Badger Daylighting (BDGI.TO)

They do daylighting, exposing underground wiring and pipelines. Seem to be able to do it quicker and more efficiently than their competitors. Great management team. Have been through downturns before and have managed it. However, looking at the valuation, it looks like it is priced to perfection at 24X forward earnings. Has a pretty good growth plan, and if they can deliver on it there is some potential for a return. The problem is, they moved into the US and have seen their margins depressed. Not confident they can get those margins up to historical levels.

(A Top Pick May 26/15. Down 24.58%.) This is in the hydro-vac business. They build machines that uses high-pressure water to move earth. Half their business is to the energy industry, and the other half is utilities and governments. This is the biggest in North America and a consolidator. Still a Buy. Thinks we have seen the most of the downside for this.

They have been diversifying away from the energy patch. They also diversified into the US. They are the biggest in both countries. The core business continues to do okay. He still buys it for new accounts.

They were focused on oil and gas, but now it is down to about 50% due to reallocating. They are well managed and are definitely doing the right thing through this downturn. Portfolio managers might look at this one to get more exposure indirectly to oil and gas.

(A Top Pick May 25/15. Down 25.48%.) Hydro-vac excavators. Was a little early on this. Reduced his holdings because of the declining price momentum. Valuation is still good, and it trades in the top 95% of his valuations. ROE is around 20%. Very solid balance sheet. This will benefit from a cyclical turn in the oil sector.

The issue they had this year was that when oil/gas exploration fell off so dramatically. A lot of their investors were in for the dividend yield, and it started to look like it would be dicey if they could keep the dividend where it was. Had been Short the name because he had thought the perception of the company was that it was safe because of their other business lines outside of oil and gas. Has covered his Shorts recently. If you think the energy rally is real, then he would take a look at it here. A solid management team. Valuation has come down to a level where it is reasonably attractive.

In the business of hydro-vac. They use high-pressure water to move Earth. Their customer base is both in the energy patch and in the construction and utility business. In that business, you have to be careful that you don’t cut cables, sewer lines, etc. You can dig part way, but then you use high-pressure water to move the earth safely out of the way. They have been growing aggressively in the US. Have also been moving away from the energy sector. Dividend yield of 1.48%.

(Top Pick Nov 19/14, Down 20.97%) He sold it shortly afterwards. It broke down from a technical level. They had strong earnings recently and he is taking a hard look at it again.

Historically, the sector does very well right from around the end of January right through until May each year. This company is a little different because it is focusing on a certain type of oil services, but it should follow a similar pattern. It is now approaching its period of seasonal strength. Technically a nice little base has formed and has been breaking out in the last few days. Technicals are starting to look better. It is trading above its 20 day moving average and it is outperforming the TSE composite. Seasonality is not there yet, but is expected to be clicking in sometime around the 3^rd week in January. Try to buy this on weakness between now and the 3^rd week in January.

Has taken a beating, and thinks it is now base building. They have hydraulic trucks that can move around, and they moved a lot of the trucks into the US, and redeployed them. They were in the energy patch in Canada, and business is slow there. It looks very promising here. They own a lot of their own stock and work very hard. They produce their own trucks in Canada so have a lower cost base.

He shot down a bid to acquire it several years ago. The company is a very well run company, but had no idea what they were worth. They have continued to do well. Half of its business is serving the oil patch. They have expanded in the US and are the go-to name in the business. They are moving their trucks away from the energy patch to municipal work, but there is only so much they can do. He is keeping it because it is a well run company. More than half is now not with commodities so he is happy with it.

They are good operators. He is looking to add stock back down at these prices. It is being thrown in with all of the energy names, but this one is different because it has to do more with infrastructure.

Starting to look like very deep value. A business with growth and yield. Doesn’t think there will be any dividend increases for any of these businesses, given the current commodity environment. They are moving trucks around and starting to get them out of the commodity sensitive areas, and moving them more towards construction areas and into the US. This is a way to get exposure in the US homebuilding and construction market. Doesn’t think we are going to see this appreciate anytime soon unless there is a little bit of turn up in the energy side.

Really likes management. There are 2 industries they service, oil/gas and municipalities. Because of the oil and gas uncertainty, she is staying out of this until she sees a bottom in energy. It would be one of the names that she would be very happy to buy back.

This is a great company. The biggest fleet of hydro-vac trucks in North America, mostly in Canada initially. Have been growing tremendously in the US over the last few years. Got whacked because they had exposure to the oil/gas industry in Western Canada. Very high margin free cash flow business. They are really targeting the utility and municipal segment, and their reliance on the oil/gas segment has come way down. Dividend yield of 1.89%.