Finning International Inc. $32 – Toronto symbol FTT

FINNING INTERNATIONAL INC. $32 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 179.6 million; Market cap: $5.7 billion; SI Rating: Above average) sells and rents Caterpillar brand tractors, bulldozers and trucks. The company continues to win new contracts from oil sands developers. It recently received a $100 million order for 19 trucks. Due to a huge backlog, it will take Finning about two years to deliver these vehicles. Most new contracts like this also cover replacement parts and maintenance services. That should provide Finning with steady revenues for years after it delivers this equipment. The stock trades at 20.4 times its likely 2007 earnings of $1.57 a share, and the $0.36 dividend yields 1.1%. Finning’s high exposure to volatile commodity prices increases its risk. But we feel this boom could last several more years due to spreading industrialization in Asia. Finning is a buy.

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