Stuart Olson Inc (SOX.TO)

Just did projects that went into severe cost overruns but they are running out now.

Got into severe troubles a couple of years ago with some fixed-price contracts that went way over bid. Management has been replaced and they now have a focus on more profitable, shorter-term projects. Could have some significant upside.

(A Top Pick April 27/12. Down 46.6%.)

(A Top Pick Dec 19/11. Down 22.17%.)

Had some big builds in contracts that have gone poorly. Doesn’t feel there is any problem with the dividends immediately but management has been guiding down for next year. He is staying away for the time being. When they get a handle on some of their operational difficulties there will be money to be made in this.

Owned for a while and took him by surprise when they made an acquisition. Company has been severely punished.

Have a significant opportunity in some of the construction they do but at the moment, the rankings are not attractive. PE seems to be reasonable at roughly 12 times. Earnings growth is forecast to be 40% next year. Earnings estimate revisions have been chopped 41% in the last 90 days, which is probably why the stock weakness has occurred. Many of their long-term contracts are subject to bringing projects in on budget and if not, this company takes the hit.

Made some acquisitions last year but have been hammered this year. Primarily construction and got hit on a lot of fixed price contracts. Currently selling below BV. Bringing a new management to address their issues.