Christine PooleWSP Global Inc.WSP.TOTOP PICKNov 12, 2020

We would be comfortable buying today, being more aggressive below $230.
Unlock Premium - Try 5i Free  

He's been adding to this since the 2022 correction. Very well-managed. These companies benefit from massive global trends in infrastructure. Yes, these companies are expensive but enjoy huge growth tailwinds. They're growing in environmental services. Definitely hang on if you own, or buy.

Engineering design firm not associated with liabilities of construction. M&A very strong the past few years. Strengthening environmental reclamation business. Beneficiaries of US Inflation reduction act. Excellent balance sheet allows for growth. Very strong management team that is proven in all aspects of market cycles. 

Government and business are and will develop infrastructure in Canada. WSP is 50/50 government and business. WSP has a footprint in most OECD countries, a massive company, so they have local expertise around the world and gives them a competitive advantage. Are asset-lite, with their big expense being their employees. Have a healthy backlog. A consistent company. They rely on M&A to make acquisitions, large and small. Debt is a healthy under-2x EBITDA. Expect an acqusition soon.

Her choice in the sector. It doesn't do construction, just engineering services and consulting. It's in all the verticals that are experiencing growth: environment, roads, infrastructure. Grows through acquisition plus organic growth.

Valuations are roughly comparable, and rich. WSP is bigger and more global. If you own WSP, don't sell, let it keep working. Access to capital for WSP is favourable. 

Return on STN has been better this year, but that's because it was undervalued coming in. A switch wouldn't be that helpful.

Very global, only 18% revenues from Canada. Well-positioned long term for infrastructure spending and energy transition. Backlog growing, as are margins. Disciplined acquirers. Balance sheet good. Organic growth 6-7%.

The question was on comparing WSP Global and Waste Connections. The companies are very different. WCN is in the waste management business and WSP Global is more on the engineering side. Waste management is an important field and a consistent business. WCN traditionally has had an expensive valuation. Both are good companies. Hold or wait to buy.

Engineering services growing. Would be a good time to buy. Would diversify with other names in sector. Overall, positive trends behind the company. 

WSP has seen a declining dividend yield over the past decade, from ~5% to 6% to its current less than 1% yield. The stock has become focused on paying down debt and acquisitions, alongside continuous, steady dividend payments. WSP has been in the income model portfolio for years, coming from a high yield to a now relatively lower yield. The income model portfolio aims to target an average portfolio yield of 4% to 5% and a total return target of 6% to 8%. We feel that while WSP does not help to bring up the average yield, the model portfolio continues to hold an average portfolio yield in the 4% to 5% range, and WSP's strong price appreciation has helped to near the total return target of 6% to 8%. 
Unlock Premium - Try 5i Free

He's traded this stock many times. It has consolidated, but is breaking out. Would re-enter at $175.

Purely engineering design and services, without construction exposure. Good track record of acquiring and integrating. Well positioned in vertical markets that she likes. Likes the engineering space, especially with the US Inflation Reduction Act. 

Likes the engineering/construction space quite a bit. Favours it in his core portfolio. High quality, better Sharpe ratio of less volatility, high returns. Consistent over time, rather than short-term price movements. Setting up to be a leader in the space on the environmental front.

Excellent company for long term shareholders.
Demand for engineering and design increasing.
Not exposed to construction side of business.
Growth through M&A going well.
Organic growth also increasing steadily.
US Federal stimulus packages good for business (infrastructure spending).
Disciplined on capital allocation and potential acquisitions.

Hold on. World leader. Will continue to grow organically or by acquisition for years. Not cheap, but good businesses. Massive infrastructure spend globally.