AtkinsRéalis Group Inc. (ATRL.TO)

This whole group has traded down. This is a cyclical. At these levels, and if you have the appetite for some political risks, it is very attractive at these levels. He likes this company moving forward.

(Top Pick May 22/14, Down 19.14%) They are going to fight the charges. The employees left in the company had nothing to do with it so it is a pity to punish them for it. They are forbidden from bidding on Canadian government contracts now. The valuation is reasonable. They have infrastructure assets they are monetizing.

Highly volatile stock but everything in it is old news. The latest thing to hurt them were criminal charges from the RCMP based on what happed to them in the past. Canadian law states if you are a company and convicted, you can’t bid on government work forever. The company has not been convicted yet. This is an election year in Quebec and this is a Quebec company. He thinks this law will likely be changed. They raised their dividend and companies in trouble don’t raise their dividend.

The scandal appears to continue to weighing down on it. It has dropped a long way from its recent high. From a technical point of view he would look at $34-$36 to be a good cheap target price and would result in a good rebound.

He likes some of their assets as well as the company as a general rule. Doesn’t own it because he thinks it is too expensive. If you can see it below $30, he would seriously look at it. The new CEO is doing a good job on cleaning up the place, but they will still have to face some of the stuff.

The problem is that they keep releasing goblins out of their closet. He wouldn’t be gutsy enough to buy this.

Stay away. If this was trading in the US the justice department would shut it down and take away all its assets. Stay away and let the dust settle and see what you have at the end.

This whole space should be really good. You don’t want to see this making a new low like we did in December. Some of the indicators are washing out, but it doesn’t mean that it couldn’t go a little bit lower. Look at it on Monday to see if it has stabilized a bit. If you like this theme long-term, which he does, then you could get a good entry point with a good risk/reward in your favour.

Outstanding legal charges have hurt the stock. Thinks there is an overhang on this stock because of the criminal charges. The likelihood is that they will probably settle. Thinks the whole flow of bidding for them is going to slow down because of their problems.

We knew at some point there would be a fine although we didn’t know how it would all play out. We knew they would be in trouble and it is now come home to roost. There are infrastructure assets there, which possibly could be spun out. Highway 407 is amazing. If it falls a few more dollars, he may get back into this one.

Clarity is still needed on some of the issues surrounding this company. This is a great company. Until there is clarity, it is hard to do anything on the stock right now. (See Top Picks.)

(A Top Pick Feb 21/14. Down 5.8%.) Still thinks this is suffering under a cloud, basically because of the bribery scandal. Thinks this is all past history. Good assets, including Highway 407. If you take those away, you have 2000 engineers that you are getting next to nothing. Yield of 2.2%.

This company has had 3 bad things happen to it in the last few years. 1) There has been the bribery corruption scandal in North Africa. 2.) Inability to make money on a lot of their construction contracts. They came into the post recession period with a huge order backlog that they couldn’t converted into profits, which made him believe that they had underbid on the lot of their contracts. 3.) Now they are exposed to a lot of energy projects, which don’t look like they are going to get built, or if they do it is going to be very difficult for them to make their margins. New management is doing a pretty good job, but they have a lot of headwinds and he is not tempted to go into this.

This is a way to dip your toe into the energy sector without having to be in it directly. Has an asset value in the low $60’s. Thinks there is a transaction coming on the sale of the toll Highway 407 in the next 2-3 months where they will get something like $20 a share in cash. Energy exposure is about 15% of their business, through Kentz which they acquired last summer. The Kentz business has a huge backlog, which they are not seeing any decline in because they are long life, five-year projects. Yield of 2.31%.

Revamped their whole senior management team and their governance structure, which was necessary given their challenges. They are a huge powerhouse in engineering, construction and infrastructure investing. A bit of a concern would be their exposure to energy and mining. They also have infrastructure investments that are meaningful in giving them a source of funds to use back in engineering/construction project. Had wondered about this for a Top Pick.