Badger Infrastructure (BDGI.TO)

Excavating using water pressure and suction. This has a lot of benefits that utilities love. Dominant player in North America. The only issue he has is that they have gotten so expensive and there is a lot of expectation into what they can do. It is not a complicated business and there are other companies that are trying to grow their business. He feels they are going to hit some bumps on the road and the higher multiple will not be supported. This is exactly what has happened. They have a good business and will continue to be a leader in this space, but he would look at the multiples and wait for a good entry point.

Had disappointed in their last quarter, so there is a correction happening. Margins had suffered. Their growth has been phenomenal and they have had to hire more people, so training costs have gone up. The company has announced that they are going to go from 5 trucks to 4 trucks in manufacturing. A lot of people interpreted it as deceleration of growth. Her interpretation of cutting back on production would be that they want to catch up. Three years down the road they are going to be back to 5 or 7 trucks a week. Doesn’t feel the stock is going to go anywhere in the next quarter, because you have to see that the margins have been improving and you won’t see that until the next 2 quarters. During this time, you have ample time to Buy the stock.

His model was showing that this was about to take a fall. A very, very high valuation for this company. His model price is $31.42. He has seen the price fall below his Fundamental Value this week. Has been trading above his Fundamental Value since 2014, but probably since April, the wind has been coming out of this particular company. He thinks this is going to go down to the $19 area. It needs to create value now.

The real problem is that what they do is not a patentable process. In other words, anybody can go out and build the same equipment and do the same kind of job. They do a water process to drill under roads and suck up the debris. This is a very efficient and quite amazing process. The multiple got way out of line. They are going to be facing more competition. He would be out of this until you see where it settles down.

(Market Call Minute) It’s a trade.

The drop today was gut wrenching for anybody that owns it. There is a bit of a concern that he is starting to see in the infrastructure space. We talk about the vast wealth in our resources out West, and yet we are seeing too much optimism in the space. Anything that can move that badly in such a short period of time, there has to be some kind of overreaction. He might take advantage of it, but has to do his homework yet.

Just reported earnings and the numbers looked good because they made an acquisition, but if you strip out the same-store sales, they are not quite as good and their margins were declining. Trades at a fairly rich valuation. He would look at this in the low $30s.

Really took advantage of an arbitrage opportunity in the market. We have decaying roads all across North America. The problem is that a competitor could start up tomorrow. Very low barriers to entry. Multiples are just too high on valuation.

Originally bought this as a yield stock. It then became a growth stock. Then it became a momentum stock. Sold the stock twice along the way, so his position is relatively small now. He is at an inflection point now, where he has to decide if he sells the rest of it or is the value at a point where he would like to get some more. A well run company and they do well at what they do. Expanding into the US, but it got way ahead of itself.

From a company and fundamental standpoint, there is lots of room for them to grow, over the next few years. Probably won’t have the performance that it had in the last 2 years. Before buying, he would want to see it recover, and start to see some positive indicators from the MACD and stochastic indicators. When you see those crossover from a weekly basis that would be the time to buy.

A fabulous company that is growing very quickly and capturing a lot of the utility market. Stock had a huge run and they split it 3 for 1. Now it is in kind of a pause mode. People are worried about them sustaining the growth. This is a great company in an industry that is growing, and they are the market leader in that industry. At this price it is a pretty good bargain. Won't triple like it did in the past couple of years, but for a solid growing company it looks very good. Well-managed.

Had a spectacular run from 2009. Unfortunately it looks like that is pretty much everything the company is going to give you. His Fair Market Value calculation is $28, 15% lower than its current price. He would be looking at $18-$19 before entering.

EBV +6, model price is $31.21. There is still going to be some downside before you should buy.

This has been on quite a tear. At a peak earlier this year and has been dropping off, which bothers him quite a bit. The stock is below the 50 day moving average, but above the 200. It has to get above its point of $40.04, or else the trend is over. Suspects this is probably an overcrowded trade. Be careful.

Has been a phenomenal company, but is now really fully valued. If you own, he would Sell this and move into Delphi Energy (DEE-T).