Finning Int (FTT.TO)

Very, very dependent on the resource industries, particularly mining, energy as well as construction. Insofar as you can see the economic landscape picking up, this one longer-term is a good industrial holding from here. For him to get interested in it, he would want to see it below $25.

Equipment makers aren’t the best place to be right now. However he still sees nice EBITDA growth of about 7% and he gets this from a little bit of revenue growth of about 5.5%, but really from improving operations and better margins. Sees their balance sheet strengthening quite a bit and sees their dividend growing nicely over the next couple of years, maybe about 13%. A good quality name. Buy on a pullback.

(Market Call Minute.) Has a new CFO. Thinks they are turning the business around. The mining business is going to be a little bit challenged. He would go to Cummins (CMI-N) instead.

Fairly expensive from a historical perspective. Doesn’t know what you do with this stock. It has some upside potential, but on the whole, he would rather be in Poughkeepsie. Trading at 3X BV, which is about its long-term average high.

Largest Caterpillar (CAT-N) reseller globally. Has sort of waxed and waned with the global mining industry. When base metals are hot, this company is hot. Has done better this year, but looking at a few years, when mining cooled off this cooled off and is now just getting back where it was 3 or 4 years ago. Very well managed. Terrific franchise.

(Market Call Minute.) Caterpillar distributor. Likes this. Cheap compared to its major competitor. It’s in all the growth areas.

Interesting name. New management came in. It was a way for him to have exposure to the mining business without all the volatility. Over the next couple of years it will stabilize and margins will come back.

Has gone through a recent change. Feels management is skilled. It has been long known to be a very well run company. Thinks the mining business is going to continue to be challenged for the foreseeable future. Have exposure in Latin America as well. Wouldn’t pursue at these rates. Would prefer owning Caterpillar (CAT-N) because he likes the US$ over the Cdn$.

(Market Call Minute.) Closed at $26.22. His model price is $37.43, a 42% upside. He would love to see it back at $22.57. He would buy it at $28 if it had a positive transit.

(Market Call Minute.) Coming out with some better earnings and there seems to be a bit of light at the end of the tunnel.

(A Top Pick Nov 6/12. Up 10.54%.) Thinks this is a very challenged space right now however, he thinks the market has concluded that they are excellent operators. Had their Q3 yesterday and the market reacted positively. Trimmed his position last winter, when the China story was not playing in a straight line. Doesn’t think it’s your easiest name for making money going forward. Great company.

Under some pressure recently. Anticipated that the revenues will grow in the area of $1 billion in the next 5 years in the service sector of their business with some of it being in the mining area. They are less and less dependent on selling equipment to miners in South America or to the oil sands. Very good value in the low $20 area. 2.73% dividend yield.

Has been cautious on anything related to resources. It is underperforming. Revenue growth is struggling.

Company has announced their Operational Excellence program to improve margins to a targeted 10% level, which may take a couple of years to achieve. Sees good growth in service revenues; a much greater proportion of the total so that it is much less cyclical then selling new Caterpillar (CAT-N) equipment, which has been the bulk of their business. This will give more consistency to earnings as well as better margins. Yield of 2.7% with further dividend increases forecasted over the next 3 years.

Thinks there will be an expansion in margins this year so even if the top line growth may not grow significantly, you should get decent cash flow growth. There could also be a dividend increase.