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STELLA JONES (SJ - TSX): - Defensive Growth at a Reasonable Price
Leading North American producer of railway ties and utility poles. The railway tie industry is a duopoly and enjoys re-occurring sales from the replacement of railway ties. The utility poles business is growing at double digits from the replacement of older poles, the expansion of the electric power grid, and the launch of new fire-resistant poles. It also has a residential lumber business through Home Depot which benefitted from the renovation boom. Balance sheet is strong allowing the company to continue consolidating the utility pole sector. The company also generates lots of free cash flow and is returning massive amounts capital to shareholders through aggressive share buy-backs and regular dividend hikes. The stock is down 25 per cent from its highs due to a rare quarterly miss from a slowdown in pole sales to utilities presenting a great entry point. This a high-quality defensive growth stock that is now trading at under 12 times earnings.