Black Diamond Group (BDI.TO)

This had a big fall yesterday. Back in Feb/March this had a big Sell signal on his system. They couldn’t pay their dividend. It is probably going to have a long recovery time if it makes it.

(Market Call Minute) Earnings outlook has collapsed, but now they are turning around. An interesting speculation.

He owns it for the yield. They do camps and rentals for construction. They raised capital recently to expand their business in construction. It is a lot less volatile than the oil business. The oil and gas industry wants to put money back to work.

Modular housing. A really good business, but just in a bad space right now. You need activity for this business to do well. Thinks we are close to the bottom here. As soon as we see drilling come back there is going to be an appetite for their product.

Provides modular accommodation for the oil patch. With the Fort McMurray situation, demand is going to be pretty high for temporary housing. The stock had a huge pop following the fire, but underlying trends in the industry are still negative. The fire probably won’t change the needle a lot, but it will improve this year. It’ll still be negative. This is a temporary issue while Fort Mac builds. Until the underlying oil/gas situation improves, the long-term fundamentals are really not going to change. He would be a little cautious.

(A Top Pick May 25/15. Down 71.15%.) Trading at only 4.6X BV. They missed and the price momentum really rolled over, so he was forced to exit his position in August.

Provides accommodations at worksites. He likes to have the macros, financials and technicals to align. On the technicals, this doesn’t look good. They cut the dividend and it looks safe on the short term. Great management.

(A Top Pick May 25/15. Up 6.41%.) Camp providers for major LNG projects that are coming up. Holding in reasonably well given the backdrop of the energy market. Still scores in the top 5% on both momentum and valuation. Very solid balance sheet and a good 5.6% dividend yield. Trading at 7X EBITDA.

Energy services. It got hit hard in the fall. It is not a super high margin business. It bottomed. It has all the metrics he looks for. 6% yield. It is a recovering story.

Black Diamond Group (BDI-T) or Horizons North Logistics (HNL-T)? This has more exposure to southern Alberta as opposed to the oil sands. There is a potential catalyst in LNG on the West Coast, and the decision should be made by June or July. There are only about 3 players that could bid on these, and both of these companies are in that field. At these levels, he would hang onto both stocks. Yield of 9.23% which the market is concerned about, as well as future growth if the LNG doesn’t get started.

Trades at a higher valuation than Horizon North Logistics (HNL-T), but tends to be less volatile. The one major difference between these 2 companies is that Horizon North produces some of their accommodations, while this company doesn’t. Also, this company has exposure to Australia while Horizon North is limited to North America. Both are very good names.