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Stantec CEO Bob Gomes at Stantec in Edmonton.
Stantec CEO Bob Gomes at Stantec in Edmonton.
(Jason Franson for The Globe and Mail/Jason Franson for The Globe and Mail)

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Why investors want Stantec to keep buying

There’s a big difference between doing deals and doing deals that create sustainable value. Which category does engineering specialist Stantec Inc. fall into?

As my colleague Tim Kiladze wrote earlier, Stantec’s stock is hot and acquisitions are a big reason. Investors like the growth.

But is it real? Growing by acquisition can make a company look good for a while, but if the buyer is consistently overpaying, the reckoning is usually painful. The worst case is a big writedown (see most any big miner) but it might just be in the form of weak returns.