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Opinions Genevieve Roch-Decter
Black Diamond GroupBDI.TOCOMMENTNov 28, 2013
Stock price when the opinion was issued
As of Jun 15, 2026. Market Open.
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Big fleet of mobile units. Doesn't require incremental capital. Benefits from nation-building projects will be highly profitable. Expects whole industry to tighten with all the Canada Build projects coming up, which will lead to much better pricing.
Already generates lots of FCF. Top-notch management. High insider ownership. Still trying to get exposure to data centre buildouts. Trading cheaply. Yield is 1.06%.
Andrey OmelchakTraditional workcamp business on oil & gas projects, which might do better going forward with increased infrastructure spend in Canada. Real attraction is modular space business -- portable spaces that they rent out, mainly for construction projects. Portables for schools in NA and Australia. Low valuation. Very high insider ownership of ~24-25%. Not that well known.
Development of Canada's North could also benefit them. Likes management, conservatively run, lots of free cashflow. Yield is 1.32%.
Colin StewartBDI has been consolidating for a year now at its highs between $8 and $10, and this type of price action can lead to an upside breakout if the fundamentals continue to improve and the valuation warrants higher prices. We like its overall momentum over the past several years, it trades at an OK valuation of 16X forward earnings, it pays a small yield of 1.5% and has a decent buyback policy in place. Forward earnings growth estimates are around 15% to 17% over the next few years, and analyst estimates have mostly been rising. Growth is volatile, but its margins have been expanding in recent years and if it can continue to beat earnings estimates and grow its cash flows, we think it can eventually break to new highs, but much depends on earnings results and management's execution.
Net debt/EBITDA is OK at 2.1X, and it is cyclical to economic swings, but we think the market has priced in some of these risks at a 16X forward earnings multiple.
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EPS of 9c crushed estimate of 6.3c; Revenue of $102.2M beat estimates of $84.9M. EBITDA of $26.5M beat estimates by 13%. Revenue rose a robust 39%, EBITDA rose 37%. Commentary was good, with the company focused on both organic growth and acquisitions, and it continues to buyback stock. Debt is still on the high side but these results were solid. The stock is down 14% this year, but we think these results should get it a bit of attention. As a small, cyclical company there remains risks here, and it is more expensive at 15X earnings than many others. But we would see it as a reasonable, though higher risk, buy for small cap investors only.
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Premium contentOur PAST TOP PICK with BDI has triggered its stop at $8.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 8%, when combined with our previous guidance.
Premium contentWe reiterate this developer of modular structures as a TOP PICK. Analysts like the resilience the company has demonstrated over the past few challenging quarters. We look to the ramp up in infrastructure projects in its markets as a indicator of future earnings growth potential. We like that cash reserves have been growing, while the company retires debt. It trades at 24x earnings and under 2x book value. We recommend maintaining the stop at $8.50, looking to achieve $12.50 --upside potential of 30%. Yield 1.2%
(Analysts’ price target is $12.54)Premium contentWe reiterate this seller and renter of modular workforce units as a TOP PICK. Bookings and revenues in rentals are up over 15%. Quarterly cash reserves are growing, while debt is retired and shares bought back. It trades at 20x earnings and under 2x book. We recommend trailing up the stop (from $7.50) to $8.50, looking to achieve $12.00 -- upside potential of 20%. Yield 1.2%
(Analysts’ price target is $12.17)Premium contentWe again reitereate BDI, the builder of modular accommodation used in disaster recovery and turn-key camps as a TOP PICK. We like that cash reserves are growing, while debt is retired and shares bought back. It trades under 2x book and 22x earnings. We continue to recommend a stop at $7.50, looking to achieve $11.50 -- upside potential of 24%. Yield 1.3%
(Analysts’ price target is $11.63)Premium contentAfter reporting earnings beating expectations, we reiterate this modular building rental and lease company as a TOP PICK. We like that quarterly cash reserves are growing, while debt is retired. It trades at 19x earnings and under 2x book value. Analysts like that earnings were 7% higher than expectations and that capital appears to be deployed in projects that are accretive to earnings. We continue to recommend a stop at $7.50, looking to achieve $12.00 -- upside potential of 29%. Yield 1.3%
(Analysts’ price target is $12.01)Premium contentBDI is a Calgary based modular building rental and lease company operating primarily in North America and Australia. It has seen revenues grow over 20% and profit grow over 30% this past year. Strong cashflow allowed the repayment of $20 million and $49 million in new organic growth. It trades at under 2x book and 21x earnings. We recommend placing a stop-loss at $7.50, looking to achieve $11 -- upside potential of 22%. Yield 0.9%
(Analysts’ price target is $10.75)EPS of $0.08 missed expectations of $0.086 and revenues of $91.1M beat estimates of $83.64M. This is the second consecutive quarter of disappointing results, and while it trades at a reasonable valuation of 13.3X forward earnings, its high and growing debt levels are a concern. Its valuation has been lower in the past, and so there is room for multiple contraction here. Given its high debt load and long-term declining earnings, we would feel comfortable taking some gains off the table here. With debt levels creeping higher, we feel this can begin to erode its profits and cash flow.
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Benj GallanderBenj Gallander
Temporary housing accommodation camp provider. Have reached a point where they are more like four-star and five-star hotels because of the labour shortage. Stock has been hitting all-time highs. Does about $120 million in EBITDA. There are about 50,000 beds in the oil sands and they’ve got about 11,000 of them. A replacement cycle is going to happen because a lot of the beds are older. Because of West Coast LNG facilities that are likely to go ahead, one facility will require about 4000 beds. If 2 or 3 of them get going, you could get about 12,000 beds. Also, in the US and gaining quite a bit of traction. Made an acquisition in Australia last year that hasn’t panned out yet and probably not going to see any positive earnings for a couple of years. 4% dividend. If she were the CEO, she’d be considering raising some cash.