Pat McKeough responds to many personal questions about investing in stocks and other topics on investment and the economy from the members of his Inner Circle. 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, Pat received a question from an Inner Circle member about a stock that provides a different approach to excavating for the petroleum and utility industries. Pat assesses the company’s unique arrangement with its operating partners and whether or not it can continue to improve its results in a recovering economy. Q: Hi Pat: I would value your opinion on Badger Daylighting as an addition to the aggressive portion of my portfolio. Thanks. A: Badger Daylighting (symbol BAD on Toronto; www.badgerinc.com) is a North American provider of excavating services that are less destructive than methods that use heavy equipment, such as backhoes. Most of Badger’s customers are in the utility and petroleum industries. Badger makes the truck-mounted Badger Hydrovac, which is its main product. The Badger Hydrovac is mainly used for digging in challenging conditions, such as congested areas. The system uses a pressurized water stream to liquefy the soil cover. A powerful vacuum then removes the soil and stores it in a tank. The company operates through what it calls operating partners in the U.S. and Canada. Badger provides the expertise, trucks and marketing and administration support. The partners deliver the service by operating the equipment and building relationships with customers in their areas. There are currently 289 Badger Hydrovac units operating in Canada and 311 in the U.S. Badger invoices all the work and shares the revenue with the partners based on a formula. In certain areas, Badger has established its own company-run Hydrovac operations to market and deliver the service. [ofie_ad]
Results allow Badger to raise its monthly dividend
In the three months ended September 30, 2012, Badger’s revenue rose 15.1%, to $62.0 million from $53.9 million a year earlier, thanks to higher demand for its services in both Canada and the U.S. Earnings per share fell 14.7%, to $0.64 from $0.75. Higher taxes accounted for the earnings decline. Meanwhile, Badger raised its monthly dividend by 5.9% in November 2012, to $0.09 from $0.085. In the Inner Circle Q&A, Pat looks at whether the recovering economy and demand from oil and gas customers will let Badger keep posting higher results. He also looks at its balance sheet and earnings forecast for 2013. He concludes with his clear buy-hold-sell advice on the 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 When you add an aggressive stock to your portfolio, what qualities do you look for in that stock? Are you primarily interested in its ability to produce a quick, spectacular return? Or do you look at a company’s prospect of establishing itself as a strong business for years to come? Let us know what you think.
