snc lavalin
SNC-LAVALIN GROUP INC. $32 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) is one of the world’s leading design and engineering companies, with operations in over 100 countries. It specializes in large public works projects like bridges and water treatment systems. The company is also a leading builder of electrical power plants and transmission systems. The recent rise in energy prices is good news for SNC, since many utilities are now looking for ways to cut consumption of oil and natural gas. High oil prices have also spurred interest in nuclear power plants. Another way SNC should benefit from high oil is from more public transit. SNC has designed and built mass transit systems in some of the world’s biggest cities....
Last year’s big run up in oil prices increased the operating costs of most industrial companies. But those that supply equipment and services to exploration firms have been among the biggest gainers in the past few months. Here are three industrial stocks that should continue to profit from high oil prices. However, only two are buys right now. SHAWCOR LTD. $25 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) makes sealants that protect oil and natural gas pipelines from rust and other forms of corrosion. The company also inspects and repairs pipelines, and makes specialty cables and wires....
TORSTAR CORP. $18 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) earned $0.10 a share in the third quarter of 2006, down 66.7% from $0.30 a year earlier. If you exclude the negative impact of foreign currency movements, restructuring costs and gains from asset sales, earnings were unchanged. Revenue fell 3.1%, to $366.2 million from $378.0 million, mostly due to lower sales at its Harlequin book publishing subsidiary and The Toronto Star flagship newspaper. The stock has dropped 20% in the past six months, due to concerns that the company took on too much debt to buy 20% of Bell Globemedia, which owns The Globe and Mail, CTV Television and several popular specialty channels. But Torstar can use these TV channels to draw traffic to its own web sites. The company could also unlock a big part of its value by spinning off Harlequin to its shareholders as a special dividend....
SNC-LAVALIN GROUP INC. $30 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) is one of the world’s leading engineering and construction firms. It specializes in large-scale public works projects such as water treatment systems, highways and power plants. SNC is currently working on projects in over 100 countries. SNC typically builds a public facility, and agrees to operate it under a long-term concession contract. Concessions account for 30% of its revenue. SNC’s best-known concession is Highway 407, a toll highway north of Toronto. In May 1999, SNC paid $175 million for a 26.92% stake the highway, and the right to operate it for 99 years. SNC later cut its interest to 16.77%. Although Highway 407 is still losing money, its revenue is growing strongly and it should become profitable in the next few years. The company is now working on several new concession projects it hopes have the same potential as Highway 407. It’s building a new $2 billion transit line for the Vancouver 2010 Olympics, and owns a third of the company that will operate it for 35 years. SNC recently increased its ownership in Alberta’s AltaLink electricity grid, from 50% to 76.92%....
PENGROWTH ENERGY TRUST (Toronto symbols PGF.A $27 and PGF.B $26; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is getting rid of its dual-class system of “A” and “B” units. It put the two classes in place to comply with Canada’s foreign-ownership requirements and maintain its tax treatment as a Canadian mutual fund trust. However, new rules let Pengrowth keep its Canadian trust status, regardless of its foreign ownership. Effective July 27, 2006, Pengrowth will convert the “A” and “B” units into a single class on a 1-for-1 basis. Prices of the “A” and “B” units have been converging as that date nears, as we predicted. Pengrowth is a buy....
SNC-LAVALIN GROUP INC. $32 (Toronto symbol SNC; SI Rating: Average) specializes in building large public works projects, such as water treatment plants, roads and bridges. It often buys small engineering firms to expand its share of the world engineering market. SNC also operates public facilities under long-term concession contracts. The largest of these is its 16.77% stake in Highway 407, a toll highway just north of Toronto that uses electronic tracking devices to toll vehicles automatically instead of traditional toll booths. The highway is still losing money, but losses shrank by 68% in 2005. This investment should soon earn a profit, particularly now that the highway’s owners and the Ontario government have settled their dispute over recent toll hikes....
It pays to be skeptical of companies that grow by acquisition. Even the most promising acquisitions can come with hidden problems and unexpected costs that devastate the buyer’s finances. However, some companies are strong enough to overcome the drawbacks of growing by acquisition. Here are four examples. Only three are buys right now, and then only for aggressive investors. SAPUTO INC. $33 (Toronto symbol SAP; SI Rating: Average) has made itself the top dairy producer in Canada in the past few years through acquisitions. However, heavy regulation limits Saputo’s growth in Canada....
SNC-LAVALIN GROUP INC. $31 (Toronto symbol SNC; SI Rating: Average) earned $0.29 a share in the fourth quarter of 2005, up 45.0% from $0.20 a year earlier (all per-share amounts adjusted for a recent 3-for-1 stock split). If you exclude losses from its 16.77% stake Highway 407, a toll highway north of Toronto, per share earnings grew 20.8%. Revenue rose 9.1%, to $1.2 billion from $1.1 billion. SNC’s order backlog at the end of 2005 grew to $8.1 billion from $6.3 billion at the end of 2004. The strong results let SNC raise its quarterly dividend 31.3%, from $0.533 a share to $0.07. The new annual rate of $0.28 yields 0.9%. The stock has jumped five-fold in the last five years. But its high p/e of 33 exposes it to a sudden drop if the company reports a quarter of weak earnings. SNC-Lavalin is a hold.