Buying Ninja styleIt's fair to say that Aecon is a Q3/Q4 2022 story. Until then it's dead money. The COVID boogey man is dieing, supply chain issues are a speed bump and inflation a concern if there is no flexibility in the backlog contracts. Be reminded... when do infrastructure or building costs ever come in on budget anyways? Just think about the $ surpises in a simple home reno, never mind a nuclear plant, transportation facilities, or industrial mega project.
In the stock market, look at SNC Lavalin...in the last year their stock is down from $38 to $28 (off about 25%). Target prices are anywhere from $31 to $48. That's a huge spread which accounts for all the volatility.
ARE stock went from $22 to $15 (about 32%). Target prices from $17 to $23. That's also a huge spread leading to volatility. Look at a few others... there is a pattern here. It's not like our sector has earnings visibility that is crystal clear.
I would argue that there is huge value here if you have a 1-3 year investment horizon. I would also argue that buy-and-hold has given way to FOMO and chasing the flavor of the week. Nobody wanted oil stocks a year ago. Many have since doubled.
Or pot stocks which went nuts despite horrible business cases and grandiose illusions of getting rich quick. Where are all these hot shots now that real life has intervened? Shouldn't they be pounding the table... Buy! Buy! Buy!
It's very tough to build a business like Aecon. The barriers to entry are huge. The credibility the company has within governments and big industry is impeccable. This is a rare organization with an extraordinary pandemic-related interruption. Sure, that's a reason for the pullbacks.
Mark my words. Smart money works moves with whispers. Big money works like a Ninja... stealthy and silent.
Somebody is building a position... I wish I could tell you who.