Opinions
Larry Berman CFA, CMT, CTA
WSP Global Inc.
WSP-T
HOLD
May 08, 2017
Stock price when the opinion was issued
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All their end markets are doing well: infrastructure, transportation, property, buildings, advisory services, design. Canada makes up less than 20% of revenue, so they are international. It grows 68% organically. Buying POWER Engineers will give them the leading access to the US power market, so WSP will participate in the energy transition as utilities face more energy demand as data centres build out. Integration is going well.
(Analysts’ price target is $280.07)High quality. Stock's done well on good execution. Canadian engineering firms have a strong business model in Canada, and they're continuing to expand outside Canada; lots of opportunities to do well. He holds STN instead.
Buy a bit now. If price goes up, you'll be happy you got in earlier. If price goes down, buy a bit more to average down. Nothing wrong with the name, you can own for a long time.
Canadian-based, but less than 20% of revenue from Canada. Attractive and achievable 3-year targets to grow margins, earnings, revenue base, and free cashflow. Strong demand for services. Not exposed to tariffs. Very strong balance sheet to take advantage of M&A opportunities. She'd buy here.
Really solid earnings the other day. Targets are way higher than what the street expected. Great numbers in growth and free cashflow. Sector is immune from tariffs. 24x PE for 2026, growing at 15%. Don't be a hero, wait to get it at a lower level.
A Canadian company exporting services around the world. Are not that effected by the tariffs directly. Shares are down because they work with companies where steel costs are rising, so these projects will be more expensive and compress their margins. If there is infrastructure spending around the world, WSP will definitely benefit. The 5-year chart is exceptional, fairly directionally up. He owns Stantec instead (more US and water exposure), but both companies are worth owning.
He likes the engineering space because they will benefit from infrastructure spending. They are breaking out to all time highs. This is a bullish thing for the stock. Forward earnings estimates make this not look that expensive. Stay with it until we start to break trend, moving below $43. (Analysts’ target $51.50). He does not like the risk/reward and so does not like it. He does not like it short term. You can stick with it if the trend continues, but there is not a lot of upside potential.