Opinions
John O'Connell, CFA
Shawcor Ltd. (A)
SCL-T
BUY
Dec 05, 2013
Stock price when the opinion was issued
You might be interested:
The Enbridge 3 pipeline will get built by early next year, but Keystone is a question mark. Shawcor coats pipelines, so they benefit from this construction. But Ottawa is anti-pipeline as are well-financed interest groups opposing pipelines. Wait and see how the pipeline chips fall in coming months.
At 8X forward earnings and with investors/analyst attention seeming to increase, we don't think much has to change here. As always, we would use prudent portfolio principles around trimming/re-balancing to limit a single company becoming too much of a portfolio but do not think it needs to be sold just because it is 'up'. While it is up nicely over the last year, it is still down 30% over a five year period. Past prices don't really mean much, but sometimes zooming out can help.
In terms of a recession, in general it is difficult for all/any companies to avoid impacts but MATR might be a bit less sensitive to an economic slowdown than say a consumer discretionary company.
Unlock Premium - Try 5i Free
Did a very good job in the past and has grown revenues very well. Just sold an asset in Brazil, which was a little disappointing in terms of what they received. Tried to sell the company which disappointed investors. Could be some tax loss selling in this name right now. This is one that you could buy realizing that there is some money that is stranded in there. Balance sheet has deteriorated a little bit. Pipelines not only need to be built, but need to be replaced and fixed.