Buy Those Companies That Japan Needs In Its Rebuilding

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SAN FRANCISCO -(Dow Jones)- The tragedy in Japan is still unfolding, and the
extent of the devastation is uncertain, but there will come a time when the
country will rebuild.



When that happens, the reconstruction effort will be massive and lengthy, and
will involve both Japanese and international companies.



With that in mind, Standard & Poor's highlighted some of the companies and
industries that could see greater demand for their products and services as
Japan recovers.



S&P's list of stocks and exchange-traded funds for investors to consider is a
grim reminder of the gargantuan scale of work that lies ahead, yet underscores
the fact that Japan will spend what it must to speed the recovery of its economy
and its society.



Japan's economy is the third largest in the world, but its growth had been
anemic even before the natural disaster struck. As a result of the quake and its
aftermath, Japan's economy will grow 3% in 2012, according to economic
forecaster IHS Global Insight.



The S&P selections aren't so surprising -- concentrated on building materials,
engineering and construction firms that will be called to repair and rebuild
Japan's housing and infrastructure, and oil refiners that could meet the
country's energy needs now that its nuclear power industry is crippled.



"The major rebuilding effort that will need to take place should eventually
benefit companies that make building materials and construction equipment,"
Standard & Poor's Equity Research Services analyst Michael Jaffe said in the
strategy report, released Thursday.



ETFs with heavy exposure to construction firms, S&P noted, include First Trust
ISE Global Engineering and Construction Index Fund (FLM) and PowerShares Dynamic
Building & Construction Portfolio (PKB).



Construction giant Caterpillar Inc. (CAT) in particular has a sizeable
presence in Asia, Jaffe pointed out. In trading Thursday, shares of Caterpillar
added 2.7% to close at $103.09.



ETFs with substantial positions in Caterpillar include Industrial Select
Sector SPDR Fund (XLI) , iShares Dow Jones US Industrial Sector Index Fund (IYJ)
PowerShares Dynamic Industrials Sector Portfolio (PRN) and Vanguard
Industrials Index Fund (VIS).



The S&P report also noted that Japan is the world's third-biggest user of oil
and the second largest importer of crude.



Energy stocks on S&P's list include Exxon Mobil Corp. (XOM), Tesoro Corp (TSO)
, Valero Energy (VLO). Analysts pointed out that Exxon Mobil is a major refiner
in Japan, while Tesoro and Valero have significant operations on the U.S. west
coast and could export more refined oil to Japan as needed.