Top Picks & Outlook – Michael Sprung on BNN’s Market Call Tonight

Outlook:

Global stock markets generally continued their upward bias in  the third quarter of 2017. This bias was supported by strengthening economic growth in both the developed and emerging economies although at subpar levels compared with traditional recoveries. As central banks have cautiously raised interest rates, bond prices have come under pressure. Wage demands in the developed countries have not accelerated as inflationary expectations have remained low and productivity improvements have been driven by technology. In this environment, central banks may temper their enthusiasm to normalize interest rates and reduce their bloated balance sheets.

Michael Sprung Top Picks Sun Life Financial, SLF, Suncor, SU, Aecon Group, AR

Michael Sprung’s Top Picks: Sun Life Financial, SLF, Suncor, SU, Aecon Group, ARE

Against this backdrop, stock markets have continued to advance. The S&P 500 in the US has hit new highs surpassing levels from before the financial crisis. Valuations have also hit high levels making the search for new investment ideas challenging.

A number of factors could come into play that would precipitate a more meaningful market correction than we have seen in the last ten years. In Canada, concerns are centered around the NAFTA negotiations. Since the Brexit vote and the start of the Trump presidency, a backlash against global free trade has been evident, causing uncertainty in the business community, thus dampening the appetite for capital investment. Other geopolitical factors are also of concern. North Korea’s nuclear threat and heightened discord with the US has been very prominent in the headlines as have tensions in the Middle East, Venezuela, Spain, Russia and the Ukraine. Monetary concerns in Greece,Italy, Spain and Portugal have not gone away.

All of these factors lead us to exercise caution and prudence in our investment stance. Investors have to look hard to find well financed, well managed and reasonably priced companies.

Top Picks:

Sun Life Financial Inc., SLF-T, Owned personally and by clients, Last Purchase February 2016 at $37.20

Sun Life Financial operates in Canada, the US, UK and Asia. Insurance companies will benefit from a rising interest rate environment. We anticipate reasonable growth in earnings over the next few years that should result in expanding dividends. The stock currently yields 3.5% and represents good value in the current environment.

Suncor, SU-T, Owned by clients, Last Purchase March 2016 at $32.94

Suncor is Canada’s largest integrated oil and gas company. Suncor has a strong production base with quality long-term assets, a strong balance sheet, and an integrated business model that smooths to some extent the cash flow from the various business segments. Management has been focused on increasing efficiencies and positioning the company for future growth. Over the remainder of the year, Fort Hills and Hebron will be coming online. Suncor has a strong balance sheet to support and expand operations. At current levels, the stock yields 3.1%.

Aecon Group Inc., ARE-T, Owned by clients, Last Purchase March 2016 at $16.00

Founded in 1910, Aecon Group is one of Canada’s largest construction companies.   Aecon’s backlog in other infrastructure, transportation and nuclear projects has been growing. The more sophisticated projects should result in higher profitability. The environment for increased public spending in Canada is robust. The company has announced that is considering a possible sale that caused an initial bounce in the share price. Since then, the price has receded somewhat giving a current yield of 3.0%. If a sale occurs, we anticipate that it would happen at higher prices.

You can view the complete Market Call interview here>>

What is Successful Investing? Learn more here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Aecon Group Inc (TSE:ARE) wins oil and gas contracts in Western Canada

Canadian construction firm Aecon Group Inc (TSE:ARE, Mkt cap 881.26M, P/E 16.93, Div/yield 0.12/3.21, EPS 0.85, Shares 57.45M) said on Tuesday that it has been awarded two recurring revenue contracts with oil and gas companies in Western Canada.

The deals include a Master Turnaround Agreement (MTA) with Spectra Energy which covers planning, construction equipment, labour, materials and supplies related to shutdown services on natural gas processing facilities in British Columbia. Work commenced in the fourth quarter of 2016 and is planned to be carried out over a five-year period.

The second contract is a Multiple Use Agreement (MUA) with an undisclosed major oil producer in Alberta, covering the period from the fourth quarter of 2016 through to December 31, 2020. The work involves reclamation, overburden removal, mine support services and civil construction activities at all of the producer’s sites in the Alberta oil sands.

Aecon reported a backlog of C$4,551m as of September 30, 2016. Recurring revenue, including these two new contracts, is not included in the backlog.

Welcoming the new contracts, Aecon’s president and CEO, John M. Beck, said: “These recurring revenue agreements provide a predictable revenue stream and added stability for both our Energy and Mining segments. Our continued partnerships with our valued clients are a testament to our reputation as being a trusted, partner-of-choice in an increasingly competitive market in Western Canada.”

On Monday, Aecon announced that Terrance McKibbon was stepping down as president and CEO with immediate effect. McKibbon had held the top position since June 2014, having previously served as chief operating officer.

Beck, the company’s executive chairman, was CEO until June 2014 and has resumed his role as CEO on an interim basis, with Brian V. Tobin becoming independent chairman.

Aecon Group Inc. (TSE: ARE) is a Toronto based construction and infrastructure development company. The Company operates through four segments: Infrastructure, Energy, Mining and Concessions. The Infrastructure segment includes all aspects of the construction of both public and private infrastructure in Canada, and on a selected basis, internationally. The Energy segment encompasses a suite of service offerings to the energy sector, including industrial, construction and manufacturing activities, such as in-plant construction, site construction and module assembly. The Mining segment offers services consolidating its mining capabilities and services across Canada, including both mine site installations and contract mining. This segment focuses on delivering construction services. The Concessions segment includes development, financing, construction and operation of infrastructure projects by way of build-operate-transfer, build-own-operate-transfer and other public-private partnership contract structures. More from Reuters »

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

TSE: ARE – Aecon, SNC-Lavalin win nuclear refurbishment projects worth $392m

Canadian construction firm Aecon Group Inc (TSE: ARE, Mkt cap 995.84M, P/E 19.28, Div/yield 0.12/2.67, EPS 0.89, Shares 57.32M) will participate in two projects at a nuclear power plant in Ontario as part of its jointly operated business with SNC-Lavalin Nuclear Inc., the company announced on Monday.

TSE: ARE Aecon Group Darlington nuclear power station

TSE: ARE Aecon, SNC-Lavalin win nuclear refurbishment projects worth $392m

Ontario Power Generation (OPG) has awarded two contracts to the joint venture between Aecon and SNC-Lavalin. The contracts are worth a total of $392m, with Aecon’s share valued at $223m.

The first contract is for turbine generator refurbishment at the Darlington Nuclear Generating Station. Aecon (60%) and SNC-Lavalin (40%) will carry out work on all four steam turbine generators at the Darlington power plant east of Toronto. The work will include a complete overhaul of the 935 megawatt steam turbines, generators, moisture separator reheaters, condenser repairs, and the implementation of new control systems. Work on this C$265m project is expected to be completed in 2025.

The same joint venture was awarded a C$127m engineering, procurement and construction contract for the Retube Waste Processing Building at the Darlington plant. Under this contract, work is split 50% to Aecon and 50% to SNC-Lavalin. The work is expected to be completed in 2017.

TSE: ARE – Aecon already part of $2.75B refurbishment program at Darlington

Earlier this year, Aecon was awarded a $1.375bn contract as part of the $2.75bn 50/50 joint venture between Aecon and SNC-Lavalin to carry out the execution phase of its Re-tube and Feeder Replacement project for OPG’s Darlington Nuclear Generating Station Refurbishment Program.

“Our continued partnership with OPG further solidifies Aecon’s reputation as a preferred contractor to Canada’s energy sector and underscores our strong backlog and diversification in the energy segment,” commented Teri McKibbon, president and CEO of Aecon.

“We are pleased to continue our work with OPG as part of the larger Darlington Nuclear Refurbishment Program while extending the life of the turbine generators for the next 30 years,” added Mark Scherer, executive vice president of Aecon Energy.

Aecon Group Inc. (TSE: ARE) is a Toronto based construction and infrastructure development company. The Company operates through four segments: Infrastructure, Energy, Mining and Concessions. The Infrastructure segment includes all aspects of the construction of both public and private infrastructure in Canada, and on a selected basis, internationally. The Energy segment encompasses a suite of service offerings to the energy sector, including industrial, construction and manufacturing activities, such as in-plant construction, site construction and module assembly. The Mining segment offers services consolidating its mining capabilities and services across Canada, including both mine site installations and contract mining. This segment focuses on delivering construction services. The Concessions segment includes development, financing, construction and operation of infrastructure projects by way of build-operate-transfer, build-own-operate-transfer and other public-private partnership contract structures. More from Reuters »

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Aecon joint venture awarded $2.75-billion nuclear contract

Aecon Group Inc (TSE:ARE, Mkt cap 786.42M, P/E 25.79, Div/yield 0.10/2.88, EPS 0.54, Shares 56.54M) has announced that it has secured half of a C$2.75 billion (US$1.94 billion) contract to carry out the refurbishment of the Darlington nuclear power station in the Canadian province of Ontario.

Aecon Group Darlington nuclear power station

Aecon joint venture awarded $2.75-billion nuclear contract for the refurbishment of the Darlington nuclear power station

Ontario Power Generation awarded the other half of the 50/50 joint venture to SNC-Lavalin Nuclear Inc. in a deal that will see the two companies work on replacing the main reactor components.

The tools and methods the two firms will use to carry out the project will be gleaned during the definition phase, also undertaken by a 50-50 joint venture between SNC-Lavalin and Aecon.

In order to minimise disruption, each of the Darlington station’s four reactors will be taken out of service sequentially for about three years. This will allow the firms to work on replacing the fuel channels, feeder pipes, calandria tubes and end fittings.

The execution phase is targeted to commence in 2016 and will take approximately ten years, Aecon said. It also confirmed that Aecon’s $1.375 billion share of the contract will be added to its Energy segment backlog in the first quarter of 2016.

“The Darlington nuclear refurbishment project will contribute significantly to the economic vitality of Ontario while ensuring the supply of emissions-free and reliable baseload electricity,” said Teri McKibbon, president and CEO, Aecon Group Inc.

“This project illustrates Aecon’s industry-leading, highly skilled nuclear and fabrication expertise, which bodes well for Aecon’s ability to leverage our capabilities in the specialized global nuclear market.”

The project has been in the works for nearly four years, added Sandy Taylor, president, Power, SNC-Lavalin.

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

BNN Market Call Interview: Market Outlook and Top Picks

Market Call Outlook

Global markets have exhibited high volatility as concerns regarding the health of the global economy have persisted. While much of the international focus has centered around the slowing economy in China, not many markets escaped the negative pressures in the third quarter of 2015.

Economic factors were not the only factors weighting on investors’ concerns in the third quarter. Continuing strife in Syria and the resultant mass emigration into Europe, the build up of Russian and US tensions, Chinese displays of military might and the ongoing political issues in Europe all played a role in stocking investors’ fears.

Through much of the quarter, the US market remained positive as signs of economic expansion continued. Then, the Federal Reserve elected not to increase interest rates at this time casting doubts in investors minds as to the underlying integrity of the recovery.

Canadian investors have been caught up in a tediously long election debate. The uncertainties resulting from the threat of a change of government are adding to the concerns stemming from the collapse in energy prices and the waning demand for base metals.

What we are witnessing is a period of adjustment after seeing markets increase since 2008. While there are legitimate concerns that economies are slowing down, the decline in many markets has over reacted. Some of the downward pressure may be attributable to the high degree of margin that had built up over the last few years. However, many of the factors affecting the markets are transitory. It is during these periods that the stocks of good companies get driven down with those of weaker companies. Investors should be using this period of adjustment to upgrade their security positions in stronger, better managed companies in order to participate in the profits to be derived over the next business cycle.

Michael Sprung BNN Market Call Interview Market Outlook Top Picks

Michael Sprung BNN Market Call Interview: Market Outlook and Top Picks

Market Call Top Picks:

Alaris Royalty Corp., AD-T, Owned Personally and by Clients: Last Purchase August 26, 2015, $26.08

Alaris Royalty is a unique investment firm that invests in a diversified range of private companies with solid long term histories and stable management teams. The nature of the investment allows Alaris to participate in future growth while the entrepreneurs maintain control provided certain agreed upon benchmarks are met. Management has had a successful track record in identifying good investment opportunities. With growth, the number of opportunities presented to management has increased dramatically however, management has exhibited tremendous discipline in being selective with whom they partner. As investments and cash flow have grown, dividends have increased. We anticipate that investors will continue to participate in Alaris’ growth.

HudBay Minerals Inc., HBM-T, Owned Personally and by Clients, Last Purchase August 26, 2015: $5.81

HudBay Minerals is one of Canada’s leading producers of zinc, copper and precious metals with operations in Canada, Peru and the US. Constancia, a major copper-molybdenum-silver mine in Peru, has been ramping up production over 2015. It is expected that recoveries will improve as mill throughput and head grades have exceeded expectations. Transportation issues are being addressed and should be resolved by year end. With other projects coming on stream over the next few years, we anticipate that valuation levels will increase.

Aecon Group, ARE-T, Owned by clients, Last Purchase June 16, 2015, $12.50

Aecon Group is one of Canada’s largest construction companies. A large portion of Aecon’s business is related to the energy sector and the company’s stock price has been under pressure as a result. However, Aecon’s backlog in other infrastructure transportation and nuclear projects has been growing. The more sophisticated projects should result in higher profitability. Over the last number of years, management has taken steps to strengthen the financial position of the company. At current prices, the stock presents good value to investors for longer term appreciation.

Watch Michael’s complete Market Call Interview with Amber Kanwar on BNN here>>

What is Successful Investing? Learn more here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that clients gain from our focus on the long-term fundamentals and not chasing short-term trends. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.