IBI Group (IBG.TO)

One of the top architecture global players. They do everything, design systems implementation, project management for construction of office buildings, designing condos, designing transit systems. Very well diversified business. Management and insiders own a very significant amount of stock of about 35%-40%.

It is an infrastructure spending play. If you took a profit at this juncture you may be a bit early. The planning phase takes years for one of these projects. Infrastructure spending comes from fiscal stimulus. There is going to be more infrastructure spending and more projects. There will be a longer term need for these companies. This stock has troughed out, but you could make more in the future.

The street viewed them as having too much debt. They tried to retire a lot of their debt. They don’t have the same risks as the actual construction business has. The valuation is quite attractive.

It is positive when you hit a 52 week high. You want to ride it. But be cautious. Put a stop underneath it.

Used to be an income trust, and like a lot of income trusts it blew up. Too much debt and too many acquisitions. Started a turnaround program a couple of years ago. Thinks there is more to come and that it is an $8 stock in 2 years.

Likes turnaround stories. An old business and has been around for 40 years, therefore you have lots of annual financial statements to look at to get comfortable as to where this company can go. An engineering and architecture company, specializing in urbanization, construction, transit lines. Urban economies grow a lot faster than national economies. He likes that they have a lot of debt, because in a turnaround, if you get it right, you get a lot more leverage on the stock price. Also, likes to see signs of a turnaround plan getting traction, and this is in this stock. Thinks that in a couple of years this will be an $8-$9 stock..

He saw warnings signs a few years ago and sold before the dividend cut. Company had too much debt. Made acquisitions in the US hoping things would turn around much faster than they did. Thinks they will have to cut the dividend completely. Thinks the company will survive. There could be restructuring down the road. He owns one of the debentures.

(A Top Pick Feb 3/09. Up 8.5% not including distributions.)