FINNING INTERNATIONAL INC. $24 - Toronto symbol FTT

FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.9 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.finning.com) sells and services heavy equipment made by Caterpillar Inc. (New York symbol CAT). Its main customers are in the oil, mining, forest products and construction industries.

In May 2012, Finning paid Caterpillar $305.8 million U.S. for Bucyrus’s distribution and support businesses in South America and the U.K.; Bucyrus makes equipment for clients in the mining and oil sands industries. In October 2012, Finning paid $159.2 million for Bucyrus’s Canadian operations.

Thanks to these new operations, Finning’s revenue rose 12.3% in 2012, to a record $6.6 billion from $5.9 billion in 2011. Earnings jumped 30.1%, to $337.6 million, or $1.96 a share, from $259.4 million, or $1.51 a share. Bucyrus contributed $0.09 a share to the latest earnings.

The slowing economy has hurt commodity prices and demand for new equipment. However, Finning believes its revenue could rise by 10% in 2013 due to the Bucyrus purchase and steady demand for its services, including equipment maintenance.

Finning is a buy.

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