Badger Daylighting (BDGI.TO)

This is in the business of hydro-vac, moving of earth, and their customers are both in energy and utility fields. A lot of the business is in the oil patch, which is hurting them. Earnings in the latest quarter were down. They are expanding big in the US. Doesn’t see them increasing the dividends as long as energy is under pressure. A very good company to own for the long run.

Had a very good run from 2011 to 2014. Then it ran out of steam a little bit, Now it has come back towards support, feels around $20 there should be some support. Now he feels that there is a chance for another up-leg on Badger. Would like to see a break from the downtrend . Feels that the up-leg could be quite long and positive.

Had not been bullish on this company because it was expensive and possible competition coming in. Since then, the stock has been cut by half and he has been getting more interested in it. They are hydro-vac people with a lot of exposure to the US. What is holding the company back is clearly their energy exposure and he still needs to figure out how much downside there is. This is getting more interesting.

Good infrastructure stock. Very useful around buried utility lines. There are very good growth aspects, especially in the US. Growth multiple has been taken out of the stock. Stick with it. It will take time to play out. They have a decent dividend for a growth stock. It is not widely held so more volatile. It’s a liquidity issue.

(A Top Pick May 25/15. Down 13.81%.) Had picked this because at that time the energy stocks and cyclicals had been improving. This still has good valuation characteristics and scores in the top 15% with good ROE. A very solid balance sheet. From a valuation perspective, he still has a partial holding. This will be a beneficiary of an eventual cyclical recovery, ahead of some of the higher levered oil stocks. If he didn’t own it, he would buy a small position.

He recently started buying it again. He had looked for two things. The expansion in the US – would it sacrifice margins, and since half the business is energy related he wanted to show they handled that. They moved trucks to the non-energy area and margins were okay for the last two quarters. So he has no problem owning it and buying again.

He always liked it and sold it way too soon. It is a well run company. The problem is there is no way to patent their process so others have picked up the technology. There is a lot more competition and it took the wind out of their sails. That is going to put a cap on them. The yield is not exciting and he doesn’t see them going anywhere.

This went from being a dividend play, to being a value play, to being a growth stock, to being a momentum stock. Once the wind was taken out of the momentum stock, he started to become more interested again. It has come down a lot because about half of its revenue and earnings comes from the energy area. They have been successful in 2 things. 1) Moving their trucks away from energy towards utility and other areas and 2) growing their presence in the US. Earnings from the US are starting to come through. Dividend yield of 1.24%.

It was a growth darling a year ago and then missed a quarter, then the energy decline impacted it. This one fits his trend of wanting to move back into cyclical names. It has good valuation. High ROEs and a 10 year track record of growth. They are the market leader and that is a good barrier to competition.

A good company and have done extremely well over the years, however their technology is not patentable. They use water pressure to drill, and it is absolutely fabulous if you are putting in fibre optics, or some tricky areas with gas pipes, etc. The trouble is, everybody else can build the same kind of machines and have been doing that. Have more competition now than they had before. This is going to put a bit of a lid on how fast the company can grow.

A lot of city construction is using this company instead of using backhoes. It consists of a high-pressure water system and a gigantic industrial vacuum mounted on a truck. It is starting to become more competitive. This company offers the advantage of being extremely disciplined in the expansion of their fleet. Earnings growth is expected to be unchanged for 2016. They have a 19 PE. ROE is roughly 23%. On a one-year basis, you will probably be happy with the results.

It is the dominant force in its particular water technique pipe laying. Sold his holdings.

He has looked at it, but never owned it. It has exposure to Western Canada. It is not cheap enough to be on his radar screen. He does not see the barrier to competition.

(Market Call Minute.) He is building a pretty good-sized position in the stock. He likes this for a whole bunch of reasons.

Chart shows higher lows in January and March, so it is building a base. However, there is going to be a lot of resistance at the current level. This is an investment that he isn’t quite sure about, but the risk/reward is really in your favour. The sector is ranked very poorly on a long-term basis. The shorter trade numbers are really good. Chart shows a downward channel from early 2014, and he would like to see it break out above that. If you own, he would be inclined to take half of your profit and let the rest run.