Stella-Jones Inc. (SJ.TO)

He likes the company, although would not buy it at the moment. In the last year it has softened up a little. He would try to look for an entry point based on a pullback and/or the financials improving.

They are mostly railway ties and utility poles. They will not be greatly impacted by additional infrastructure spending. They will benefit from the replacement cycle. It is not cheap. He was looking to get back in in the mid-$30s, but never did. It is well managed and their acquisitions were very accretive. There has been a slowdown in the sector and some margin pressure due to inventory builds.

This doesn’t show up well on his screens. Earnings growth has really slowed, so he has a small Short on it. The railway ties are tied to oil/gas and infrastructure in Western Canada. He would stay away from this.

One of the better companies on the Canadian market. Utility poles and railway ties. A stable business. The railway industry has to continually replace ties, so they kind of have an installed base of demand going forward. A bit cyclical, so right now they are having an issue where there is just not a whole lot of demand. However, revenues are still coming in. They’ve been acquisitive in the past, and he feels they will look for more acquisitions in the future. This is cheap, and it is going to do well long term. Worth holding.

She loves the management. She took profits, but does not mean it is a sell. They warned their quarter will not be great. They keep thinking the poles will be kicking in. But it has not yet happened. Eventually the comps will start looking better. She may want to own it two years down the road.

He likes the company, the management team and the position they have. They indicated this year will be a little bit slower. The second half of the year should be better.

2016 was a tough year, and 2017 is a continuation of that. Railroad ties and utility poles. A business with a natural barrier, because they are heavy and can’t be transported too far. Also, they need a license to produce ties because of the type of wood preservative used. Railroad ties wear out over time based on age, train weight and how many times a train goes over that tie. In the latter part of 2016, there was some pressure as Class1 pulled back and effectively de-stocked a little which created pressure. Also, wood pricing moved, so that they knew pricing was going to come down, and there was a cost mismatch between inventory and what they could sell for. The back half of 2017 is going to get better. Not a bargain, but a reasonably fair price if you’ve got a 2-year time horizon.

Got a little bit ahead of itself. A really good company. Very consistent for over 20 years. On either Q3 or Q4 it missed earnings estimates, and the stock got taken down a little, but he wouldn’t let that shake you out. It is still undervalued.

One of the best run companies in Canada. The problem is that railroads are not buying railway ties, and utility companies have been slow to order new Hydro poles, so the company came out with a warning a few weeks ago that hammered the stock. Over the long-term, the story makes a lot of sense. The issue is Donald Trump. Can a Canadian company support these things?

Anyone could have bought it at $37. His model price is $57.25. He still likes it and it has not had a negative transit. There is still a wide gap after earnings downgrades. The fundamentals are still good. The market overreacted. Nibble away at the position.

Recently came up with guidance a little lower than what the street was expecting, and the stock sold off. It came up today, and he is not sure why. A lot of value managers have been doing a lot of work on this and finding that there is value. This has been really well-managed. Looking at the longer-term view, there is a huge replacement cycle. The poles in the US are past the recommended useful life, so there is going to be a constant demand.

Provides railway ties for railroads, and utility poles for North American utilities. Some of the major class 1 railroads have reduced their CapX. This company is one of the main suppliers, and railroads have to maintain their networks. Expects their business will come back in the 2^nd half of 2017. He likes the company. Very strong management. They have a history of growing their dividends.

They came out with a weak outlook for 2017. The trend is sloping off a little bit. He sees that across the board in specialty clothing retailers. It has had a fair drop, but it does not mean you should go out and buy it. He sees $38 support and if that is broken then $30.

They had a disappointing forecast. In the past year it sold off every time it got above $45. At best it is a hold.

The chart shows this hasn’t really done much over the past year. They’ve missed some expectations, especially in the last quarter. Believes there is some news coming out about railway ties that aren’t selling is much as they used to. However, that should start to pick up again. This could be in for another rocky year or so.