Aecon Group Inc (ARE.TO)

(Top Pick Feb 14/15, Down 16.32%) There were perceptions about declining infrastructure spending. They sold an airport in Ecuador. They have won a number of contracts. It is a construction business with infrastructure tied to it. There was fear they would be impacted by the oil sector.

Pretty good risk/reward. In a really good place long-term. Sold off a part of their equity of an airport in Ecuador, so now they are a really pure play. Increased their balance sheet. All in all a pretty good story.

He owns their convertible debt. Prefers SNC Lavalin (SNC-T). This is energy exposed and lumpier than SNC Lavalin (SNC-T) or WSP Global (WSP-T) because it is smaller. Averaging down on this at around this price would be fine. He can see it at $16-$17 a year from now.

He likes this company. Not too long ago he was buying it close to $10. They have a fairly sizable operation in the Alberta area, and a good deal of that is energy related. As a result, he thinks that is why it has pulled back as much as it has. Over the next few years, with the infrastructure building that is going to occur, this is certainly going to be a participant. Try to buy close to $12-$12.50.

(A Top Pick Feb 13/15. Up 12.58%.) This one benefits from February all the way through to June. Spring is construction season and construction spending increases every year from March through to August.

He hasn’t looked at the seasonality on this, but he is guessing that it is going to be very good in the spring time, because that is when they are filling potholes, construction, etc. Chart shows a nice uptrend, but historically this tends to end right around the end of April. If you own, you will probably want to take some profits, probably within the next month.

It is not a stock he would want to own right now, but in good times they get exposure to the construction and energy sectors. Construction is looking a little flat and is not that attractive to him.

We have a base pattern starting to develop in the chart. He likes it from that perspective. It is a test of a long term support line after a long term decline. If it broke out on the upside he would look for it to get to the $16 range. He would nibble here. The government says there is an announcement of major infrastructure projects coming soon.

We are above where we were at the interest rate scare of 2011. It has bounced off support. It has underperformed the industrials index so any money in it is dead money.

Two or three bad quarters in a row. They have to compete for bids, and so have to bid finely and can’t always build the project for what they bid. It is a tricky sector to play. None of these companies have done very well.

The fair market value is huge, relative to the current price. The only issue is if investors in Canada will have sufficient confidence in the Canadian economy to get this stock going again.

It has a model of $18.12 without the December balance sheet, or a 58% upside. It is cheap enough. If it started racking up negative transits he would sell (going through his EBV lines).

This is not a big dividend grower and doesn’t have a substantial yield, so he does not own this one. This is a cyclical business and it is going to be challenged by the whole oil patch, because they are in construction.

One of the largest Canadian construction companies. Has been hit as a large proportion of their earnings come from energy related areas. However, they are also very big in infrastructure. Trading close to BV. Management over the last couple of years has achieved a significant turnaround in the operating efficiency of the company. A sale of their exposure to the Quito Peru airport, is also a positive to their balance sheet. Yield of 3.05%.

Got hit badly on account of its whole Western Canada theme where everything was thrown into the dustbin that had the name energy written on it. This is one of the babies that fell into the bath water. A lot of analysts have been revising their target downwards, but there are a bunch of catalysts in this company. One is a 45% ownership of an airport concession as well as its construction business and its backlog. Yield of 3.14%.