Wajax Corp (WJX.TO)

(A Top Pick Feb 17/17. Up 8%.) Sold this a while ago to reduce his holdings in the infrastructure space. He still likes the sector immensely. Chart shows a reverse head and shoulders. If this can get above $25.70, he would like to buy it again.

They cut their dividend, but he sees this as pretty safe with a 60% payout ratio. He models 45% EPS growth. Their balance sheet has gotten much better. The cycle is just starting to come on with equipment makers, and is trading at about a 6-point discount to Finning. Trades at about 13.8X with Finning at around 19X.

They have three divisions. Industrial components, power systems and equipment. They have had a huge run up based on earnings. They report in a couple of weeks. It may be necessary to sell after that.

They are adamant they cannot cut the dividend. He thinks they should because the cash flow does not cover it. It is not on his list of safe dividend payers. He is short this stock.

This is a really volatile space. He likes TCK.B-T instead. On a short term basis it came right up to the break down level. It is at the bottom of a previous trading band. We are right at support here.

(Market Call Minute.) Interesting company at this price. Have been doing tremendous cost cutting. At a level right now where it is starting to look very interesting again if you are patient.

Just came to market and raised about $75 million to repay debt and get their debt level into better form. They are focusing on cost cutting and organic growth opportunities. They’re in a tough spot. 50% of their sales are to mines, oil sands, etc. They were down 7% in the market today and he doesn’t know what the news was. It’s not one that he would be buying here yet.

Yield on this is pretty high and because of their debt position, they are likely to be cutting it at some point. They are related to the oil sector, so that is probably going to soften their earnings.

Trading at 6.4X versus 11.4, its five-year average, so it is cheap. Have just restructured, so that is complete and it can derive cost savings. Its debt to EBITDA is pretty low at 2.1, well below its debt covenants. What is sad is the weak outlook for oil and gas, and for miners. The payout is very generous. This is worth a shot for somebody who doesn’t mind taking a little bit of a risk.

Have about a 12% backlog, and it is up 12% year-over-year, which is encouraging. Cautious outlook, but he does model a 2014 payout ratio of 90%, so the 6% dividend is going to be pretty safe, at least for this year. 18% of their revenue is tied to oil and gas, so they are not too levered. This is a name that you can buy at $33-$35.

Has a payout ratio that he thinks will be at 90% of 2014 and 70% for 2015. Debt levels are becoming more reasonable. Backlog was up 12% year over year as of last quarter. They are reducing their spending, trying to boost their margins and are trying to grow organically. He has been Buying at $34-$35.

He would feel there is more upside on this, depending on what the economy does. Has a decent yield and feels it is fairly sustainable. Their business is doing fairly well. Their backlog grew in the past 12 months.

This company had a good setback in the market. It had got up to about 4X Book, which is really, really expensive for them. They are now down to about 2X Book. It certainly has the potential to get back up to $45-$50. Watch to see if it breaks out technically.

Feels the market has been improving for them a little bit lately, with the increasing activity in oil/gas and some of the mining sectors. A cyclical company. Right now it is probably a good company to own. Management would be pretty determined to retain their dividend. Yield of 6.8%.

Had another bad quarter recently which gives them a string of 7 or 8 bad quarters. Their end markets have been challenged. The mining side has been very challenging and he thinks they have been undercut by some lower-cost equipment. Also, their power side hasn’t really taken off. There could be more downside before they get it sorted out. Dividend yield of 7%.