Brett Girard, CPA, CA, CFA Stantec Inc STN-T PARTIAL BUY Jan 22, 2025

WSP and STN are the top 2 companies in Canada. Serial acquirers. Hasn't invested in this area since burned by SNC-Lavalin. He doesn't have the same conviction for disciplined acquisition prices, or the same conviction for high ROIC, as he does for other industries.

There is a demand for infrastructure, and there's spending to be done. He prefers the engineering companies that provide the services to build the infrastructure, such as this one. Infrastructure builds across NA. Big holding for him.

A true compounder in Canada. Respects management, but it's fallen from its summer peak due to profit-taking. It's a buying opportunity now. Will grow earnings in double digits for many years. Are exposed to the right verticals. Fine management.

Lots of infrastructure spending to be done. Today in the space, he'd prefer WSP (which he owns) over STN, but the whole group looks really strong.

Great environment for engineering and similar services. ROE is ~13%. PE's of all these companies are getting up around 40x trailing earnings. Rather fully priced. Very good exposure to the US, and the USD is strong and likely to remain so for a while.

In a trade war, services may not be as badly affected as some products, so these companies could be somewhat of a haven. 

Big fan of the space, especially with the incoming US administration. This name had done a tremendous job over the years. But take a look at ATRL.

Owned it years ago. Run well, acquires a lot, and profitable. Growth has stalled, US tariffs are a question, but should do well.

Services aren't goods, so they won't be subject to border tariffs. Engineering services have secular growth opportunities. Meaningful US position, and US is growing faster than Canada. Much revenue comes from government, and is a risk, but doesn't negate the strong secular tailwinds.

We continue to like STN, but at the time we felt its valuation was lofty relative to its historical averages, and we were looking for higher growth opportunities elsewhere. We think it is a solid moderate growth name, and for a long-term investor, we would be comfortable holding it over the long term. It can go down along with the market if we continue to see declines for the TSX, but it has a strong history of margin expansion, revenue growth, and free cash flow growth.
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