Bird Construction - BDT . TSX
Purchase Notes - June 2019
Bird construction is a construction company based out of western Canada. When the resource sector was booming, Bird was booming as well. Sales were climbing, profits were robust and the dividends flowed like cheap wine. But then the bloom came off the rose and Bird fell on hard times. They were making $1 per share or more during the resource boom but when I bought this stock in the early summer of 2019, those earnings had evaporated. They lost money in 2018 and have lost money again in the first quarter of 2019. However, they are actively diversifying their client base and looking for business to replace the lost oil and gas and mining business. They have secured a contract to build 9 new Ontario Provincial Police detachments and 20 new light rail transit stations in Ottawa. Meanwhile, the resource industry still offers up the occasional goody like their recent contract to build workforce accommodation for the new LNG plant in Kitimat. They have had some problems with the execution of a major contract and this had taken a big bite out of their recent profits but they think that their results will improve as the year progresses and they are targeting a return to “normalised” EPS of around 59 c by next year. This company has always struck me as quite well run. Their balance sheet is rock solid with no net debt and they have a history of paying out virtually all of their excess earnings in dividends. My belief is that they have a future with or without a return of the resource sector and at my average purchase price of around $5.60, I can buy in to this story for a little less than 10 times their projected earnings. If they manage to hit their projections, I think this could turn out to be a solid buy.
What's changed since I made my first purchase of this stock? Follow the ongoing story in the posts below...