Loyal clients offset cyclical risk

Article Excerpt

Finning and Precision Drilling (see the next article in this issue) serve the cyclical resource sector, which adds risk. However, both are market leaders, so their customers are unlikely to switch to a competitor. As well, complex new technologies like hydraulic fracturing, or fracking, and steam-assisted gravity drainage should spur demand for their specialized gear and services. FINNING INTERNATIONAL INC. $33 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.2 million; Market cap: $5.7 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.finning.com) is the world’s largest dealer of tractors, bulldozers and trucks made by Caterpillar Inc. (New York symbol CAT). It also sells heavy equipment made by other firms. Finning’s clients are mainly in the mining, forest products and construction industries. In the three months ended June 30, 2014, the company’s overall revenue rose 9.1%, to $1.8 billion from $1.6 billion a year earlier. Revenue gained 21.2% in Canada (which accounts for 53% of the total), thanks to strong…