Opportunity in Canadian infrastructure mega projects
The long list of Canadian infrastructure projects due to be awarded in the next 12 to 18 months is expected to serve as a catalyst for the engineering and construction sector.
A new report from Canaccord Genuity noted the total value of the 100 largest Canadian infrastructure projects is now more than $140 billion, after growing at an annual compound rate of 27% since 2007.
Among the biggest are the $13 billion Fort Hills oil sands project, $8 billion Redwater Refinery, $6 billion Northern Gateway pipeline and $15 billion Kitimat LNG terminal.
RelatedFluor Corp gets key contract win for Kitimat LNG projectS adidas flux uncor Energy Inc approves $13.5 billion Fort Hills oil sands project to boost production
As a result, Canaccord analyst Yuri Lynk believes the E sector backlog has hit a turning po adidas flux int, which should produce better earnings growth and higher valuations.
the skilled labour market expected to tighten, we see pricing power swinging to E companies, he said in a research note. companies are also now in a position to negotiate less risky contracts. analyst upgra adidas flux ded both Aecon Group Inc. and Fluor Corp. to buy from hold, and increased his valuation multiples on several other names.
His top picks are Finning International Inc., SNC Lavalin Group Inc. and Petrowest Corp. because of their low multiples, solid balance sheets and leverage to his top down view.
Mr. Lynk also noted that equipment stocks offer good value as they continue to trade below mid cycle earnings per share multiples despite climbing more than 10% in the past six months.