SHAWCOR LTD. $30 - Toronto symbol SCL.A

SHAWCOR LTD. $30 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $2.1 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.1%; TSINetwork Rating: Average; www.shawcor.com) gets 88% of its revenue by making sealants and coatings that keep oil and gas pipelines from rusting. It gets the remaining 12% by making electrical wire and protective sheaths.

ShawCor has won over $800 million of new contracts since October 2011. That includes a $400-million U.S. deal to coat an undersea natural gas pipeline in western Australia.

These new orders pushed up the company’s revenue by 11.9% in 2011, to $1.2 billion from $1.0 billion in 2010. ShawCor gets two-thirds of its revenue from outside Canada, and the high Canadian dollar cut the contribution of its overseas operations by $22.4 million.

Even with the higher revenue, earnings fell 41.0%, to $56.1 million, or $0.78 a share. That’s mainly because of a $10.1-million writedown of an investment. In 2010, ShawCor earned $95.1 million, or $1.33 a share. However, that figure included a $13.2-million accounting gain on the re-valuation of ShawCor’s stake in a Brazilian joint venture.

ShawCor trades at 14.6 times the $2.05 a share that it will likely earn in 2012. The $0.32 dividend yields 1.1%.

ShawCor is a buy.

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