Pat McKeough responds to many requests from members of his Inner Circle for specific advice on 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. Recently an Inner Circle member asked us about a Canadian stock that is tapping into the economic growth of Western Canada. WesternOne operates through a series of smaller acquisitions that build up its business in construction heating, aerial equipment and modular buildings. Pat looks at the company’s expanding business and the potential risks and rewards of its growth-by-acquisition strategy in a very competitive market. Q: Pat, could you give me your opinion on WesternOne, please? A: WesternOne (symbol WEQ on Toronto; www.weq.ca) aims to keep expanding by acquiring privately owned small- and medium-sized businesses, mainly in Western Canada. The company converted from an income trust to a corporation on January 1, 2013. WesternOne operates in two main areas: construction heat services and aerial equipment; and modular building construction and leasing. The company’s businesses include Britco Building Innovation, a designer and maker of commercial custom-built mobile and modular buildings in North America. In January 2013, Britco expanded into Australia through the acquisition of APB, one of that country’s largest modular building manufacturers.
Latest quarter sees revenue jump by 51%
As well, the company’s WesternOne Infrastructure Services business has 15 locations across B.C. and Alberta. This subsidiary rents equipment to customers that include mid-sized construction firms in the commercial, residential and infrastructure industries, as well as niche markets like television and movie production. In the three months ended March 31, 2014, WesternOne’s revenue jumped 51.4%, to $116.6 million from $77.0 million a year earlier, mostly due to acquisitions. Earnings per share rose to $0.08 from $0.03. The company’s annual dividend of $0.60 yields 7.4%. In the Inner Circle Q&A, Pat looks at the risk of pursuing a growth-by-acquisition strategy in highly competitive markets and whether WesternOne can sustain its high dividend. 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 Call it the “Fort McMurray phenomenon.” Many businesses have tapped into the boom created by development in the oil sands and other resources in Western Canada. Do you buy stocks that could benefit from this boom? Do you look for smaller stocks that may achieve a breakthrough? Or established companies that can find fresh growth in Western development? Have any of these stocks done particularly well for you?
