WSP Global Inc. (WSP.TO)

She really likes it and would add. Although based in Montreal only 15% of revenue comes from Canada. Its business is very global. It has grown organically and though M&A. A couple of acquisitions have grown its power and energy vertical which is good for the demand from data centres. It is now the largest engineering, design and services company in the US. It focuses on engineering and doesn't get into construction.

Tremendous job over the years, good organic growth. Big fan of the CEO. More room to keep growing and keep making accretive acquisitions. He's very bullish, even at these levels. Selloff was unwarranted. Great buying opportunity if you have a longer-term horizon.

On his radar. Likes the engineering space. Rolling up engineering companies around the world, large acquisition in last couple of weeks. That's where most growth is going to come from -- buying up companies by using debt and a bit of equity to finance, paying down debt, and getting synergies. Executed well on this strategy for last 10-15 years.

Multiple has come down. Nice time to pick away, but not quite at the entry price he's looking for. He wants a PE ratio below 20x, and it's still ~22-23x.  Would likely scoop up if it fell 15-20% from here.

Best-managed engineering/construction firm in Canada. Recent acquisition is attractive. Well managed.

Global. Because government and utilities plan years ahead, likes the visibility to the steady pipeline of work even when economic growth slows. That stability shows up in results. Recently raised net revenue outlook. Strong demand across regions. High-quality compounder. Exposed to long-cycle infrastructure spending. Yield is 0.6%.

Question was on ATRL which he does not follow, so he proposed to compare

The two names he follows most closely are STN and WSP. He goes back and forth as to which he prefers. Both very well run. He wants pure engineering and construction, which are positioned where he likes in the infrastructure spend cycle. Very attractive profitability and cashflows in their services businesses. Valuations are almost identical, as are the FCF yields and growth profiles.

He might lean just slightly to STN, as it's a little bit smaller and so it has more room to grow.

We are still confident in WSP's long-term potential, and its large backlog does add some visibility to growth. Catalysts will be earnings and acquisitions. At least 15% earnings growth is expected next year. We would be comfortable holding the stock. That being said, companies like CLS, SHOP and PNG have better growth and momenutm. But they are also (much) more volatile. We think the banks are fine, but we would not expect the same degree of returns as they have had this year. We would make any decision here on sector allocations, rather than a straight-up swap which could change the risk of a portfolio. If another sector is under-represented we would be OK with a switch for portfolio management purposes, but we would still not view WSP as a SELL. 
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We would be comfortable buying today, being more aggressive below $230.
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We would be comfortable buying today, being more aggressive below $230.
Unlock Premium - Try 5i Free  

We would be comfortable buying today, being more aggressive below $230.
Unlock Premium - Try 5i Free  

In very stable jurisdictions globally. Engineering expertise in water, environmental services, transportation, and power -- everywhere the globe needs to invest. Earnings CAGR of 20% over last 5 years. Strategic plan out to 2027, and it can handle that. Yield is 0.55%.

Doesn't know why it's down 3.6% today. WSP is extremely well managed, therefore commands a premium valuation.

Sector should have some growth with planned infrastructure spending. In the space, he prefers larger companies like this one in terms of safety, especially as we don't know which way the economy's going to go in the next couple of years. Large companies also have a global footprint, so US tariffs are not as much a concern.

His choice in the space. About 23% compounded annual shareholder return over last decade. Bigger than peers, more global, in better verticals. Into water and environmental remediation -- things with faster growth curve. Serial acquirer.