snc lavalin

SNC-LAVALIN GROUP INC., $40.00, Toronto symbol SNC, fell 18% this week after the company warned that its 2011 earnings will be $80 million, or 18% below its earlier forecast. In 2010, SNC earned $437.0 million, or $2.87 a share. The earnings drop is partly due to $35 million in unusual payments related to certain construction contracts. Because of the recent civil war, SNC will also write down the value of its Libyan operations, including a prison, an airport and a water treatment system, by $23 million. The company did not say if the unusual payments are connected to its Libyan projects. SNC is working with its external auditors and legal advisors to examine these payments and certain other contracts. The company still aims to report its 2011 earnings by March 30, 2012. However, the stock will likely remain under pressure until SNC clarifies the nature and extent of these payments....

SNC-LAVALIN GROUP INC. $53 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.9 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.snclavalin.com) has won a contract to install new containment and ventilation equipment in a Romanian nuclear power plant. SNC will complete this project in 2013.

The contract is worth $48 million, which is less than 1% of the company’s annual revenue of $7 billion. However, this deal could lead to more contracts from nuclear power producers, particularly as they invest in new safety equipment after the Fukushima nuclear plant in Japan was damaged by the March 2011 earthquake and tsunami.

SNC-Lavalin is a buy.

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TELUS CORP. (Toronto symbols T $57 and T.A $54; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 324.5 million; Market cap: $18.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.telus.com) has paid an undisclosed sum for Wolf Medical Systems, which makes software that helps hospitals and clinics convert patient records to electronic form. Doctors can also use Wolf’s products to access this information from a wide variety of devices, including smartphones and tablet computers. Adding Wolf’s expertise enhances Telus’s current electronic health record services. There is also plenty of room for the company to grow in this market: right now, just 32% of Canada’s medical records are digital....

SNC-LAVALIN GROUP INC. $54 (www.snclavalin.com) has won a contract to design a plant to process bitumen from the MacKay River oil sands project in northern Alberta. The company didn’t reveal how much the contract is worth, but it should enhance SNC’s reputation in this fast-growing area....

AGRIUM INC. $76 (www.agrium.com) has raised its dividend for the first time since 1996. The new semi-annual payout of $0.225 U.S. a share, up 309.1% from $0.055 U.S., has an annualized yield of 0.6%. The company should also continue to benefit from rising crop and livestock prices, which give farmers more money to spend on seeds, fertilizers and other products that Agrium sells in its retail outlets. Buy. SNC-LAVALIN GROUP INC. $54 (www.snclavalin.com) has won a contract to design a plant to process bitumen from the MacKay River oil sands project in northern Alberta. The company didn’t reveal how much the contract is worth, but it should enhance SNC’s reputation in this fast-growing area. Buy. LINAMAR CORP. $15 (www.linamar.com) earned $0.39 a share in the third quarter of 2011, up 44.4% from $0.27 a share a year earlier. These figures exclude costs to integrate Linamar’s recent purchase of three French plants that make cylinder heads, gears and other parts for European carmakers. Thanks to these new operations, sales rose 30.4%, to $725.6 million from $556.3 million. Linamar is also seeing strong demand for its other products, such as parts for farm equipment and wind turbines. Buy.

SNC-LAVALIN GROUP INC. $50 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants.

SNC recently bought the 23.08% of AltaLink L.P. that it did not already own. The company now owns 100% of AltaLink, which provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 270 substations.

AltaLink’s long-term outlook is bright, partly because new power lines will have to be built to power Alberta’s expanding oil sands projects. In addition, AltaLink’s expertise should help the company compete for new power-infrastructure projects in other provinces.

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sensitive to swings in the economy than, say, utilities. The best manufacturing stocks (including the four we analyze below) are well-established market leaders that can take advantage of downturns to expand. Their unique products and services are also helping them hang on to customers. SNC-LAVALIN GROUP INC. $50 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.8 million; Market cap: $7.5 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. SNC recently bought the 23.08% of AltaLink L.P. that it did not already own. The company now owns 100% of AltaLink, which provides electricity to 85% of Alberta’s population through 12,000 kilometres of power lines and 270 substations....

TRANSCANADA CORP., $40.81, Toronto symbol TRP, fell 4% this week after the U.S. State Department said it wants the company to re-route its proposed Keystone XL oil pipeline around underground water tables in Nebraska. Keystone XL will pump oil from oil-sands projects in Alberta through Oklahoma to refineries on the U.S. Gulf Coast. TransCanada had hoped to receive final approval for the project by the end of 2011, but finding an acceptable new route will take around 18 months. These delays would add to Keystone XL’s $7-billion U.S. cost, and might prompt oil shippers and refineries to cancel their commitments....

PRECISION DRILLING CORP. $11 (www.precisiondrilling.com) has paid an undisclosed sum for Axis Energy Services Holding Inc. Based in Calgary, privately held Axis specializes in directional drilling services that help energy exploration companies extract more oil and natural gas from hard-to-reach reservoirs. This purchase will add to Precision’s drilling expertise and help it win more contracts. Buy. SNC-LAVALIN GROUP INC. $46 (www.snclavalin.com) is buying Arcturus Realty Corp., which manages over 35 million square feet of office, retail and industrial properties across Canada. The company did not reveal the cost of the purchase price, which should close by November 30, 2011. Arcturus looks like a nice fit with SNC’s design and engineering operations. The purchase also gives SNC access to Arcturus’ high-quality clientele. Buy. NORDION INC. $9.08 (www.nordion.com) gets most of its isotopes for cancer detection and research from the Chalk River nuclear reactor near Ottawa. This reactor will soon be shut down for maintenance; that will hurt Nordion’s revenue in 2012. The company also buys isotopes from a supplier in Russia, but this company is unlikely to be able to make up the shortfall. Hold.

CANADIAN TIRE CORP., $56.03, Toronto symbol CTC.A, closed its e-commerce site in 2009, because this site was never as profitable as the company’s retail stores. However, the trend toward online shopping continues to grow, so this week the company launched a new web site that mainly sells tires. Orders will be shipped to a nearby Canadian Tire store, where a mechanic can install them. Canadian Tire is one of the few retailers that sells tires over the Internet. That should give this new site an advantage. As well, customers will probably buy more goods at the company’s stores while they wait for their tires to be installed....