Aecon Group Inc (ARE.TO)

This is an infrastructure play, and the Trudeau government has made it very plain that he is going to use fiscal policy to spend on infrastructure to keep the Canadian economy growing. This company participates in the pipelines. All of this is positive.

Market Call Minute. She wouldn’t buy this here. They’ve had some difficulties, and there are other companies in the space that are more attractive.

This is a fundamental sell off. He traded it some time ago, but has been out of it. You can’t buy this stock right now. You need three weeks of the current low not being taken out before saying it has stopped dropping.

In general, for engineering companies, people have bought them on the expectation that there is all the infrastructure spending to happen. There has been an awful lot of talk, but not a lot of follow-through yet. If you are a short-term investor, you should not be near the stocks, but if a long-term investor, this is creating an opportunity. (See Top Picks.)

It is close to a 52 week low and you have to think there is some support there. Nibble close to that level if you like the company. He does not follow it.

(A Top Pick Oct 14/15. Down 3.33%.) Just reported and people hated what they saw. They missed on a number of fronts, but a lot of those were delays. They still have a very robust backlog. He thinks it is an opportunity here.

He never buys more of a stock, never averages down. He did not have holdings going into this earnings miss. It was middle of the pack on price momentum and is now near the bottom of the pack. He would wait for this to settle out. It could go a lot lower. It has a low ROE of 3.7%. There is no debt problem and that is the saving grace.

Held this many, many years ago. The thesis is that these companies are going to benefit by the massive infrastructure that the Liberal government is going to institute. Where’s the money? Thinks the stocks have run up too fast. Parts of this country are in a recession.

This had a horrible, horrible performance in terms of numbers. Very light on revenue and very light on earnings. It has brought the valuation down to a more reasonable level of about 12.5X forward earnings. The backlog is still $4.6-$4.7 billion. In the construction/engineering space, you get these large contracts where timing sort of screws up results. It is pretty common to have these companies swing around in terms of numbers. You have to be a little brave to step in.

She has had a checkered past with this company. They frequently have a couple of good quarters, and then they have a bad quarter. This would not be her favourite name. Wait until you start seeing good numbers. You are not going to miss anything, as infrastructure projects are really backloaded.

This is a continuation of the federal infrastructure spend being double for the next 5 years, compared to what it has been in the last 5 years. Lots of money going into the space. It has a record backlog of about $3.5 billion, which is going to be over $4 billion of work that is lined up. They continue to win contracts as they go. Dividend yield of 2.67%.

They will benefit from fiscal stimulus in Canada and the US. Seasonally we are in the time period (Oct to May) so we are looking for a good entry. If it breaks above resistance it would be a good sign If it reaches $16 it should provide some support. If it then broke a high he would step in. Let it consolidate.

If you are looking for a company in the design and engineering space, this one can benefit. They have not experienced the benefit in the last 3 to 5 years. You could look at utilities in the shorter term. It is one of the leading companies out there and there is nothing questionable about the balance sheet. It is not the top idea in the portfolio, however.

They are probably one of the only construction companies that have done well. He finished selling it about 4 months ago because after they do well for a while they eventually misprice a contract. So he exited. The management team did a very good job.

(A Top Pick Aug 21/15. Up 55.76%.) He still likes this.