In spite of the weak economy, governments around the world continue to invest heavily in wind projects and electrical-power grids. On Monday, for example, the Ontario government committed $2.3 billion over the next three years to expand and strengthen the province’s grid.

Antiquated power grids can hold back wind power stocks

Upgrades to power grids are important to wind power stocks because, while most power plants are located near big cities to keep transmission costs down, wind farms tend to be in more remote areas with steady winds. As well, low transmission capacity, or none at all, has hurt the ability of wind power stocks to build new projects.

In light of governments’ continued focus on transmission-grid upgrades, we recently updated our views on two electrical-equipment suppliers in our Wall Street Stock Forecaster newsletter: General Electric Co. (New York symbol GE) and ABB Ltd. (New York symbol ABB).

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GE and ABB are ahead of the environmental curve

General Electric is one of the world’s largest makers of industrial equipment, including electrical-infrastructure equipment, such as turbines, regulators and fuses. These put GE in a good position to gain from government investment in this area.

However, infrastructure spending could slow over the next few years, as governments move to rein in deficits as the economy rebounds. But GE is also a leading maker of windmills and nuclear-power plants. This should help it profit from longer-term trends, such as tighter restrictions on greenhouse gases. These include the Obama administration’s efforts to curb carbon-dioxide emissions, such as its new “cap-and-trade” bill, which is before the U.S. congress.

ABB Ltd. is a Swiss-based maker of transformers, transmission switches and other electrical-infrastructure equipment.

ABB has been restructuring lately. The company already has a high cash balance, so the added savings could help it make acquisitions, likely at bargain prices. Buying other companies always entails hidden risk, including the possibility of unpleasant surprises. But, like GE, ABB stands to gain from continued government investment in renewable energy and electrical infrastructure.

The renewable-energy segment continues to rapidly develop. You can make sure you don’t miss out on any opportunities in this area by subscribing to our Wall Street Stock Forecaster newsletter. Click here to learn more about how you can subscribe for one full year with no risk and no commitment.