A general view of heavy traffic on a highway during the morning rush hours in Shanghai © CARLOS BARRIA, Newscom, RTR

A recent article in The Wall Street Journal discusses how some traders and investors see a coming "death spiral" for what was once considered a safe investment sector: utilities.

The biggest threat comes from solar energy as it becomes economically viable, the article says. But another issue is the sector's need to modernize its infrastructure.

If you agree with this thesis, you may want to look to publicly traded airports and toll roads as interesting investment alternatives.

The Utilities Select Sector SPDR (XLU) was up just 10 percent last year, compared with a whopping 29 percent gain for the S&P 500 Index ($INX). The utilities sector also faces a huge threat from the bond market. Utilities, especially the regulated ones that tend to pay higher dividends, are sensitive to rising interest rates. When rates go up, investors have tended to rotate out of utilities and into bonds because they can get higher yields without having to take on the risk and volatility of owning stocks.

I don't think solar energy poses an immediate threat to utilities, but it will eventually. Rising rates and the need to invest in infrastructure, though, are tangible threats to the sector.

The attributes of the utilities sector -- namely lower volatility and higher yield -- are important ingredients in a diversified equity portfolio, but if the sentiment summed up in the Journal article proves to be correct then investors will need to find stocks with these traits in other industries.

A couple of smaller segments that fit the bill include toll roads and airports. These are typically not built or operated by publicly traded companies in the U.S., but it is very common for operators in other countries to trade on exchanges. Some of these foreign companies also have American Depositary Receipts (ADRs), which makes it easy for U.S. investors to gain exposure to them.

An example of an airport with many of the attributes of a utility is the Auckland International Airport (ACKDY). It is a relatively large-cap stock on the New Zealand market and is the third largest holding in the iShares MSCI New Zealand Capped ETF (ENZL) with an 8 percent weighting.

The government of New Zealand is forecasting tourism to grow at a compounded annual rate of 4 percent through 2018. That, along with steady GDP growth in the 2.4 to 2.5 percent range, should provide a steady environment for air travel.

From the bottom up, ACKDY has very little debt, a very high profit margin of 40 percent and a yield of 3.4 percent. The stock has a lofty price-to-earnings ratio of 26, but it's likely to continue higher with the New Zealand market. Investors should expect the stock to get hit hard the next time there is a recession, however. After all, it is an airport, and travel volumes decline during recessions.

An example of a publicly traded toll road is China's Jiangsu Expressway (JEXYY). It operates seven toll roads, including multiple roads into Shanghai. There are more than half a dozen publicly traded toll road companies in China, and JEXYY is by far the largest by market cap at $6.2 billion.

Like most of the other toll road companies, the business also includes related services on the road such as gas stations, rest stops and hotels. JEXYY has a trailing yield of 4.7 percent, and its volatility as measured by its beta is only 0.57 (anything less than 1 indicates lower than average volatility).

The second largest Chinese toll road is Zhejiang Expressway (ZHEXY). Like Jiangsu, Zhejiang is located along the ocean and controls multiple roads into Shanghai. ZHEXY yields a slightly higher 5.3 percent, but its 17 percent gain over the last year has trailed JEXYY's 24 percent rise. ZHEXY's beta of 0.66 is also very low.

Consistent with research from ETF provider Emerging Global Advisors, the emerging Chinese middle class is buying cars at a record pace, with 1.93 million purchased in October. That's a 20 percent gain year over year. Many of these first-time car buyers are hitting the highways, and collected tolls reportedly are growing by 9 percent.

Several years ago, Global X filed for a ports and toll road ETF but did not bring it to the market, perhaps because of low demand from its client base. The iShares Emerging Markets Infrastructure ETF (EMIF) comes the closest to being a pure play ETF with 12 percent in toll roads and 10 percent in airports. Its beta is 0.92 and has a trailing yield of 3.11 percent.

Toll roads and airports have been publicly traded for years, but investors may want to pay more attention to them if the prospects are growing dimmer for the U.S. utilities sector.

At the time of publication, Nusbaum owned shares of JEXYY, and many of his firm's clients owned shares of ENZL and EMIF.

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