Badger Infrastructure (BDGI.TO)

Great story and a well-run company. If you think about all the trends that are happening with oil and infrastructure spending, it is hard to say that this company is not going to be pretty active. They definitely have the fundamentals to back them. The problem he has always had is that they always trade at very lofty valuations. Part of that is because of ROC that they make from their truck. He looks around and sees a lot of trucks that are not theirs. They don’t have a high barrier to entry like they used to. Prefers other names, but wouldn’t be too worried given the turnaround, and there is more room for multiple expansion.

He shorted it in October and since then has covered it. They used to have a large emphasis on oil and gas. It is not a bad name to own if you think infrastructure spending will work out, but he does not.

(A Top Pick Nov 27/15. Up 37.07%.) Excavation by hydraulics. In recent years, it has been moving into the US. They are the biggest in the business. Has moved significantly away from energy and into excavation for municipalities, pipeline companies, and electric utilities, etc.

(A Top Pick Nov 6/15. Up 60.93%.) They use high-powered water to excavate. It has had a great run, and he has trimmed at around $25. He still likes this. If crude prices continue to edge higher, it will be even more beneficial.

Oil and gas activity is only about 40% of their business. That 40% should probably grow because we are seeing more activity. Their construction business is pretty steady at this stage. Also, there is a different angle on this. There is a massive Short position with 37 million shares outstanding, and 10 million of them are sold Short. Every day that the stock goes up, there is more agony for them. There are not a lot of Sellers, because it is very institutionally held. Dividend yield of 1.23%. With any luck, the stock could go to $40. (Analysts’ price target is $31.74.)

(Top Pick Aug 22/16, Up 9.12%) He sold out at these prices after a big move. It is a really well run company but has just gone through a CEO transition. A recent article in the media was a bit narrow minded. He took a bit of a pause.

He likes the scalability of this. It is a business where you could continue to buy hydro-vac trucks, put them into the market and grow the business organically. However, the oil/gas problems happened in Canada, and they had a bunch of trucks allocated to that part of the market. They had to repatriate those into the US, where they are starting to see that business pick up. A very good business and a long-term hold. The balance sheet and the sector look good.

This has had a nice move off of $20, and we are very close to the highs for the year. This is a company that can do well going forward. Spending on infrastructure and construction could be stronger over the next couple of years. He would have no problem owning this.

This has had a great recovery and has done very well in a tough environment. They have moved a lot of their hydro-vac’s into the US, and doesn’t think the market has given them credit for doing as well as they did. Have slowed down their production of new hydro-vac’s this year. He would like to see greater clarity.

(Top Pick Aug 26/15, Up 51.63%) They had a lot of exposure to the US, but had such a great business model. They have mobile assets. They have great cash flow. They will continue to grow in the US and may increase their dividend in the future.

They use high-pressure water to move earth. Some of their customers are energy companies and some of their business is with municipalities in utilities. Utilities don’t want cables to be damaged, so water is used. They are now the biggest in their industry in North America. They are rapidly growing their business in the US. Dividend yield of 1.44%.

(Market Call Minute.) They just put up a great quarter. It has been hit and miss in the last few quarters. He is looking at this pretty deeply right now.

Basically half its revenues were tied to the oil/gas industry, so they fell on hard times. They’ve rejigged the profile, because the other part is on utilities, and mostly with construction in streets being dug up to lay down pipe to run cable and stuff. As long as the oil/gas sector doesn’t get any worse, they’ll start to generate more cash, so this is kind of a derivative way to play the oil/gas industry. Dividend yield of 1.49%.

This used to be a really exciting growth stock. Builds hydro-vac units used for excavation which were used a lot in the energy industry. It was a great growth stock when energy services was working. Now the outlook is less clear. Their equipment is fairly mobile and they have done a great job in moving into the US. They now do utility work for more than half their portfolio. The medium and short term outlook is less clear because we are not sure of the strategic direction of the new CEO.

The previous management was terrific in diversifying out of the oil/gas business. It is now growing much more in the US. This could still face a couple of tough quarters, but she would hang onto it. 2 years from now you will be happy.