Aecon Group Inc (ARE.TO)

This will get its fair share of infrastructure spending that governments are planning on. They do a lot of business in the mining and oil/gas business. Thinks it is going to be a very difficult environment for manufacturing and infrastructure that is not government related. He is somewhat apprehensive about this company being able to grow its earnings, because of the weakness in the energy patch. Even if this recovers, it is going to be a long time before there are major investments, as companies are going to have to pay back their debts first.

This is a beneficiary of the Liberals’ infrastructure program. Operationally doing well. They sold some assets and cleared up their balance sheet. The government is supporting the industry. The stock chart looks scary, but the fundamentals are solid.

He is modelling that they can grow cash flow per share compounded over the next couple of years at 15%. Trading at a discount to its 5 year average and at a price/cash flow of 7.1. Has a record backlog right now. A nice dividend with a low payout ratio, which can be easily boosted over time. The only issue is that their energy segment is a little challenged.

The Liberal government is already baked into the chart. They did a recent earnings beat related to Ontario, offsetting Alberta energy. He is looking to add to it aggressively, especially as it comes to the bottom of its recent trading range.

Would prefer SNC Lavalin (SNC-T), just because it is cheaper. However, this is also a beneficiary of the federal government putting more money into infrastructure. If you are a believer in $50 oil, this is more of an Alberta energy oriented company. He can see 10% upside from here, but more in SNC.

Convertible 5.5% bond due Dec 1/18. This can be swapped for stock at $19. The company’s balance sheet is very conservative, so he knows he is going to get paid back at the end of the day. This is also a play on the provincial and federal infrastructure plays. One 3^rd to half of revenues comes from public ventures such as subways, etc.

(Market Call Minute.) Safe and would buy it.

(A Top Pick Feb 25/15. Up 24.9%.) Were really impacted because of great exposure in Alberta, but thinks that was an overreaction by the market. Have been gaining some significant contracts. Still a Buy.

From a fundamental point of view, it is a great company. Looking at the bigger picture, it is in an uptrend over most of the past 12-14 months. That is positive. Look for rising highs and rising lows, which this one has. As long as the $13.50-$13.77 holds, it is probably pretty favourable. He doesn’t see anything wrong with this chart.

They are doing the Eglinton subway. They have been around since the last 1800s. Reasonable valuation at 12 times next year’s earnings. They are off their highs because of western exposure, but little of that exposure is to the energy sector.

(A Top Pick Feb 6/15. Up 26.6%.) The big driver was the final sale of their concession in the Quito Airport, so they now have no debt. They should benefit from the upcoming fiscal stimulus. Not in the US in a big way, but still feels there is enough opportunity in Canada to win their fair share of the BBB work.

This company stands to win on infrastructure in Canada. A well-run company that has relationships with the oil/gas sector plus much more across Canada. Doing quite well considering that it is attached to the West.

Seasonally strong from end of Nov to Apr of each year. It is not quite set up just yet so wait until it gets above the point of resistance, then it will be a really good trade.

(Top Pick Feb 6/15, Up 27.14%) They have a bog back log but had disappointing news yesterday. He is sticking with it. They will be debt free soon. They will win a fair share of projects from Canada’s new government. They have a low payout ratio and are diversified. Their backlog is at a record high.

There has been quite a bit of talk because of possible infrastructure spending in Canada. Thinks this is the best way to get the infrastructure spending of the Liberal government and/or the NDP government in Alberta. This is pretty well diversified across Canada. Valuation is not expensive at under 6X cash flow. They keep outperforming every quarter. There is probably another $4 upside to the stock with $18 being a fair price target for it.