WSP Global: Below-the-Radar Bet on Engineering
12/26/2017 5:00 am EST
Canada has some world-class companies that fly below the radar of most investors. One of them is Montreal-based WSP Global (WSP), a Toronto-listed major international engineering and design firm, notes Gordon Pape, editor of Internet Wealth Builder.
The range of the company's activities is mind-boggling. It has been involved in projects at more than 300 airports in 32 countries. It is one of Canada's leaders in construction. WSP has worked on the refurbishing of some of the country's most important historical sites such as the Royal Ontario Museum.
It is a leader in infrastructure construction and management. In 1993, it went on an acquisition spree that saw it buy up about 30 companies across Quebec and enter the Ontario market. That acquisition binge continued as the company entered the U.S. market in 2000 and between 2006 and 2012 it bought up another 60 companies.
The big breakthrough came in 2012, when the firm — then called Genivar — acquired WSP Group PLC, a multidisciplinary consultancy based in London. That purchase created a global professional services firm with 15,000 employees working in 300 offices worldwide.
During the early years when all this consolidation was going on, investors showed little interest in the stock. You could have bought shares in the $20 range in late 2012. But the acquisition of Britain's WSP Group got the attention of the markets and the stock price started moving higher.
WSP isn't resting on its laurels. During the quarter the company made two acquisitions in Latin America aimed at enhancing its presence in that area. The first was a Chilean firm called Poch, which provides a range of engineering and environmental services in that country as well as Peru and Colombia.
In November, WSP bought Consultoria Colombiana S.A., a 1,000-employee professional services firm based in Colombia. The firm has additional offices in Peru, Chile, Panama, and Mexico. The company also announced the anticipated acquisition of Opus, a 3,000-employee firm based in New Zealand.
The shares pay a quarterly dividend of $0.375, or $1.50 per year. Investors have received three payments to date totaling $1.125, bringing the total return for 2017 to 35.1%. WSP remains a Buy.