Stantec Inc (STN.TO)

Likes the infrastructure aspect, and expects to see increased infrastructure on both sides of the border. Stabilizing commodity prices are going to help. They bought a global water platform, and thinks they will be able to cross sell. This has struggled for the last couple of years, and thinks it is starting to break out. He models 20% EPS growth over the next couple of years. Trades at about 18X versus its peers of 21X, versus its five-year average of around 21X. Dividend yield of 1.4%.

This has been really beaten up and lagging its competitors. Some exposure to the oil/gas industry, being Edmonton-based, put some stigma around it. It’s the 3rd largest design firm in North America. Thinks a lot of headwinds they’ve been seeing are behind them now. 5% free cash flow yield. Dividend yield of 1.4%. (Analysts' price target is $39.50.)

(A Top Pick Nov 25/16. Down 1%.) Still likes this. One of the cheaper names in engineering services. Made a big purchase of a water infrastructure company, which are really big-ticket projects. They still have the infrastructure theme coming from Canadian governments as well as potential from the US.

One of the very, very few that it is trying to break out through its all-time highs at $40. He would need to see it going higher before he would be a buyer. If he owned it, he would Sell it.

An engineering type company. The yield is reasonably low, but well covered. It’s a very competitive business. They do some business in the US which is good. An okay company, but he wouldn’t buy it personally. 1.5% dividend yield.

He prefers a Top Pick today in this space. This is a great pick in the Canadian space. It is probably a hold and has been for years. It is fine. It is an area he wants to be in but he has a cheaper idea in his Top Picks

(A Past Pick Nov 14/16. Up 8%.) Still in a turnaround situation. The last quarter was good, but the previous three quarters were not. They are moving aggressively into environmental engineering and water management. Just made an acquisition that covers California and Western US. This is currently at a decent value, and he is continuing to buy it.

This has done well, but hasn’t done anything for a while. There are willing sellers on top and willing buyers at the bottom. He would use the rally to take profits.

An engineering and construction firm, high quality. It stumbled a few years ago and they are righting the ship. They are not fully out of the woods but they have turned the corner. Even if they get a small fraction of the plans to build out public infrastructure in Canada, they will do well. He will revisit it in another quarter. It has a long history of organic growth as well as growth by acquisition.

(A Top Pick Nov 8/16. Up 20%.) This is an engineering company, not construction. They recently made a major acquisition in the US to get them more into the water engineering business. Earnings came through very, very well. They will be a beneficiary once the North American governments start spending money on infrastructure, rather than talking about it.

Had a pretty interesting 2 years. Did a major acquisition and had some challenges in the interim when some of their end markets became very challenged. However, they were able to digest a lot of it and were able to sell a portion of the business they acquired, for a pretty healthy valuation. Recently, a number of billings in their markets have turned positive. Over a long period of time, he likes this business. They have a very consistent model of how they allocate capital. Dividend yield of 1.4%.

It is a very well run company that ran into some missed earnings over the last couple of years. The last couple of quarters have been rock solid. He goes back and forth between this one and WSP Global.

(Top Pick Nov 14/16, Down 1.75%) It offers value at this level. A lot of the problems with the acquisition of MWH appear to be behind them. Last quarter they came out with turnaround numbers that show them starting to improve. They are now into more water and environmental technology. They are starting to get more US exposure.

It is an easy name to trade. You have support and resistance over a few years. $28 to $37. We had a double bottom recently. He expects $2 above that range if it breaks out. He is shying way from construction names at present because the seasonality is not strong this year.

This has been literally going sideways for the last 3 years. It is at a valuation low over the last 8 years. Has a model price of $35.99 giving a 15%-16% return from the current price. There has been a lot of acquiring going on, and they have grown the balance sheet, and now have to work that off.