Stella-Jones Inc. (SJ.TO)

Loves management. They do wooden poles for Hydro and ties for railroads. They commented that there was a big replacement cycle at the end of the war, and we are getting to a stage where there are going to have to be replacements, and are starting to get some major orders. There were some fears that because of the lower earnings in the US by the rails, that CapX may be slowed down. Canadian National (CNR-T) said they were expediting the replacement of their ties because of slower volume when it is easier to do it. Whether that happens in the US or not, she doesn’t know. If you have a 3-year time horizon, this is a buy.

Railway ties and telephone poles. He has been trimming a bit, because there is a mood in the market that very high priced stocks should be sold down.

The problem is that the stock is very highly valued. Trading at about 4X its BV, and from a long-term perspective that is actually very good for the company. Looking at the P/E ratio it is close to 19. What attracts you to the stock is that the BV is growing at a pretty good clip, but that is all that you have left. You end up with a stock that is fairly risky, because once companies reach their FMV, they tend to stall out. You have to wait for BV growth.

Canadian forest companies get a benefit from the weak dollar. He does not own it because he is out of resources, but if he had to own a forest, it would be this one.

Chart shows they have done really well from mid-2014 up to earlier this year. Industrials have all sort of broken out of their upward trending pattern. Chart shows a fairly good pattern and is a pretty good Hold at this point.

Railway ties and telephone poles. Came out with some pretty decent numbers this summer. This is a low key, low risk type of company that has been a decent performer. He wouldn’t hesitate to Buy this.

Produces telphone poles and railway ties. Great long term performer, but did have a bit of a glitch last quarter. He has never owned, but feels the stock is expensive, but has delivered

This is into railway ties and utility poles, and has years and years ahead in those areas. Dividend yield of 0.77%.

(Top Pick May 8/14, Up 49.40%) Telephone poles and railway ties. They started buying up companies in the sector, anticipating the growth in the sector, positioning themselves well for the growth. They are reporting very strong earnings growth now.

Has been very surprised at the resilience of their business. They make railway ties and telephone poles, pretty simple businesses. A great long-term story. To him it is expensive and there is a lot priced in. When you get a stock like this, if there is any disappointment in earnings, you can expect a big impact. Be cautious.

(A Top Pick May 8/14. Up 25.44%.) Boring in that they just make telephone poles and railroad ties, but the stock does very, very well. The industry that they serve is starting to spend more and more money. Have made very good acquisitions to position themselves, almost perfectly, into that spending cycle. This is one that you don’t need to worry about for the next 3-4 years.

He sold it on valuation, but the business has done very well. There is a consolidation going on across North America in that industry. It is a bit of an illiquid trader as well. Re-enter below $35.

Railway ties and utility poles. You really have to take your hat off to management. Have done a phenomenal job. They have the wind at their back over the next few years, because the average life of a utility pole in North America is getting really up to its max. There will be a huge replacement cycle that takes place and will certainly drive their earnings. Management is also very good at its efficiencies. If there is any kind of a pullback you could look at entering for a good 3 year timeframe. If you own, continue to Hold.

She likes this company. A growth by acquisition story. The last few little quarters have been good, but there have been a few little issues. Earnings were respectable, but not fantastic. She is looking for them to make more acquisitions either in the pole business or rail ties. Execution has been stellar. The majority of their earnings are from the US.

She loves this company. Great management. It fits into the infrastructure theme where a lot of the rail ties have to be replaced. Rail traffic has been increasing. Last quarter was a little weaker, because the cost of treated wood rose. The stock market did not react to it. Next quarter also might not be fantastic. Growth for the next couple of years is fantastic. They also grow by tuck in acquisitions.