Stantec Inc (STN.TO)

Construction and architecture. They’ve turned the corner for the 1^st time in 3 years. They’ve made an acquisition that is in the water business. Creating environmental as well as infrastructure for water is going to be a big theme going forward. Dividend yield of 1.31%. (Analysts’ price target is $36.25.)

Engineering companies will eventually benefit from infrastructure spending in Canada and the US, but it is not going to be overnight. This is a Tomorrow stock. It may even go down a bit. Dividend yield of 1.56%.

A good business. Whenever he looks at a business, he looks at 3 things. The fundamentals of the industry, the financials of the business and the technicals. These 3 add up pretty well for this engineering/construction space, and thinks it is a space that is going to do very well going forward. This company is a little more sensitive to oil/gas and mining spending, so he prefers Aecon (ARE-T) a little more.

He has owned it in the past. An engineering company that said it would not buy a construction company and in the past 6 months they invested in a company that did water treatment and it had a construction component. It has come down a lot and it is attractive to him now We will have to see how this acquisition in the UK goes. He would buy now for the long term.

This has been a disappointing stock, however, it has become cheap. He has a short term one-year target of about $35. Had disappointing earnings in the oil/gas segment and the building segment to some degree, but thinks that will turn around. He really likes their MWH acquisition, which puts them in the water infrastructure business, and will allow them to have representative offices in several other key sectors of the world. Good management.

(Market Call Minute.) Has his eye on this, but it is kind of expensive. He’d like to buy it lower.

This has generally lagged the market. Execution was not great. The 2^nd quarter was disappointing. They have been impacted by much lower business related to energy, but now we are pretty much closer to the bottom of the barrel, and things should start to improve in the fall and the next few quarters. Recently acquired NWH, diversifying them into water utilities, mostly in the US. This is an area where we see a lot of project growth, which should be good for the company. They should also benefit from infrastructure investments by governments. Dividend yield of 1.47%.

They are expecting a material improvement on their earnings in 2017/2018, and he thinks it will materialize. This is the kind of management team that you don’t bet against in the long-term. They are currently digesting a very large, attractive acquisition. Also, some of their end markets have been challenged. Believes margins will improve in a number of segments, and that there will be cost and revenue synergies. Not cheap, but a quality name in Canada.

(Market Call Minute.) Engineering/construction. This company is struggling to integrate an acquisition, and with revenue headwinds in their energy business. It is one of the best steady long-term growers that Canada has.

(Market Call Minute.) An engineering and design company. Has a bunch of exposure to Alberta, and recently reported a poor quarter. Also it is not cheap.

(Market Call Minute) Of the major infrastructure stocks, it is the one he likes the least. It has verified his judgment, but not doing anything.

Just published some fairly disappointing results. Stock continues to move down and analysts have downgraded it. You really want to see this stabilize. They just did a major acquisition which, strategically, was the right thing, because it diversified them away from areas that were in trouble. If you have a one-year view, you might want to wait and see, but if you are putting it away for 5 years, it might be attractive here.

(Market Call Minute) Will really benefit when Trudeau gets going on infrastructure spending. Prefers this one.

(Market Call Minute.) Did an acquisition so they probably have to consolidate. It is ultimately a long-term Buy, but he likes WSP (?) better.

He was stopped out of it. They go through periods of consolidation and then jump higher. They have dropped below 20% ROE, his criteria. Their exposure to Alberta has spooked the market a bit. He would wait for an all time high. They could trade sideways for another year or two.