Stantec Inc (STN.TO)

Just published some fairly disappointing results. Stock continues to move down and analysts have downgraded it. You really want to see this stabilize. They just did a major acquisition which, strategically, was the right thing, because it diversified them away from areas that were in trouble. If you have a one-year view, you might want to wait and see, but if you are putting it away for 5 years, it might be attractive here.

(Market Call Minute) Will really benefit when Trudeau gets going on infrastructure spending. Prefers this one.

(Market Call Minute.) Did an acquisition so they probably have to consolidate. It is ultimately a long-term Buy, but he likes WSP (?) better.

He was stopped out of it. They go through periods of consolidation and then jump higher. They have dropped below 20% ROE, his criteria. Their exposure to Alberta has spooked the market a bit. He would wait for an all time high. They could trade sideways for another year or two.

Infrastructure company. Had a stint where they had slow growth and not doing too much, but that is a good thing. A steady dividend grower which adds value to the dividend. Did a water infrastructure acquisition, and that is going to take some time to digest, but over time, when they can buy some synergies with that, they will be reward.

His model price is $41, a 25% upside from its current price. For those people who don’t have it, $30 looks pretty compelling.

From an engineering/design side, this might be the company that could benefit the most from the Fort McMurray Alberta fire.

Aecon (ARE-T) or Stantec (STN-T)? Every time he has made an assessment of these 2, he has gone with Aecon.

This has been profitable for more than 54 years in a row. A slow, steady company which does small tuck-in acquisitions. Valuation is okay. Started paying a dividend in 2012 and have grown it since then. Recently bought a water infrastructure company, and there really aren’t that many public water companies you can play in. It will probably be a little more interesting in the next 2 years than it has been in the past 2. Solid management and good balance sheet.

The deal looks immediately accretive this year. This is a good name with a good backlog, and good organic growth. It is trading below its 5 year average. It is the type of name you want to buy.

Great company. Recently made an acquisition of a company out of Colorado. Expects this will increase their non-Canadian revenues up to 20% of their business. Trading at a reasonable multiple. Thinks this will benefit immensely from the new infrastructure program that the government wants to roll out over the next few years. A good area to be in.

(Market call Minute) Ranks 92 out of 700 stocks in his model. There was concern about their past ability to acquire contracts. It is a bit expensive.

Prefers over SNC-T because the RCMP is not marching into their offices. It is one of the companies in his safety and value strategy. He just bought ARE-T as well.

(Top Pick May 16/14, Up 10.29%) The space is appealing. They had a big backlog of infrastructure planning. They project manage things from soup to nuts. They are diversified by industries and by geography. They are a little constrained by the oil and gas space as they all are. He thinks they would be a buyer in consolidation activities. They won’t get bought.

One of the two engineering and construction firms he likes. You get US housing market exposure and US transportation exposure. The stock is very attractive here. Not much oil and gas exposure, but it sold off. He thinks the premium of the stock is justified.