Bird Construction Income Fund (BDT-T)

Trades at only 12-13x PE and pays a 2.4% dividend. They just bought Jacob Construction, which will boost their infrastructure business from 13% to 21% and a bigger foothold in western Canada which sees more infrastructure growth. There's more spending and demand to come in this sector. Shares are reasonable.

Private and public funds are going into the infrastructure space. The demand for electricity is going up and we will need more than just renewables to meet the demand. Nuclear energy is needed and the nuclear build is real. She owns Aecon for infrastructure which has a higher dividend yield and lots of nuclear exposure.

We think BDT is very interesting at current levels. The focus on electrification projects and recent acquisition of NorCan plays very well into current green trends and BDT wants to become the partner of choice in this space.  BDT does not primarily benefit from the residential housing shortage because its focus is more on the infrastructure and institutional side of things. It has some exposure in multifamily residential and high rises, but not houses. Financials are strong with the factors listed in addition to a  nice yield and cheap valuation. We think there is a lot to like in BDT coming off a strong 2023. The bear case would be that growth slows, and BDT becomes an income name.
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IT's had a good run and is well-positioned given a strong order book for construction in Canada and Seattle. Shares stall just above $18, so he wants to see it break above $20 and hold that floor. It's in a consolidation phase. Fundamentals are still quite positive.

BDT is a $450.6M company with a strong dividend yield of 5.1%, and has been paying down debts recently. Sales growth has been decent, its profit margins are somewhat thin, but it has a nice cash balance of $115.8M, and generates decent cash flows. Its valuation is at a good level, with a forward sales multiple of 0.2X and a forward P/E of 7.6X. Analyst expectations are for decent sales and earnings growth in the coming years. We would be comfortable with a position here, given its low valuation and good yield, although we might not expect much in the way of capital appreciation.
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He tends to shy away from the construction industry. It's volatile, very low margins, risk of cost overruns. Consulting is more lucrative and steady, as with WSP. Trade it if you want.

This is a tough business to be in as construction and design are low margin businesses. The last couple of quarters showed some operational hiccups. He needs to see these issues turn around before investing. He thinks there are other ways to play the infrastructure wave, such as Brookfield or SNC Lavalin.