acquisition

STANTEC INC. $30.05 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 93.8 million; Market cap: $2.8 billion; Dividend yield: 1.2%) (all figures adjusted for a 2-for-1 share split in November 2014) sells a range of consulting, project-delivery, design and technology services. The company’s clients operate in a variety of industries, including oil and gas, transportation and construction. In the quarter ended September 30, 2014, Stantec’s revenue rose 12.2%, to $544.2 million from $484.8 million a year earlier. Earnings gained 5.7%, to $48.6 million, or $1.04 a share, from $46.0 million, or $0.99. Stantec continues to grow by acquisition. It has now completed its purchase of Montreal-based Dessau, a distressed firm that’s one of a number of companies caught up in a Quebec government inquiry into corruption in the construction industry. Under the deal, Stantec won’t be responsible for any of the millions of dollars in fines or penalties Dessau may have to pay....

WESTJET AIRLINES $32.05 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 127.8 million; Market cap: $4.1 billion; Dividend yield: 1.5%) serves 91 destinations in North America, Central America, the Caribbean and Europe. Its fleet of 109 modern Boeing 737s are 30% more fuel efficient than older jets. In June 2013, the company launched WestJet Encore, its Canadian regional airline. This business now operates 14 Bombardier Q400 NextGen turboprop planes, which seat 78 passengers. In the three months ended September 30, 2014, WestJet’s earnings, excluding one-time items, jumped 30.9%, to a third-quarter record of $85.4 million from $65.1 million a year earlier. Earnings per share gained 32.0%, to $0.66 from $0.50, on fewer shares outstanding. This was WestJet’s 38th consecutive quarter of profitability. Revenue rose 9.2%, to $1.0 billion from $924.8 million....

TOROMONT INDUSTRIES LTD. $27.71 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667- 5511; www.toromont.com; Shares outstanding: 77.1 million; Market cap: $2.1 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. It also makes refrigeration systems through its CIMCO division. The company completed the spinoff of Enerflex Ltd. (see right) in 2011. Shareholders received shares of both the new Toromont Industries and Enerflex. In the three months ended September 30, 2014, Toromont’s revenue fell 6.2%, to $467.4 million from $498.3 million a year earlier....

CANADIAN REIT $48.21 (Toronto symbol REF.UN; Units outstanding: 72.4 million; Market cap: $3.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.6%; www.creit.ca) owns 198 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain 24.6 million square feet of leasable area. The trust’s occupancy rate is 95.3%.

In the three months ended September 30, 2014, Canadian REIT’s revenue rose 1.5%, to $100.8 million from $99.3 million a year earlier. Cash flow per unit gained 2.8%, to $0.74 from $0.72.

Canadian REIT added $191.1 million worth of buildings in 2013. That followed $401.9 million of purchases in 2012, including 50% of Calgary Place, a 575,000-square-foot office and retail complex, for $156.0 million. So far this year, it has made one acquisition: a 261,000-square-foot industrial property near Toronto’s Pearson International Airport for $29.3 million.

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ALGONQUIN POWER & UTILITIES CORP. $10.41 (Toronto symbol AQN; Shares outstanding: 238.1 million; Market cap: $2.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.8%; www.algonquinpower.com) has nearly tripled in size over the past three years through acquisitions. Now it’s expanding further with new purchases.

The most recent was late last year, when Algonquin paid $327 million U.S. for Park Water, owner of three regulated water utilities with 74,000 customers in California and Montana.

Algonquin’s regulated utility businesses now provide water, electricity and natural gas to over 488,000 customers, up sharply from 120,000 three years ago. In addition, its hydroelectric, thermal energy, solar and wind facilities generate 1,150 megawatts, up from 460.

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Element Financial Group, $14.05, symbol EFN on Toronto (Shares outstanding: 264.1 million; Market cap: $3.7 billion; www.elementfinancial.ca), is a leading independent North American equipment-finance company. Element operates across the continent through four segments: Commercial and Vendor Finance, Aviation Finance, Fleet Management and Rail Finance. Commercial and Vendor Finance focuses on equipment for a range of markets, from transportation and construction to industrial, health care, golf and office products....

We haven’t found any infrastructure stocks we want to recommend as buys, but here’s a look at one hold recommendation of Stock Pickers Digest, as well as two prominent U.S. companies in the industry: Stantec, $29.79, symbol STN on Toronto (Shares outstanding: 93.8 million; Market cap: $2.9 billion; www.stantec.com), a recommendation of Stock Pickers Digest, benefits from infrastructure investments all over North America. The company offers consulting and project management services for infrastructure and various facilities. Stantec continues to grow by acquisition. At the same time, it cuts its costs by sharing administrative expenses, financing and employee benefits among its divisions and new acquisitions. But continually buying firms adds risk, including the risk of writedowns....

ATLANTIC TELE-NETWORK, $64.56, symbol ATNI on Nasdaq, is entering the solar energy market by acquiring 28 solar projects in Massachusetts, California and New Jersey. The company paid $103 million for these assets ($64 million in cash and the assumption of $39 million of debt). Atlantic will now operate these projects, which have a total of 45.7 megawatts of capacity, through its newly created Ahana Renewable subsidiary. Customers include corporations, utilities, schools and municipalities. The projects’ power-purchase agreements range from 10 to 25 years, with a weighted average remaining life of 14.4 years. All of these facilities are generating revenue and have been operating for at least a year....

Pat McKeough responds to many requests from Members of his Inner Circle for advice on specific investments 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 a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday. This week an Inner Circle member asked us about several real estate investment trusts (REITs) that focus on industrial properties. Dream Industrial REIT, formerly Dundee Industrial REIT, owns buildings spread fairly evenly across Canada. Pure Industrial REIT also owns buildings across the country, but with almost half of them in Ontario. Both host a number of well-established tenants. Pat looks at the revenues and cash flow generated by these two REITs and their ability to sustain their distributions and high dividend yields. Q: Hi, Pat. I have a significant weighting in real estate investment trusts, including these two industrial REITs: Dream Industrial REIT and Pure Industrial REIT. Can you please comment on industrial REITs in general and these specifically? Thanks....

Cantel Medical Corp., $41.94, symbol CMN on New York (Shares outstanding: 41.5 million; Market cap: $1.8 billion; www.cantelmedical.com), makes products that control and prevent infections. Examples include specialized medical devices for kidney dialysis and looking inside the body, water purification equipment, disinfectants and cleaners, filtration and separation products and specialty specimen packaging. In the three months ended October 31, 2014, Cantel’s revenue rose 15.7%, to $136.8 million from $118.3 million a year earlier. Excluding one-time items, earnings per share rose 9.7%, to $0.34 from $0.31....