Michael SmedleyStella-Jones Inc.SJ.TOTOP PICKAug 20, 2008

US infrastructure demand is lifting shares. Well-run and returns are higher than the market. Trades at a good PE. Buy on dips or even now and hold long term.

Darling in market the past year. Railway sector very strong. Federal government always spending on railways. Would recommend buying for the long term. Current valuation very attractive. 

It was a top pick pick a while ago and he sold a bit too early. It is well positioned for an increase in infrastructure demand since its products are needed for enhancing the grid. It is a long term buy but you could wait for a pullback.

NA's largest supplier of railway ties and utility poles. Owns and operates timberland and sawmills. 75% of demand comes from replacement work. Product is cheaper, more environmentally friendly, and lighter than alternatives. Attractive valuation of 14.5x earnings. Buy here, hold for long term. On a pullback, he'd buy aggressively. Yield is 1.5%.

Is tied to infrastructure which is a great tailwind. They make utility poles which need replacing in fires, so they benefit from climate change. The PE remains reasoanable.

Very boring business - railway ties & telephone poles.
Excellent business model.
Still has room for share price to increase.
Owns shares in company.
Very strong management team. 

It is a great chart and recent moves have been parabolic. It is well over its 200 day moving average so is overbought. You could buy again on a pullback or buy more. There are free sites which can give you the 200 moving day averages.

It is in a slow moving business, utility poles and railway ties, but has had a big run-up lately. A good time to take profits.

They can gain a lot because the rails and ports need upgrades and reconstruction. He regrets selling this at $50 and now trades above $60. Now, shares a little expensive. A great company.

SJ reported revenues of $710 mln and EPS of $1.03. This beat estimates of $706.7 mln and $0.78 respectively. The company is expecting utility poles to grow by 20% annually into 2024. Utility pole revenue was up 29% this year quarter largely driven by pricing. Overall this looks like a solid quarter at first glance.
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A leading producer of railway ties and utility poles. New utility poles will be needed (double digit growth), including the fire-resistant ones that they developed a few years ago. It has a great balance sheet, lots of cash and is raising the dividend. A defensive growth stock trading at 12 X earnings.