Pat McKeoughForget about the Hold rating, McKeough is extremely conservative and rarely endorses any company that trades on the VSX. GLTA
The telecommunications cabling company has seen profit double and its share price climb on strong revenue.
DISTINCT INFRASTRUCTURE GROUP (symbol DUG on the TSX Venture Exchange; www.diginc.ca) provides design, engineering, construction and maintenance services to the telecommunications, infrastructure and utilities industries. It operates in Ontario, Alberta and Saskatchewan. The company’s services cover all aspects of installing cables inside and outside of buildings and developing communication networks.
To build the base for its current operations, the company started up in October 2013 with the acquisition of Pillar Contracting Inc. It was a Fort Saskatchewan, Alberta, provider of streetlight and traffic-control services as well as painting and electrical work.
The company then bought Candesto Enterprises in April 2014. Candesto is a Calgary-based provider of road signs and guardrails.
In August 2015, the company got its Toronto Venture Exchange listing through the reverse takeover of a shell company called DistinctTech Inc. It then changed its name to Distinct Infrastructure Group.
In November 2015, Distinct sold Candesto, before buying Mega Diesel Excavating in March 2016 for $2.6 million.
Since then, the company has grown to its current size without the help of additional acquisitions.
In September 2016, Distinct consolidated its shares on a 1-for-10 basis. As we have often mentioned, shares of speculative stocks often fall after a consolidation or reverse stock split. However, Distinct has moved up over 60% since then.
In the three months ended September 30, 2016, the company’s revenue jumped to $16.1 million from $8.7 million a year earlier. Earnings rose to $1.1 million, or $0.04 a share, from $527,587, or $0.02.
Distinct’s long-term debt of $20.3 million (as of September 30, 2016) is a manageable 36% of its market cap. It also just raised $11.5 million through the issue of 8.5 million shares at $1.35 each.
The company operates in a competitive industry, but it has been successful in winning contracts with major clients such as ATCO, Fortis, Toronto Hydro, Hydro One, Rogers, BCE and so on. It’s also profitable with a sound balance sheet.
TSI Network recommendation: Distinct Infrastructure Group is okay to hold for aggressive investors