Stantec Inc (STN.TO)

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.

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.

Likes the sector of engineering services, instead of construction. 77% of STN revenue comes from NA. She owns WSP. Nothing wrong with STN, though it's smaller. Since STN is smaller, it might be able to grow faster.

WSP revenue from NA is 50% or slightly below, so it's more global. Starting to see organic growth pick up from its bigger acquisitions in very attractive markets. Growth profile slightly better.

Both grow organically and through M&A.  Both have balance sheet support to do M&A.

EPS of 82c missed estimates of 86c; revenue of $1.24B was 1.4% better than estimates. EBITDA of $194.6M was 4% short. The dividend was increased 7.7% and a very large battery contract was announced. EPS was flat year over year. The CFO is also retiring. Backlog is $6.3B, up ~7%. Not a perfect quarter, but the contract and dividend bump are positive signs. We would consider the outlook still quite positive overall. 
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It is winning across the board in infrastructure spending. Engineering in general is the place to be.

He's always cautious. Tremendous number of acquisitions, which they've done well. Window's been open for capital in the space. Sometimes the market will love it and leave it if they make a mistake. 

If you already own it you probably own enough, as it's done so well it has to be a bigger weight in your portfolio. Wait to buy more, don't double down at these prices.

Valuations are roughly comparable, and rich. WSP is bigger and more global. If you own WSP, don't sell, let it keep working. Access to capital for WSP is favourable. 

Return on STN has been better this year, but that's because it was undervalued coming in. A switch wouldn't be that helpful.

Sharpened its focus and expanded exposure to environmental and water. He's been adding, if needed, to rebalance portfolios. Add a half position now, add more on weakness.

Has done well. Likes the sector. She owns WSP instead, but STN is a reasonable investment.

On the service side, so it's more in the early stages of a construction project. Business flexibility, contracts can reprice quickly. Valuation has come up significantly, wait for a pullback.

Really nice run. Hold on. World leader. Will continue to grow organically or by acquisition for years. Not cheap, but good businesses. Massive infrastructure spend globally. He owns WSP instead.

Recent performance very strong.
Good time to trim some of winnings the past 5 years.
Very strong company growing rapidly.
Owns shares in company.

They've refocused a bit since Covid and shares have climbed. They bought a water consulting company which means they're thinking of services the wider population needs (water scarcity). He's long owned this. 

We see no specific news here other than the items mentioned in the question. We can't comment on personal weightings but it is about a 2% position in our model growth portfolio. We still like it, but would like it more at $78/9.
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Good investment in the sector. WSP management track record was better, so she chose it and doesn't need two names. Both are well-positioned in the right verticals.