AtkinsRéalis is “on fire”, this fund manager says

Greg Newman, senior wealth advisor and portfolio manager at Newman Group, ScotiaMcLeod, told BNN Bloomberg’s Market Watch on Sept. 25 that AtkinsRéalis (AtkinsRéalis Stock Quote, Chart, News, Analysts, Financials TSX:ATRL), formerly SNC-Lavalin, is the global engineering and project management company best positioned to benefit from Canada’s push for major “nation-building” projects.

“PM Mark Carney’s national product projects are a big theme. These guys [AtkinsRéalis] have been on fire,” he said, pointing to recent results that beat expectations by 3% in engineering services and 20% in nuclear. “Margins are really improving. They’re involved in Darlington in Ontario, which I say is one of the beneficiaries of these five projects. Their mission is to meet demand for low-carbon energy here and building resiliency to climate change, repairing aging infrastructure. Meantime, their balance sheet is in just terrific shape and trades are reasonable, 20 times earnings, growing at 37% visibly.”

Newman contrasted AtkinsRéalis with sector peers WSP Global and Stantec, which he also owns, but emphasized this as his current pick.

“This is the one to buy now. You know, I think it’s a little bit more of a beneficiary of the federal programs and working on its own without that anyway,” he said. “And still could even because those are the first five nation-building projects we’ve been talking about, but there’s more likely coming from the federal government, too.”

He added that the multiplier effect from the first projects could be “pretty darn good” if executed on schedule, with further upside if more are added.

AtkinsRéalis shares have gained 79.6% over the past 12 months and 358.9% over five years. On the Street, 12 analysts rate the stock “Buy,” two “Hold,” and none “Sell,” with a consensus target of $110.71.

Shares closed Sept. 25 at $99.41.

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