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The Shard skyscraper and Saint Paul's Cathedral are seen in a view of the London skyline from south London June 16, 2012. In buying Parsons Brinckerhoff Group for $1.3-billion in 2014, WSP Global added U.S. clients including the operator of New York’s subways. For the engineering firm, that means a bigger foothold in rails, bridges and ports after working on buildings such as London’s Shard skyscraper.

Kevin Coombs/Reuters

WSP Global Inc. is generating the best returns among Canadian industrial stocks after setting itself up to grab a bigger slice of the $3.6-trillion (U.S.) American construction market.

In buying Parsons Brinckerhoff Group for $1.3-billion in 2014, WSP added U.S. clients including the operator of New York's subways. For the Montreal-based engineering firm, that means a bigger foothold in rails, bridges and ports after working on buildings such as London's Shard skyscraper.

"Parsons is going to be a very strong acquisition," said Chris Murray, an AltaCorp Capital analyst in Toronto. "If there was one place I would have wanted to be in, it would have been transportation in the U.S. over the next five years – and Parsons is there."

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The American Society of Civil Engineers estimates trillions of dollars will be needed for public works over that span including airports, surface transport and water systems. Some of that funding is poised to flow to WSP because New York-based Parsons is working on projects such as California's planned bullet train and a rail line for New York's Metropolitan Transportation Authority. The Parsons deal gives WSP about four times as much U.S. revenue as it had on its own.

"There is a huge infrastructure deficit in the United States," WSP chief executive officer Pierre Shoiry, said in an interview. "There's a debate as to how to pay for these investments, but it's only a matter of time before things get done."

WSP's 19-per-cent rally this year through Wednesday led the 23 companies on the benchmark subindex of Canadian industrial stocks, which rose 0.8 per cent in 2015.

Among the companies in WSP's wake is SNC-Lavalin Group Inc., which has slumped 7.6 per cent this year as the Montreal-based construction and engineering company fights federal charges of attempted bribery and fraud related to projects in Libya. Spokesman Louis-Antoine Paquin, said Wednesday that SNC had no comment on the case or the decline in the company's stock.

WSP is "purely a services firm," Mr. Shoiry said. "We don't do construction, and we don't want to change our business model. With Parsons, we have reinforced ourselves considerably in project management and program management. We think there's plenty of work for us as is."

Past projects at WSP include engineering services for London's needle-shaped, 306-metre Shard and the structural design for One 57, New York's tallest residential high-rise.

In buying Parsons from Balfour Beatty PLC, WSP bulked up in transportation and in the United States. About 60 per cent of Parsons's sales, and 92 per cent of its U.S. revenue, at the time of the deal came from the transportation industry.

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WSP's fourth-quarter U.S. sales of $193-million (Canadian) were 23 per cent of global revenue. That makes the United States the company's second-biggest region, trailing Canada's $201-million. Excluding the effect of acquisitions, the U.S. business grew 11 per cent in the period, topping a 2-per-cent Canada gain.

WSP has "the assets and geographies that people want to be exposed to," said Maxim Sytchev, a Dundee Securities Corp. analyst in Toronto. "They also have very strong execution from the existing asset base. As long as that growth comes in people will be ready to bid the stock up. I think it's going higher."

Mr. Sytchev's buy rating on WSP is equivalent to Mr. Murray's outperform ranking. The stock is the sixth-most-recommended among Canadian industrials, according to data compiled by Bloomberg.

Oil remains a trouble spot. Energy-related projects are about 30 per cent of WSP's Canadian revenue, and the global rout in crude prices "will have a negative impact on our performance in Western Canada for 2015 and therefore for Canada as a whole," Mr. Shoiry said on a March 18 conference call. WSP cut an unspecified number of Western Canada jobs this quarter, he said. Details will be released when WSP reports first-quarter earnings on May 12, spokeswoman Isabelle Adjahi said by e-mail.

WSP's most recent forecast suggests that its growth story remains intact. Bolstered by the Parsons acquisition, revenue will rise at least 75 per cent this year, to a range of $4.1-billion to $4.6-billion, WSP said last week.

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