WSP Global Inc. (WSP.TO)

You can play infrastructure through those who build it or through those that handle the engineering. He has not had a lot of exposure other than through Brookfield. He is watching Stantec closely on the engineering side, who is more focused on pure engineering. (Analysts’ price target is $67 )

(A Top Pick July 14/17 Up 16%). He sees this company growing by acquisitions and sees more opportunities to come. They still own it.

A top pick in the last shows. He has owned it for a long time. Solid balance sheet. 50% payout ratio that supports the dividend. The stock is not cheap. He wouldn’t be adding but holding or sell calls on it.

(A Top Pick Nov 23/17. Up 6%.) This company continues to execute. A great global player on infrastructure. Chart shows a very healthy up channel.

Has gone from being a pure Canadian company to a major global player through M&A. It does infrastructure such as buildings, transportation. Got hurt a little in 2015 during the selloff in crude oil, but since then they have moved away from energy and are now focused on infrastructure. Have a very strong position in the US and parts of Europe. Dividend yield of 2.6%. (Analysts’ price target is $62.00.)

(A Top Pick Oct 21/16. Up 41%.) Had felt this was a good play on the mobile rebound that was set to happen. He still models 12% EPS growth. The balance sheet is in good shape and the dividend is still safe. It has hit the level he had expected, so it is not cheap anymore. Trading at around 24X, which is in line with its five-year average.

He likes it. The earning are going to be good. Strategically, to buy these stocks that are up a bit, get a toehold and then add when it pulls back. You should have it but you don’t need to buy it all at once.

Sell SNC Lavalin (SNC-T) or WSP Global (WSP-T)? He would keep SNC.

(Market Call Minute.) All the Canadian construction companies and engineering companies are probably Buys. North America and the world needs infrastructure to be replaced.

This has a very strong backlog. Thinks they are going to grow at the top end of their guidance. There is a stronger economy now with a GDP of 3.6. There is need for infrastructure spending globally. He models 22% earnings per share growth. Good balance sheet. A little pricey relative to its peers, but below its five-year average. Dividend yield of 2.9%. (Analysts’ price target of $54.50.)

This has had a fair record of peaking out at about 2X its BV, and is currently trading at about 1.6. He can give an upside to about $62 based on its current earnings, but unless there is any earnings acceleration, there is nothing absolutely beyond that, because at that point, both the FMV and the technical condition would run out of gas.

A large company with almost 36,000 employees and 500 offices in 40 countries. 36% payout ratio. They are forecasting unchanged earnings at $.65. Growth margins grew from last year from 17.8% to 18.8%. Year-over-year cash flow was up 53%. Feels all infrastructure supporting companies will end up doing well. Dividend yield of 2.9%. (Analysts’ price target is $54.50.)

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.

WSP-T vs. BIP.UN-T. He would buy BIP.UN-T today. They have a track of record making good acquisitions. The underlying business of WSP-T is not going to generate business that is as stable. You will have mid-single digit dividend growth with BIP.UN-T.

There are many reasons why you might want to look at this play. They just reported and earnings were a little bit soft because they were doing quite a bit of cost containment. You end up getting a global company with 500 locations, 34,000 employees. It really plays into this idea of infrastructure build, which we keep hearing about from the Trudeau government and he thinks something is going to come out of this, and the infrastructure project discussion out of the US as well. This is attractive here.