Aecon Group Inc (ARE.TO)

Convertible debentures from Aecon. He is looking for a more conservative way to play an equity. 5.6% yield. You get back 100% in three years. Not a lot of downside. It has been hurt along with the oil situation.

There has been a selloff in this group, and some of it has been related to other things that are going on in the big picture in engineering companies. (See Top Picks.)

Has fallen back into a range which can be normal, before it goes back out. A lot of indicators are really oversold. On a long-term basis he thinks this is still in the right space and is building a bit of a base here.

Reported this morning and results were disappointing. Their end markets are weakening. Her preference for the engineering/construction space is to be more global, such is Fluor Corp (FLR-N).

They are in three different areas. Trading a lot less than peers. He likes the sector.

They take on the contracts, often fixed priced, and then they can get into overruns which crimps the margins totally. Trying to get their costs under control, and just have not been able to do it in a time when the industry is booming.

(Market Call Minute.) He is looking at a sister company, WSP Global (WSP-T). Likes the sector.

Likes this. Sold it and moved to SNC Lavalin (SNC-T) where he sees 10%-15% upside. He still holds this company’s convertible debentures. A good company, but it just got a little ahead of itself for him.

Really turned around. He would not jump in today. Will participate in growing infrastructure spending in the gas and oil industry. A lot of today’s growth is built into the stock price.

Not his favourite stock in the engineering/construction sector. Prefers SNC Lavalin (SNC-T) because liquidity is a little bit better, and thinks there is an imminent catalyst with it. However, he sees nothing wrong with this company. and you will see an acceleration in infrastructure spending in Canada and the US.

Chart shows a strong uptrend from last year, but broke down at the beginning of May. In this case, the last Low hadn’t been taken out, but there is some danger as it broke the uptrend. Before Buying he would want to see it a least consolidate and maybe start to move up. There are probably better places to look until it shows some sign of life.

Chart shows a nice long upward trend. If you are a long-term investor, you could see this come back to about $14. If comfortable with that, he wouldn’t worry about it too much. The whole infrastructure space has really been thematic in the last couple of years with the big disparity between expectations of what earnings will be like and governments. This was a real sweet spot to be in. This could be a rotation into a better name right now. $15-$15.50 would be a good place to step in. If there is a breakdown from there he could see it going down to $12.

Had owned, but Sold and went on to SNC Lavalin (SNC-T). Not as cheap as it used to be and this is not the best entry point. Try to get it a little bit lower. Infrastructure is still under-spent for most of a generation so he likes the general play of it going forward.

Doesn’t follow this closely, but it has performed well and if you own, he would be inclined to take profits. One of the challenges in the engineering/construction business is that it can be “boom and bust”. When oil/gas sector is doing well, they win a lot of contracts as well, but there are risks that when the going gets tough, they can be locked into contracts that could have costs overruns.

Can’t seem to get all of their segments to fire at the same time. Trying to expand their margins to the 9%-10% level. Have some assets for sale which could be accretive to the share price. BC Hydro has an $8 billion project, which would be a very good project for them.