Stock Review - AECON - Symbol ARE on TSX

Aecon Group Inc. is a Canadian based construction and engineering company. The company has been in business for several decades in one form or another. The stock symbol is ARE and it trades on the Toronto Stock Exchange. The company is small cap by most standards - the market capitalization is approximately $650 million. The company operates mostly in Canada but does have some international exposure. It also operates in both the public and private sector.

I have been following the company closely for about 6 years. In 2008 I got lucky when I bought the company at a low of about $6.50 and the stock doubled over the next 6 months as the federal government implemented a substantial infrastructure program.  On the negative side this company does tend to be deep cyclical - when economic activity goes down hill this stock can get hit hard.

On April 23rd the Stock closed at $12.26 CDN. The book value is slightly over $10 according to my calculations. More importantly over the last year they have significantly increased the dividend and in the latest quarter they reported an earnings surprise at $0.72 per share. This significantly beat the street at $0.56 per share. If the current economy holds up and the oil sands work also holds up they could earn $1.40 this year. Over the past couple of years they have increased the operating margins - this is a key goal according to John Beck the President.

I am currently long this stock buying in at an average price of about $10.40. On a cautionary note I am keeping an eye on economic data as well as oil sands developments.