Horizon North Logistics (HNL.TO)

He has heard a lot of pessimism. They got hit but the cutbacks in the north because they supply camps for oil and gas companies and that will hit their bottom line. A great company for him to follow. It is a direct oil and gas play. It is worth looking at but the question is when to buy in. Perhaps the end of the year with tax loss selling.

Black Diamond Group (BDI-T) or Horizons North Logistics (HNL-T)? This company manufactures the camps. New CEO which is slowly turning things around. 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 these companies are in that field. At these levels, he would hang onto both stocks. Yield of 14.48%. Market is concerned about future growth if the LNG doesn’t get started.

They had a big problem because of exposure to the oil industry through modular housing. They also made a few strategic errors in managing their company. He rates it as okay but higher risk. Prefers BDI-T because of the better balance sheet.

(A Top Pick Dec 16/13. Down 71.63%.) When people invested in the stock, they didn’t sign up for the type of volatility that we have seen. At the beginning of the year, they should have been able to tell what the percentage of revenues was going to be on Jan 1. Proved to not be the case, so there were disappointing results in Q1 and Q2. At the end of Q2 the CEO stuck his neck out and said the 2^nd half would be much, much stronger, but the 3^rd quarter was also disappointing. The outlook is not very good for these camp stocks.

Thinks they did not plan enough for the problems in the oil/gas sector. They provide camps, catering and mat services for the equipment. Have almost no cash and pay a pretty fat dividend of $0.08 a quarter. The debt has gone up. Revenue has gone up over the last number of years, but is going to go down. Unless gas prices go up in the near future, demand for their services will go down.

Their dividend is high, but the quality of their earnings is not what it used to be. Earnings are slipping. He cut its rating to C+ which is to buy it with reservation. They have customer concentration risk, so it is riskier.

There is some potential news coming out today. The BC legislature is going to announce the tax regime for LNG. The perception is that as long as it comes in at less than 7%, it would be perceived as a positive for camp stocks such as this and Black Diamond (BDI-T). Has traded off pretty hard along with the other oil/gas related names.

They are in the oil sands. It has been really hit. They own their own manufacturing. They have a really high fixed cost and don’t have the volumes. They grew from nothing.

Have lumpy revenues from the manufacturing side so the issue is that expectations were too high going into each of the quarter’s results and perhaps the company did not communicate well enough. Guidance for the balance of the year on EBITDA earnings for the year Q3 and Q4 seem quite achievable. Also, this lodging stock will benefit greatly from the development of the LNG platforms in Western Canada. Dividend is safe. A good story.

This has a bad looking chart. Chart shows higher highs and higher lows from 2010 until early this year. The last Low was just taken out in a big way. There are not a lot of positives.

Trading near 52 week low. Last two quarters were tough for the company. The street doubts the ability of the CEO. He is in it for the long haul.

(Market Call Minute.) 3^rd quarter in a row that they’ve had a miss. Had trouble putting numbers to the bottom line.

Intrigued by the lodging business. Black Diamond (BDI-T) and this company are quite competitive. Very good, high profit margin, relatively predictable, sustainable types of businesses. Tends to be good distribution. This company manufactures its own lodging units. Long term lodging is tied to large LNG projects and large oil sands projects, which look to be very optimistic for the next several years. We’ll be needing a lot more beds by these suppliers.

Really likes this name. He prefers to invest in resource in an indirect way, and this is a good example. Has a nice industry growth profile and thinks they will gain market share.

This requires patience. Their business is lumpy. They build very high quality camps. There is a lot of LNG work coming in the next few years and they are going to get a piece of the pie. Great yield of 4.2%. You are paid to wait.