Why Bird Construction Inc. Is an Interesting Contrarian Value Play

Contrarian investors have seemingly had their pick of the litter of late, with the broader market and specific sectors feeling the pain of heightened geopolitical risk combined with valuation multiples which are near historic highs, on average.

As such, contrarian investors looking for rebound plays have been busy in recent quarters analyzing a number of high-profile companies which have fallen from grace. One such company, which is perhaps less high profile, but has seen its market capitalization plummet from approximately $600 million just one year ago to around $400 million today is Bird Construction Inc. (TSX:BDT).

The construction business, as one can assume, is directly related to the economic strength of a given region and its housing market. One of the reasons why Bird has largely been considered to be a very speculative contrarian play is due to the fact that a large portion of the company's revenue is centered in Alberta, and Bird has traditionally been more sensitive to changes in the Canadian economy than other construction companies due to its exposure to Canadian provinces which have been hit particularly hard in recent years.

While the headwinds for Bird are real, the company’s most recent earnings release highlighted some promising factors which the market has appeared to take into consideration, prompting an 11% increase in Bird’s share price on Friday alone. The company increased its order backlog by more than $100 million to $1.2 billion, and turned a profit which defied expectations of a number of analysts.

Whether the trend will continue or not remains to be seen, however this news has come as a welcome surprise to investors betting on an earnings beat in the recent quarter for Bird.

Invest wisely, my friends.