Both these growth paths lead you to profits

Article Excerpt

We’ve said for a long time that growth by acquisition is inherently riskier than internal growth since it carries an above-average chance of unpleasant surprises. That’s because a buyer of something rarely knows as much about it as the seller. Still, some companies do it a lot better than others—and successfully integrating acquisitions can spur strong growth and share-price jumps for their investors. Stantec’s strategy of making small acquisitions is safer than making big purchases because any mistakes tend to be smaller. And by sharing administrative expenses, financing and employee benefits among its businesses, it cuts its costs. All this is why Stantec’s shares are up for our readers by a stellar 49% since the start of November 2019. AltaGas took on a lot of risk with a huge acquisition in July 2018. But it stuck to its promise of selling non-core assets to pay down a lot of the debt it took on; the stable, regulated cash flows it gained have paid…

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