WAJAX CORP. $35.88 - Toronto symbol WJX

WAJAX CORP. $35.88 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $599.2 million; Dividend yield: 9.0%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).

Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.

In the three months ended December 31, 2012, Wajax’s revenue fell 3.2%, to $364.9 million from $377.2 million a year earlier. Earnings declined 14.3%, to $14.2 million, or $0.85 a share, from $16.6 million, or $1.00 a share.

The declines mostly came from reduced activity in the western Canadian oil and gas industry, which hurt results at Wajax’s power systems business. That was partly offset by strength in the forestry and construction markets, particularly in western Canada.

The company needs a recovery in western Canadian oil and gas drilling to restore its revenue and earnings growth, but its long-term outlook is positive.

Wajax trades at just 10.3 times its forecast 2013 earnings of $3.50 a share. The stock yields a high 9.0%, and its dividend appears safe.

Wajax is a buy.

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