Aecon Group Inc (ARE.TO)

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.

Expects this to go much, much higher although there is a bit of volatility to deal with in the meantime. Has a $25 target from here. If it gets above $19, a way we go. Dividend yield of 2.56%.

A beneficiary of very rich infrastructure spending at all government levels. Very strong backlog in their energy segment, where a lot of people are staying away because it is a big component of their business. They have nuclear opportunities such as the Darlington win last year. There are a lot of additional opportunities from Candu sites. Has a decent dividend with a very low payout ratio. He models 22% cash flow per share growth each and every year for the next couple of years. This is cheap, relative to its 5-year average. Dividend yield of 2.56%.

A construction/engineering group. They do very good work and have been around for a very long time. Very well managed. Their fortune is tied to how busy things are in the mining and energy space on one side, and the construction/engineering space. If the Canadian government is really going to accelerate the infrastructure program, this company will be benefiting quite a bit.

(Market Call Minute.) A great story. Infrastructure spending is improving. They’ve had some blowout quarters, and he thinks the best is still ahead of them if energy starts to rebound a little bit.

The stock has done well. With the whole infrastructure spending the government is proposing, it will be beneficial for all E & C companies. Some of this company’s end markets have been depressed, but this company has weathered through that.

(Market Call Minute.) This has gone up very high, but still cheap relative to its five-year average. Thinks there is a lot more in the tank.

A very consistent company over time, and construction is relatively consistent. This is all about their future book. They have debt outstanding. Sometimes the market gets really worried that they have debt, but he thinks it is a very solvent company. It seems hard for the company to grow dramatically, so in really bad times, he is able to buy the bonds with about an 8% yield. Any time the stock is $9-$10, it is interesting, but on a risk/reward basis, where he can buy the bond at 8% it is an incredible way to invest. He just sold his bonds which he felt were fully valued.

They do infrastructure building and lots of that is happening in Ontario. It is in an upward trend, broke to a new high and is outperforming the Toronto market. Stick with it.

Element Financial (EFN-T) or Aecon (ARE-T)? Two different things. One is a financial player and this one is involved in industrials, being a construction company. The company has started to turn itself around. If the Canadian government comes through with the $30 billion+ of infrastructure spending, this company should be able to get its fair share.

If you like the development area and you want to be in the Canadian side with a government that is much more interested in fiscal stimulation, subways to be built, etc. this is not a bad time. Thinks they are going to do extremely well.

If the world’s governments are going to do anything in the next 5 years, it is going to be infrastructure. He likes this play. His model price is $16, but he would love to get it back at $13.60, and he would be a buyer.