Value investors searching for a way to take advantage of the economic strength of Canada have often found themselves catching falling knives; considering all the value plays in the Canadian oil patch, companies often trading at or below book value, it is hard to look past the few obvious examples of value plays most regularly pointed out by analysts and industry experts. In this article, I’m going to discuss one value play in the Canadian construction space: Bird Construction Inc. (TSX:BDT).
Bird Construction operates in the commercial, industrial, and institutional construction segment in Canada, offering a wide range of services to large firms looking for large, high dollar value project construction solutions. Bird is one of the most well-known names in this space, and has done well to build its relationship base with some of the most influential Canadian companies and municipalities always in need of the services firms like Bird provide.
With the recent downturn in the Canadian economy linked to a protracted drop in commodity prices hampering many industries, perhaps no industry has seen as significant a drop as the construction sector. As requests for proposals have dropped, and Bird has continued to complete its ongoing project portfolio, the company has seen its order backlog drop, leading some analysts to recommend value elsewhere.
Bird has recently secured a select few valuable projects which have bolstered its backlog, leading to renewed interest in the beaten up name. With a valuation multiple still considered to be fair (its P/E ratio sits around 31 today), I believe significant upside remains should Bird continue to grow profitably as companies turn their attention back to growth and capital spending in the years to come.
Invest Wisely, my friends.
