Stantec Inc (STN.TO)

Both good companies. To choose is a difficult choice, you'd have to make a call on their respective industries. As well, is the industry structurally challenged by AI -- those concerns are very much overblown.

WSP is exceptionally well run, with an exceptional CEO. STN is the same. Despite AI concerns, business models remain intact. AI will bring some changes in monetization of activities, and has already bettered their businesses. You can't do what they do via AI alone, it's much more complex.

He'd own both in equal weight.

Eventually, it shall work out. All engineering/consultant firms are down due to AI fears and Middle Eastern conflict. Organic growth missed last quarter, but maintained full-year guidance. Good things come to those who wait. Expects organic growth to accelerate through the year. End markets are very strong in all regions (especially in Germany, and in water divisions). 

Margins continue to surprise. Better balance sheet than peers, so more near-term M&A optionality. Valuation suppressed. Trades at 14x, growing 14%. Very good, consistent management; the CEO change is one to note, but for this company he sees all systems go. Yield is 1.01%.

Has come off on fears about AI. Strong growth profile, yet valuation ~15-17x PE. Generates very strong FCF. Likes it a lot. A Buy today.

Market fear that AI will dispense with these businesses just doesn't make sense. Instead, they'll be able to utilize the tools of AI. The AI narrative's just gone too far. Well-positioned. Own it with a 3,5,10-year view.

Doesn't own any pureplay engineering stocks. Always tend to be too expensive. Bid up on future infrastructure needs. 

See his Top Picks, one of which has a division devoted to engineering services.

Trend is to create environmental improvements and remediation. Just won a contract with a Scottish water enterprise to upgrade water and wastewater infrastructure. Good entry point. Good 10% growth expected, both in profits and dividends. (For dividend growth, this is about double what publicly listed companies worldwide offer.) Yield is 0.65%.

Question was on ATRL which he does not follow, so he proposed to compare STN vs. WSP

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.

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.

Banner earnings report. Revenues are growing faster than analysts expected. Into environmental architectural projects, especially in Canada and US. Up 25% YTD. Long-term compound annual return would be ~15%. Right spot, right time.

Attractive name. Global. Pure design, before projects are even built.

We continue to like STN, but at the time we felt its valuation was lofty relative to its historical averages, and we were looking for higher growth opportunities elsewhere. We think it is a solid moderate growth name, and for a long-term investor, we would be comfortable holding it over the long term. It can go down along with the market if we continue to see declines for the TSX, but it has a strong history of margin expansion, revenue growth, and free cash flow growth.
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Services aren't goods, so they won't be subject to border tariffs. Engineering services have secular growth opportunities. Meaningful US position, and US is growing faster than Canada. Much revenue comes from government, and is a risk, but doesn't negate the strong secular tailwinds.