Stantec Inc (STN.TO)

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.

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.