Transcripts

The New Big Three- Energy, Education and Healthcare

PAUL KANGAS: In the President's address to Congress last night, Mr. Obama called for increased spending for energy, health care and education. While details of the plan are still sketchy, Scott Gurvey looks at which areas of those sectors could benefit and whether investors should consider them.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Energy, education, healthcare. These are the sectors President Obama identified last night as critical areas for government investment in the nation's future. Jim Awad of Zephyr Management says as a result, these sectors should outperform the overall economy in the years ahead.

JAMES AWAD, INVESTMENT STRATEGIST, ZEPHYR MANAGEMENT: If the government is going to be spending a lot of money in these three areas, that relative to the rest of the economy, these are going to be three growth industries and you're going to see investors and money going into them.

GURVEY: In the energy sector, analyst Fadel Gheit says it will pay to be green.

FADEL GHEIT, SR. OIL & GAS ANALYST, OPPENHEIMER & CO.: Obviously natural gas companies. Most of the independent oil and gas companies are basically natural gas companies, so they will benefit definitely from that. But technology, whether it's clean coal, whether green energy, that will open up a very new area if you will and will put the muscle of the U.S. government behind it and I think will (INAUDIBLE) significant growth in this area.

GURVEY: In education, salaries are by far the largest expense and these are for the most part public sector jobs. But analysts also predict growth for textbook publishers, companies which specialize in school construction and those which create web-based instruction and other educational alternatives. Healthcare is much more complicated. As the government gets more involved in providing insurance and managing care, that will increase the volume of services, but decrease profit margins. Robert Gold of Standard & Poor's suggests investors look for companies which provide specific services.

ROBERT GOLD, DIR., HEALTH CARE EQUITY RESEARCH, STANDARD & POOR'S: We're not talking about the product companies as much. We're not talking about the large capital equipment companies, which are struggling right now with reduced hospital spending generally. We're talking more about again the companies that collect patient records, that do inventory management, that just help operating efficiencies for the system. I think you're going to see a lot of companies emerge in those categories and a lot of the current companies are going to face a lot of pricing pressures.

GURVEY: The president releases his budget tomorrow, but there are reports tonight that it will call for spending $634 billion over the next 10 years as a down payment on the overhaul of the health care system. That money to come from reductions in Medicare payments and limits on the tax deductions taken for upper income taxpayers. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.