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Successful Inv says hold SNC-Lavalin Group

2016-02-08 21:25 ET - In the News

The Successful Investor, in the February, 2016, issue, says hold SNC-Lavalin Group Inc., recently $40. The Investor said buy 12 times from April, 2000, to December, 2015, at prices ranging from $12 to $56 (the stock split 3 for 1 in March, 2006). A $1,000 investment for each of the 12 buys is now worth $24,320. SNC continues to fight years-old criminal charges that accuse it of using bribes to win Libyan construction contracts. If convicted, the company might be banned by Ottawa from bidding on government contracts for 10 years. It can still bid while this process is continuing, according to a recent agreement with Ottawa. As well, SNC is still winning contracts outside of Canada, such as its recent $98-million deal to help build a cooling system for the airport in Riyadh, Saudi Arabia. SNC's balance sheet is strong, with $2.45-billion in cash and investments and a long-term debt load of $864.7-million, just 14 per cent of market cap. Its 16.77-per-cent interest in Ontario's Highway 407 toll road is up for sale and could be worth $3-billion. The Investor likes all of that, but is concerned about SNC's heavy exposure to the struggling oil and gas industry, which provides 40 per cent of its revenue. The stock is a hold.

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