snc lavalin
The BP oil spill in the Gulf of Mexico will probably lead to greater regulation of offshore drilling. Because of the extra costs, energy-exploration firms may turn their attention to safer onshore oil and natural-gas deposits, like Canada’s oil sands. That would help these three companies, which supply equipment and services to oil-sands producers. However, only two are buys right now. SNC-LAVALIN GROUP INC. $45 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.0 million; Market cap: $6.8 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; SI Rating: Average) is a leading Canadian engineering and construction company. SNC designs and builds large public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical power systems. Petroleum and chemical projects accounted for 14% of SNC’s 2009 revenue. Last year, the company designed a new steam-assisted gravity-drainage system for Husky Energy Inc.’s Sunrise oil-sands project. This technology injects steam into a well to loosen the heavy oil and make it easier to pump to the surface. SNC is working on similar systems for oil-sands projects jointly owned by Teck Resources Ltd. and UTS Energy Corp....
Whiterock Real Estate Investment Trust, $13.99 symbol WRK.UN on Toronto (Units outstanding: 16.1 million; Market cap: $225.9 million), owns, develops and operates office, industrial and retail properties across Canada. As of March 31, 2010, Whiterock owned 33 office buildings, 13 industrial buildings and 7 retail properties. In all, these holdings include 4 million square feet of leasable area. The trust gets 46% of its revenue from Ontario, 20% from Quebec, 15% from Saskatchewan, 10% from Atlantic Canada and 9% from Alberta. Whiterock’s largest tenants include SIQ (a Quebec government agency), the Province of Ontario, Intact Insurance Co., SNC-Lavalin Group, the Government of Canada, the Province of New Brunswick, the Province of Nova Scotia and Teranet, which manages Ontario’s electronic land-registration system. Government tenants account for about 29% of Whiterock’s revenue....
The Greek bailout and the poor financial state of major countries rattled the market again this week. Everybody agrees that high government debt and deficit spending are serious problems that must be fixed, but opinions differ about urgency. The biggest pessimists see government debt-and-deficits as terminal conditions that are too far advanced to be reversed. Others see the debt-deficit as more akin to a serious case of high blood pressure – a risk factor, not a death sentence. My view is that a combination of budget cuts, economic growth and a dash of inflation may be enough to gradually unwind the debt-and-deficits problem over a period of years if not decades....
EMERA INC., $24.56, Toronto symbol EMA, owns Nova Scotia Power Inc., which is Nova Scotia’s main electrical-power supplier. Nova Scotia Power supplies 94% of Emera’s revenue. The remaining 6% comes from investments in power companies in the U.S. and the Caribbean. This week, Nova Scotia Power and U.S.-based NewPage Corp. agreed to build a new biomass power plant at NewPage’s Port Hawkesbury paper mill in northern Nova Scotia. Biomass power plants generate electricity by burning plant materials and wood waste. This new facility should start operating by the end of 2012. It will then supply 3% of Nova Scotia’s power needs. Under the deal, Nova Scotia Power will invest $200 million in the new plant, including $80 million to buy an existing wood-burning generator. Most of the remaining $120 million will go toward building a second generator. NewPage will build and operate the biomass plant. It will also supply the fuel....
SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; SI Rating: Average) is a leading Canadian engineering and construction company. SNC designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems. The company gets 55% of its revenue from North America. SNC also runs plants and facilities for its clients. For example, in 2009 the company received a 29-year contract from the Province of Quebec to build and operate a new concert hall for the Montreal Symphony Orchestra. The new hall should open in mid-2011. Steady revenue streams from deals like this help cut SNC’s risk. The company now gets 30% of its revenue from services. In 2009, SNC’s revenue fell 14.1%, to $6.1 billion from $7.1 billion in 2008. That’s mainly because the recession prompted many of SNC’s clients in the mining, electrical-power and chemical industries to put off investing in new plants. However, SNC’s 2009 earnings rose 15.1%, to $2.36 a share (or a total of $359.4 million) from $2.05 a share (or $312.5 million) in 2008. SNC’s earnings mainly rose because it paid less for building materials and labour....
We generally focus on market leaders when analyzing stocks in the more volatile Manufacturing & Industry sector. That’s because they have spent decades building large client bases. That cuts their risk, since long-time customers are unlikely to switch to unproven suppliers. Their strong reputations also help them attract new customers. These four industrial companies’ earnings should rebound with the overall economy. However, only three are buys right now. SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; SI Rating: Average) is a leading Canadian engineering and construction company. SNC designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems. The company gets 55% of its revenue from North America....
Now that the Olympic flame is out in Vancouver, the attention of the sporting world is starting to turn to the next winter games, in Sochi, Russia, in 2014. That’s also true of the investing world, as companies line up to get a piece of the roughly $12 billion (Canadian) that is being spent to build the Russian Olympics in Sochi. And one Canadian firm is set to play a big role: engineering firm SNC-Lavalin Group Inc. (symbol SNC on Toronto). SNC is one of the growth stocks we cover in our Successful Investor newsletter.
This growth stock’s international expertise makes it well-suited to help build the Russian Olympics
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CANADIAN NATIONAL RAILWAY CO. $54 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 471.0 million; Market cap: $25.4 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.0%; SI Rating: Above Average) is spending $100 million to build a new rail hub in Calgary. To put this figure in context, CN earned $1.5 billion, or $3.24 a share, in 2009. When this facility opens in 2013, it will make CN more efficient by speeding up the flow of trains in western Canada. CN Rail is a buy....
CANADIAN NATIONAL RAILWAY CO., $53.52, Toronto symbol CNR, earned $1.5 billion in 2009. That’s down 13.8% from $1.8 billion in the prior year. Earnings per share fell 12.7%, to $3.24 from $3.71, on fewer shares outstanding. These figures exclude unusual items, including income-tax refunds and gains on sales of two small railway lines. Despite the drop, the latest earnings beat the $3.22 a share that analysts were expecting. Revenue fell 13.2%, to $7.4 billion from $8.5 billion. The recession hurt revenue at all of CN’s freight groups: The automotive group’s revenue fell 24%, followed by metals and minerals (down 23%), forest products (down 20%), consumer and industrial goods (down 15%), petroleum and chemicals (down 6%), coal (down 3%), and grain and fertilizers (down 3%)....
AGRIUM INC. $70 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157.0 million; Market cap: $11.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 0.2%; SI Rating: Average) is spending $800 million to expand production at its potash mine at Vanscoy, Saskatchewan (all amounts except share price and market cap in U.S. dollars). The company earned $46 million, or $0.29 a share, in the three months ended September 30, 2009. By 2015, the expansion will increase this mine’s annual production by 37%. That will help Agrium take advantage of the improving outlook for fertilizer. Agrium is a buy. SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.1 million; Market cap: $7.9 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.2%; SI Rating: Average) is part of 50/50 joint venture that will build this expansion and provide engineering services. Its $400 million U.S. share of the contract is equal to about 6% of its annual revenue....