Wajax Corp

It'll be flat this year. It's very illiquid, so likely way cheaper than it ought to be. Good balance sheet. Cheap at 8x earnings. The payout ratio is safe. You can buy and win with this.

(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%.

Has been a good company over time and is a cyclical business. Paying out 95-100% of their earnings as a dividend right now. 7%+. Some believe they should cut the dividend and pay down debt.

In a space that he likes. Chart shows a strong advance from early 2009 to early 2012 followed by an ABC corrective period. There is a bit of support at around $32 level. 6.5% dividend yield.

(Market Call Minute) Hammered due to resource exposure.

Cyclical and a tough business. You want to watch it carefully in terms of the cycles that its products are exposed to. Don’t pay a high multiple and make sure the payout ratio is not too high for these companies. This one has a policy of only 75% of earnings.

Stock price has been absolutely whacked in the last year as a distributor of capital equipment. Now maybe things start to improve. Dividend seems to be fairly safe. Have been fairly responsible in their willingness to cut. You might actually see it back to its previous peaks in the next 18 months.

Likes this. Has come off quite a bit, which is largely a reflection of the slowdown we have seen in mining and, to some extent, in the need for equipment in oil/gas industry as well. Extremely well run company. Still tends to pay out a fairly healthy dividend (6.6%). Thinks there will be a turnaround in the mining sector in the next business cycle and this would not be a bad entry point. For the shorter-term, this may be stalled out.

All of these companies are challenged by their customers in the oil, gas and metals and mining industries. Their customers are having problems and are cutting back on buying equipment. Outlook isn’t that great. Yield of about 6%-6.5% is maintainable. Payout ratio of about 70%. Don’t expect a dividend increase anytime soon.

(Market Call Minute.) Nice dividend but they are in a space that is very vulnerable to a commodity slowdown.

This one will really depend on demand for equipment in Western Canada. Starting to crawl its way back but doesn’t know that it is going to head straight back up from here. It may be a little while. We need to see more of the rotation to the late cyclicals and more of that China demand. Any sniff of that improving and this company will move.

Equipment distributor for mining/industrial products. Because of the weak mining industry in Canada they have been weak for the last few quarters. Management is also weak. Attractive dividend which might have to be cut if demand for their products is not improved. If the recovery continues, things should improve in Canada.

Just got their dividend and the stocks been pushed down a bit. Not seeing a lot of activity in the mining or oil sands and don't expect to see that for the rest of this year. A bit of a difficult time. If you think oil sands are going to pick up then it's good.

Had a lower dividend then expected and the stock dropped accordingly. End market demand for their products has gone down, so earnings went down and then dividends followed.

Look for stocks that have a gain in end market demand to see results by 2014.

Cut has already been done, so you are ok for the next 12 months.

Just hit a 52-week low so it peeked his interest. Has a very high dividend. Interesting company but the problem is it has a lot of exposure to Canada, a lot of exposure to oil sands, copper, gold mining, etc. Thinks the dividend is okay for the next couple of quarters. They really have to deliver in terms of backlog and have to deliver in terms of getting new orders. He feels there are better ideas in the cyclical commodity space.

Think they have been having some problems lately and missed on the last quarter. At a 52-week low. An interesting company. You need to get the momentum going in your favour.

Short. He has a negative view on the Canadian construction market. This company is a large distributor of heavy equipment. Prices on heavy equipment are falling quite dramatically. Missed on their 3^rd quarter results. Yield of 7.31%.

A lot of exposure indirectly to commodities in the oil sands and mining. With the whole Keystone issue and concerns around some of the CapX in the oil sands slowing down he is on the sidelines with some of these names.

Believes the 8.1% dividend is sustainable as long as the economy bumps along. They have the cash flow to pay the dividend.

Not a very glamorous company but a “Steady Eddie”. Involved in all kinds of industrial stuff. Not expensive but he doesn’t find it a particularly interesting company. If he owned, the next time it popped up in price, he would take profits. 7.4% dividend yield.

Equipment company with about 50% revenues coming from heavy trucks, 25% from industrial components and 25% from power systems. A play on economic growth in Canada. Purchased some big trucks on spec that they are planning on selling in 2013, which is a little bit concerning. Very clean balance sheet EBITDA is 0.5X. Management has publicly said that as long as the EBITDA is lower than 1.5-2, they will use debt to sustain the dividend.

(Market Call Minute) The distribution of capital equipment used in mining and infrastructure continues to be a growth area.