STUART OLSON INC. $6.15

STUART OLSON INC. $6.15 (Toronto symbol SOX; TSINetwork Rating: Speculative) (780-454-3667; www.stuartolson.com; Shares outstanding: 26.4 million; Market cap: $159.6 million; Dividend yield: 7.8%) mainly operates in Western Canada, with both government and private sector clients. Its services include building construction, commercial and industrial electrical contracting, earthmoving and industrial insulation. In the three months ended December 31, 2015, the company’s revenue fell 22.6%, to $283.1 million from $364.5 million a year earlier. The decline came from lower activity in the Alberta oil sands and across the province. The company is also phasing out less profitable industrial projects. Before one-time items, Stuart Olson earned $2.1 million, or $0.08 a share. That’s up sharply from $1.2 million, or $0.05, a year earlier. The growth reflects the company’s focus on higher-profit activities. It ended the quarter with a backlog of $1.96 billion, down 1.3% from $1.99 billion. Stuart Olson’s dividend yields a high 7.8% and appears safe. The stock trades at 10.6 times the $0.58 a share the company is forecast to earn in 2016. The estimate could prove optimistic if low oil and gas prices continue to hurt Western Canadian construction and oil sands activity. Long-term debt for Stuart Olson is high at $119.1 million, or 75% of its $159.6 million market cap. That adds risk, though the company does hold cash of $33.7 million, or $1.28 a share. Stuart Olson is still a hold.

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