Switch out of SNC into Aecon Group

The Public Prosecution Service of Canada announced that it would not allow SNC to negotiate a settlement in regards to past corruption charges. This means that SNC will have to go to court to settle this charge and this may take quite a long time.

In the interim the company will not be viewed in a favourable light by the investment community as this creates a lot of uncertainty.

After its recent sharp price decline the stock is now trading at a substantial discount to its peers.

The company does become a takeover target at these prices.

However should the company lose its upcoming court case, it would be banned from bidding on government contracts for up to ten years.

Aecon Group has a strong order backlog and solid 3% dividend with a low payout.

The company is experiencing good cash flow growth.

The company was recently awarded a 50/50 joint venture to construct Trans Canada’s new  pipeline to transport natural gas to the LNG facility in Kitimat. This contract is worth $263 million to Aecon.

Posted in Blog Post.

Leave a Reply