Pat McKeough responds to many requests from members of his Inner Circle for specific advice about buying stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week an Inner Circle member asked us about a stock he has been buying on price dips. Bird Construction has seen its revenue and order backlog fall in the past year. On the other hand, it made a key acquisition early in 2013. Pat examines the company’s chances of building up its backlog with new business. He also looks at its earnings forecast and whether the shares are due to move up. Q: I’ve been a long-term holder of Bird Construction and have been buying more on dips in price. Can you update me on your current views on this dividend-paying investment? Thanks. A: Bird Construction (symbol BDT on Toronto; www.bird.ca), has offices in Toronto, Winnipeg, Calgary, Edmonton, Vancouver and Seattle. The company was formed over 90 years ago in Medicine Hat, Alberta. It focuses on projects in a number of markets, including industrial, commercial, institutional, civil construction and mining. Institutional work supplies 37% of Bird’s revenue and includes projects like hospitals, prisons, schools, university buildings and military projects. Industrial projects (43% of revenue) include work in the petrochemical, oil sands, mining, refinery and water- and wastewater-treatment sectors. Bird’s commercial work (20%) includes retail projects like enclosed shopping malls, big box stores and grocery stores.
Acquisition gives company added business in Western Canada, Yukon and Northwest Territories
In the three months ended June 30, 2013, Bird’s revenue fell 9.0%, to $312.3 million from $343.1 million a year earlier. The decline was mainly due to lower revenue from industrial customers, partly offset by higher demand from commercial and other clients. Excluding one-time items, such as a big loss on a fixed-price construction project that experienced cost overruns, earnings fell 27.6%, to $7.1 million or $0.17 a share, from $9.8 million, or $0.24. In January 2013, Bird paid $12.4 million for Nason Contracting Group, a leader in building water and wastewater facilities in Western Canada. Nason has been in business for 40 years and has built projects throughout Alberta, B.C., Saskatchewan, Yukon and the Northwest Territories. On June 30, 2013, Bird’s backlog stood at $1.06 billion, down 21.7% from a record $1.36 billion a year previous. Bird’s stock yields a high 5.9%. In the Inner Circle Q&A, Pat looks at Bird’s prospects of winning new orders and building up its backlog before the end of 2013. He also examines the company’s earnings outlook and whether the shares are likely to rise. He concludes with his clear buy-hold-sell advice on this stock. (Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members Do you buy more shares of the stocks you own when the price dips? Has this usually worked out for you?
