burlington Northern from high oil prices, it also gives Rose an extra bargaining chip when it comes to dealing with more environmentally conscious businesses.  For years now, Burlington has provided potential customers with data showing exactly how much more carbon-friendly their hauls would be if they used trains instead of trucks.

For instance, a train carrying 100 tons over 1,000 miles produces 45% less pollution than a long-haul truck does, according to Burlington.

In addition to being more fuel-efficient, Rose makes the argument that trains are simply more efficient – period.

While it takes just two train employees to drive a 9,000-foot, 300-car train, it would take 300 truck drivers to move the same amount of freight.  That is, in part, because of new regulations enacted in the trucking industry that cap the total number of hours a driver can spend behind the wheel.

And unlike trucks, trains don’t get stuck in traffic – accounting for the third and final leg of Rose’s “three-legged stool” – traffic congestion.

“Congestion costs the industry $8 billion a year,” said Ray Kuntz, president of the American Trucking Association. “And it’s growing at 8% to 10% per year.”

No doubt, Burlington Northern is exceptionally well positioned.

The company controls approximately 32,000 miles of railway track throughout the United States and Canada. Burlington’s rails cover two thirds of the continental United States and its abundance of West Coast rail terminals and make it a vital artery in America’s Asian trade network. In fact, many containers coming into U.S. ports are delivered to shore and then placed directly onto Burlington Northern flatbed cars.

Over the past five years, U.S.-China trade has increased by 114%, reaching $386.7 billion.

Burlington has expanded its operations in lockstep. Rose spent $2.6 billion, or 16% of the company’s $15.8 billion in 2007 sales, to expand and improve the company’s rail network, BusinessWeek reported.

“Railroads – now, that’s an example of changing our minds,” Berkshire’s Munger said. “We threw out our paradigms, but did it too late. We should have done it two years ago, but we were too stupid to do it at the most ideal time.”

Berkshire may have been a little late, but the train still hasn’t left the station. Shares of Burlington Northern closed at $89.06 Friday, up $2.47 – or 2.85%  – each.

The garbage industry is about as recession-proof as you can find, says David Fessler . People won’t stop taking out the trash in a downturn. David says the Market Vectors Environmental Services ETF (AMEX: EVX ) is a great way of investing in the sector, and is a bargain right now. For a specific company pick, he recommends Clean Harbors (NASDAQ: CLHB ), which treats hazardous waste.

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A friend of mine, along with his family, owns and operates one of the largest landfills in my area. He smiles and says, “It’s about as a recession-proof business as you can find. Here in the United States, people and businesses generate 750,000 tons of garbage every day. The trucks never stop coming.”

Many years ago, before recycling became popular, the company started a recycling operation as a natural extension of the landfill business. It’s doing very well. When any given recyclable commodity goes up, the company’s a seller. The rest of the time, it just stores the copper, steel, aluminum and a dozen other scrap metals and plastics in huge mounds.

Now the company plans to “drill the pile” and tap into the vast source of methane gas generated when garbage decomposes. That solves a big problem with landfills: smell. Some of the power produced will be used at the site and the excess will be sold off to the local power company.

Plans to expand the landfill are currently under way. And even though the company gives back to the community in many ways besides paying taxes, the expansion is being met with mixed feelings by local residents. It’s the old “NIMBY” (not in MY backyard) argument. So what’s the best way to play the garbage game?

Market Vectors Environmental Services: A “Trashy” ETF

Not surprisingly, there is a “trash” exchange traded fund (ETF), called Market Vectors Environmental Services ETF (AMEX: EVX ) that seeks to replicate the performance of the AMEX Environmental Services Index.

The 24 companies in the AMEX ESI include those involved in the management, removal and storage of consumer and industrial waste (trash haulers and landfill operators), and related environmental service companies.

Three of the top four holdings of EVX are trash haulers and landfill operators: Waste Management, Inc . (NYSE: WMI ), Republic Services, Inc. (NYSE: RSG ) and Allied Waste Industries (NYSE: AW ). Veolia Environnement (NYSE: VE ), an international environmental services company, rounds out the top four.

EVX shares - cut in half by the recent market rout - have recently rebounded to the $35 range, but still trade well below the 52-week high of $58.54 reached this past June. EVX sports a yield of 1.5% and is a great buy at current levels.

Special Mention - Clean Harbors Included in Amex: EVX

Clean Harbors (Nasdaq: CLHB ) - a vertically integrated environmental services and hazardous waste treatment company - is included in the EVX ETF, but merits special mention.

Handling the hazardous side of waste disposal and management is Clean Harbors’ special focus, and business is booming. Revenues are up 55% in the last three years, and earnings are up an even more impressive 81%.

Clean Harbors is the leading provider of environmental services in North America, with 45,000 customers located in the United States, Mexico, Puerto Rico and Canada. The company’s customer list includes 325 of the Fortune 500 companies, and it services them from over 100 locations.

Treating and disposing all this hazardous waste requires extremely specialized facilities, and Clean Harbors has that covered, too. The company owns and operates six hazardous waste incineration facilities, six wastewater treatment plants, nine landfills, six PCB (polychlorinated biphenols) management facilities, two waste oil reprocessing and recycling facilities, and 20 TSDFs ( transportation , storage and disposal facilities).

The second quarter of 2008, ending in June, was a record for the company. CEO Alan S. McKim had said, “Clean Harbors delivered another record quarter in Q2, with double-digit increases in both revenue and profitability. Solid growth across nearly all of our operations enabled us to generate revenues of $265.3 million.”

Currently, shares are trading midway between their 52-week high/low, and represent an excellent buy at current levels.

I expect that the third quarter of 2008 will be another good one for the company, perhaps another record. We won’t have to wait long. It’s expected that earnings will be announced on November 3, 2008.

In summary, both Market Vectors Environmental Services ETF (AMEX: EVX ) and Clean Harbors represent two great ways to add some recession resistance to your investment portfolio while you wait for the global economy to slowly recover.

David Fessler says WW Grainger, Inc. (NYSE: GWW ) is a great way to protect your portfolio by investing in infrastructure. The company literally provides the nuts and bolts for businesses and public institutions throughout America. And its earnings are growing despite the economic downturn. Now GWW is targeting Chinese infrastructure projects with massive potential.

More from Investment U :

With no end in sight to the string of negative headlines, investors worldwide are calculating the impacts of a sustained global recession. But since there’s no way anyone can accurately call the bottom, all we can do now is continue to uncover sound prospects for your long-term money… whether you decide to buy today, next month or a year from now. Here’s one in particular that’s well placed to weather any storm, including today’s…

When the average weekend warrior wants nuts, bolts and other hardware for a project, it usually involves a trip down to the local Home Depot (NYSE: HD ) or Lowe’s (NYSE: LOW ). However, if you’re running a manufacturing business or institution, like a school or hospital - and you need to keep it running - your needs are going to be much more immediate and diverse than what the big box stores can deliver.

But without wasting a lot of time running to a plumbing, electrical or other specialty store to get something specific, what other choices are there? Let’s say you need a new winch, or steel drums, or a conveyor belt, along with items from the plumbing and electrical stores.

In that case, your choice becomes a very simple one. It’s the same one that 1.8 million other businesses rely on worldwide. Yet you’ve probably never heard of this $6 billion Fortune 500 company… I’m talking about WW Grainger, Inc .

WW Grainger - A Global Industrial Powerhouse

WW Grainger, Inc. (NYSE: GWW ), is a global industrial service business powerhouse. Grainger provides the nuts and bolts  - and just about everything else - from one of its more than 600 branches to over 115,000 customers every day.

And there’s no waiting: Customers can go directly to the branch to pick up their order or have it shipped directly to them.

Customers for its 870,000 products include a wide, diverse group:

• All levels of government, including offices, prisons, military installations and all U.S. postal facilities.
• Heavy manufacturers: lumber, textile, metal, chemical and rubber companies.
• Light manufacturing: pharmaceutical and biotech, food and beverage, and most of the electronics Industry.
• Retail: gas stations, restaurants, grocery and most other stores and malls.
• Commercial contractors: maintenance and construction on many kinds of commercial buildings and installations.
• Commercial customers: theaters, hotel, motels, hospitals and nursing care facilities.

Although WW Grainer has its roots in Philadelphia, where it started as a motor repair shop back in 1927, it has morphed into a global industrial supply powerhouse within the infrastructure sector . In addition to its 438 branches in the United States, Grainger has 15 branches and a distribution center in Mexico. Canada is well served, too, with 153 branches and five distribution centers.

WW Grainger’s Newest Venture - China

China is WW Grainger’s newest venture, and its 128,000 square-foot distribution center supports six branches located in and around Shanghai. Clearly the potential here is enormous, and Grainger currently has over 53,000 items described in Chinese in its online catalog.

And Grainger’s business is doing great, in spite of the economic malaise sweeping down upon us. The reason? Things break, wear out or need updating, and that requires many of the products that WW Grainger’s sells.

The company recently completed its third quarter, and sales were up 11%. EPS of $1.79 handily beat analyst’s estimates of $1.53 a share. The company attributed its better-than-expected results to an expansion of its product line and greater market share.

And in spite of the slowing global economy, Grainger raised its earnings outlook for the remainder of 2008.

WW Grainger CEO James T. Ryan had this to say: “Our third-quarter and year-to-date results are a testimony to Grainger’s winning strategy and our employees’ ability to execute. Going forward, the credit crisis and its effect on the economy create uncertainty. However, our national scale and local inventory availability help customers be more efficient as they maintain their facilities during these challenging times.”

So how is Grainger able to be so successful in such a challenging economic environment?

There are three things that contribute to Grainger’s continued success:

• Immediate product availability
• Flawless execution
• Standout customer service

The company has a long-term goal to average 7% to 10% annual sales growth through a given economic cycle. This sounds impossible at best, but the company consistently grows its top line revenue at a rate much faster than the growth in GDP.

In summary, the maintenance, repair and operations markets are estimated to be around $540 billion worldwide.

Clearly Grainger has plenty of room to grow its business for the foreseeable future, and it represents a great way to add a healthy infrastructure service business to your recession-resistant portfolio.

Source: WW Grainger: A Healthy Infrastructure Buy For Any Recession-Resistant Portfolio