from Globe Investor Globe Advisor asked three fund managers for their top picks among undervalued, smaller-cap stocks.
Aman Budhwar, portfolio manager, Penderfund Capital Management Ltd. in Toronto
His fund: Pender Small/Mid Cap Dividend Fund
The pick: Aecon Group Inc. ARE-T
The construction and infrastructure development company is getting a tailwind from the energy transition to renewables and a nuclear renaissance, Mr. Budhwar says.
Toronto-based Aecon has contracts to refurbish Ontario’s Bruce Power and Darlington nuclear reactors and expects a similar one for the Pickering facility, which just received Ontario government approval.
Aecon expects its higher-margin nuclear business to grow to 20 per cent of construction revenue in a few years from 15 per cent once a contract to build small nuclear reactors gets booked into revenue, he adds.
Jean-Louis Servranckx, who became chief executive officer in 2018, oversaw the sale of Aecon’s roadbuilding business and brought in Oaktree Capital Management as a minority stakeholder in the utilities business to help accelerate growth. These changes are not reflected in the market’s perception of the business, Mr. Budhwar notes.
Aecon shares suffered in the past due to losses from four legacy, fixed-price lump-sum contracts. His share-price target is $32 by 2026.