Stantec Inc (STN.TO)

An excellent company. He used to own this, but its valuation got to a point where he just didn’t expect it to do much better. Since that time, it has been in a holding pattern. If it was 15% less then its current price, it might be worth looking at.

Over time it will turn out to be good. The valuation is fair. You can own it over the long term. He believes you can bet on management.

The chart was drifting down, down, down and away, and then all of a sudden along comes Mr. Trump and gives North American infrastructure stocks a shot in the arm, and the stock jumped. There is quite strong overhead resistance at about $37, and his FMV is about $42, so the stock can move higher from here, but is not fabulous value until something interesting comes along.

Infrastructure company. This is going with the Trump theme. They have 60% of revenues coming out of the US. An interesting name if you want exposure to the Canadian infrastructure budget, and the potential US infrastructure budget. Trading a bit lower than its peers, so a cheaper name that might pull back less if the infrastructure story doesn’t play out. They’ve also done an acquisition of a water infrastructure company. Dividend yield of 1.25%. (Analysts’ price target is $36.38.)

Construction and architecture. They’ve turned the corner for the 1^st time in 3 years. They’ve made an acquisition that is in the water business. Creating environmental as well as infrastructure for water is going to be a big theme going forward. Dividend yield of 1.31%. (Analysts’ price target is $36.25.)

Engineering companies will eventually benefit from infrastructure spending in Canada and the US, but it is not going to be overnight. This is a Tomorrow stock. It may even go down a bit. Dividend yield of 1.56%.

A good business. Whenever he looks at a business, he looks at 3 things. The fundamentals of the industry, the financials of the business and the technicals. These 3 add up pretty well for this engineering/construction space, and thinks it is a space that is going to do very well going forward. This company is a little more sensitive to oil/gas and mining spending, so he prefers Aecon (ARE-T) a little more.

He has owned it in the past. An engineering company that said it would not buy a construction company and in the past 6 months they invested in a company that did water treatment and it had a construction component. It has come down a lot and it is attractive to him now We will have to see how this acquisition in the UK goes. He would buy now for the long term.

This has been a disappointing stock, however, it has become cheap. He has a short term one-year target of about $35. Had disappointing earnings in the oil/gas segment and the building segment to some degree, but thinks that will turn around. He really likes their MWH acquisition, which puts them in the water infrastructure business, and will allow them to have representative offices in several other key sectors of the world. Good management.

(Market Call Minute.) Has his eye on this, but it is kind of expensive. He’d like to buy it lower.

This has generally lagged the market. Execution was not great. The 2^nd quarter was disappointing. They have been impacted by much lower business related to energy, but now we are pretty much closer to the bottom of the barrel, and things should start to improve in the fall and the next few quarters. Recently acquired NWH, diversifying them into water utilities, mostly in the US. This is an area where we see a lot of project growth, which should be good for the company. They should also benefit from infrastructure investments by governments. Dividend yield of 1.47%.

They are expecting a material improvement on their earnings in 2017/2018, and he thinks it will materialize. This is the kind of management team that you don’t bet against in the long-term. They are currently digesting a very large, attractive acquisition. Also, some of their end markets have been challenged. Believes margins will improve in a number of segments, and that there will be cost and revenue synergies. Not cheap, but a quality name in Canada.

(Market Call Minute.) Engineering/construction. This company is struggling to integrate an acquisition, and with revenue headwinds in their energy business. It is one of the best steady long-term growers that Canada has.

(Market Call Minute.) An engineering and design company. Has a bunch of exposure to Alberta, and recently reported a poor quarter. Also it is not cheap.

(Market Call Minute) Of the major infrastructure stocks, it is the one he likes the least. It has verified his judgment, but not doing anything.