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On today’s Breakouts report, there are 54 stocks on the positive breakouts list (stocks with positive price momentum), and 18 stocks are on the negative breakouts list (stocks with negative price momentum).

Featured today is a dividend stock that surfaced on the positive breakouts list – Bird Construction Inc. (BDT-T). Between mid-2016 and 2020, the share price was in a downtrend. However, 2021 has been a turnaround year for the stock with the share price rallying 30 per cent.

The stock has a unanimous buy recommendation from nine analysts and a 12-month forecast price return of 17 per cent, not including the attractive and stable 3.8-per-cent dividend yield.

A brief outline on Bird is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.

The company

Ontario-based Bird Construction is a construction company with operations across the country.

Investment thesis

  • Government pledges on infrastructure investments.
  • Rebound in economic activity.
  • Record revenue and earnings.
  • Record backlog of $2.7-billion, a reflection of future revenue.
  • Healthy balance sheet.
  • Reliable dividend.
  • Attractive dividend yield.
  • Compelling valuation.
  • Key drivers: 1) Aecuring additional contract wins; 2) acquisitions that will further diversify the company’s revenue profile and geographic exposure; and 3) margin improvement.
  • Potential risks to considers: 1) The company is forecast to deliver slow and steady growth, not explosive growth.

Quarterly earnings results

After the market closed on Aug. 10, the company reported better-than-expected second-quarter financial results. The company reported record revenue, record earnings before interest, taxes, depreciation and amortization (EBITDA), and record earnings per share fueled by acquisition growth. Revenue came in at $556-million, surpassing the consensus estimate of $520-million. Adjusted EBITDA was $30-million with an adjusted EBITDA margin of 5.4 per cent. The Street was anticipating adjusted EBITDA to come in at $19-million. Adjusted earnings per share was 28 cents, exceeding the Street’s estimate of 14 cents.

During the quarter, the company was awarded several contracts that added $639-million to its backlog, including a residential building contract (Sherbourne project located in downtown Toronto) for $172-million. The following day, the share price rallied 5 per cent on high volume with over 741,000 shares traded, well above its three-month daily average trading volume of approximately 240,000 shares.

After the market closes on Nov. 9, the company will be releasing its third-quarter earnings results. The consensus revenue, EBITDA, and earnings per share estimates are $632-million, $26.4-million, and 23 cents, respectively. Management will be hosting an earnings call on Nov. 10 at 10 a.m. ET.

Dividend policy

The company pays its shareholders a monthly dividend of 3.25 cents per share, or 39 cents per share yearly, equating to a current annualized dividend yield of 3.75 per cent.

The company has maintained its dividend at this level since 2017. The company never cancelled a single dividend payment despite uncertainties arising from the coronavirus pandemic.

On the second-quarter earnings call, chief financial officer Wayne Gingrich commented on the prospects of a future dividend increase, “The dividend has remained a very important part of our total shareholder return strategy. But, I think until the pandemic subsides, I don’t think you’re going to see any movement in the dividend until we can kind of say the pandemic is behind us, and then we’ll evaluate things at that point in time.”

Analysts’ recommendations

This small-cap stock with a market capitalization of $558-million is well covered by the Street. There company has a unanimous buy recommendation from nine analysts.

The firms providing research coverage on the company are: ATB Capital Markets, Canaccord Genuity, CIBC World Markets, iA Capital Markets, Laurentian Bank, National Bank Financial, Raymond James, Stifel Canada, and TD Securities.

Revised recommendations

Earlier in the week, CIBC’s Jacob Bout increased his target price to $12 from $11.

Last month, iA Capital Markets’ Naji Baydoun and TD’s Mike Tupholme both raised their target prices by 50 cents to $12.

Financial forecasts

Steady earnings growth is anticipated.

The consensus EBITDA estimates are $105-million in 2021, $115-million in 2022, and $123-million in 2023. The Street is forecasting earnings per share of 90 cents in 2021, $1.02 in 2022, and $1.09 in 2023.

Earnings forecast have trended higher for 2021. To illustrate, four months ago, the Street was forecasting EBITDA of $99.5-million in 2021 and $113-million in 2022. The consensus earnings per share estimates were 82 cents in 2021 and $1.04 in 2022.

Valuation

According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 5.2 times the 2022 consensus estimate, below its five-year historical average of 5.6 times. On a price-to-earnings basis, the stock is trading at a P/E multiple of 10.2 times the 2022 consensus estimate, below its five-year historical average multiple of 11.7 times.

The average 12-month target price is $12.14, implying the share price has 17 per cent upside potential over the next year. Individual target prices are: two at $11.50, $11.75, four at $12, $13, and $13.50 (from Raymond James’ Frederic Bastien).

Aecon Group Inc. (ARE-T), its small-cap industry peer, is trading at an EV/EBITDA of 5 times and at a P/E multiple of 15.2 times.

Insider transaction activity

Year-to-date, there has not been any trading activity in the public market reported by insiders.

Chart watch

Between mid-2016 and 2020, the share price was in a downtrend, making lower highs and lower lows.

However, 2021 has been a turnaround year for the stock. Year-to-date, the share price is up 30 per cent, outperforming the S&P/TSX Small Cap Industrials sector, which is up 14 per cent, as well as the S&P/TSX Small Cap Index that has rallied 22 per cent.

In terms of key technical resistance and support levels, there is a ceiling of resistance around $12. After that, there is major resistance around $14. Looking at the downside, the share price has strong technical support around $9, near its 200-day moving average (at $9.12). Failing that, there is support around $8.

POSITIVE BREAKOUTSOct. 19 close
RZZ-XAbitibi Royalties Inc. $29.01
ARR-TAltius Renewable Royalties Corp. $10.71
AX-UN-TArtis Real Estate Investment Trust $11.84
APR-UN-TAutomotive Properties REIT $13.48
BDGI-TBadger Infrastruture Solution $37.05
BTE-TBaytex Energy Corp $3.98
BDT-TBird Construction Inc $10.40
BDI-TBlack Diamond Group Ltd $4.15
BEI-UN-TBoardwalk Real Estate Investment Trust $51.38
BBU-UN-TBrookfield Business Partners LP $59.73
CDAY-TCeridian HCM Holding Inc. $154.13
CIX-TCI Financial Corp $27.81
CGX-TCineplex Inc $14.36
CMMC-TCopper Mountain Mining Corp $3.92
CRR-UN-TCrombie Real Estate Investment Trust $18.53
DML-TDenison Mines Corp $2.30
DXT-TDexterra Group Inc. $9.14
DRM-TDREAM Unlimited Corp $29.86
ENB-TEnbridge Inc $53.09
EDV-TEndeavour Mining Corp. $31.81
EFX-TEnerflex Ltd $10.91
FTT-TFinning International Inc $36.71
FSV-TFirstService Corp $243.93
FRU-TFreehold Royalties Ltd $11.72
FEC-TFrontera Energy Corp. $8.62
GEI-TGibson Energy Inc $24.33
GRT-UN-TGranite Real Estate Investment Trust $96.22
GCG-A-TGuardian Capital Group Ltd $34.70
HLS-THLS Therapeutics Inc. $19.25
IMG-TIAMGOLD Corp $3.55
JWEL-TJamieson Wellness Inc. $38.96
KRR-TKarora Resources Inc. $4.24
KMP-UN-TKillam Apartment REIT $22.64
LNF-TLeon's Furniture Ltd. $26.00
LAC-TLithium Americas Corp $32.53
MAL-TMagellan Aerospace Corp $10.84
MEG-TMEG Energy Corp $11.04
NOA-TNorth American Construction Group Ltd. $20.30
NVA-TNuVista Energy Ltd $5.93
PXT-TParex Resources Inc $25.62
PHX-TPHX Energy Services Corp $5.40
PZA-TPizza Pizza Royalty Corp $11.62
RBA-TRitchie Bros Auctioneers Inc $84.10
RCK-XRock Tech Lithium Inc. $9.33
STC-XSangoma Technologies Corp. $3.73
SES-TSecure Energy Services Inc $5.81
SRU-UN-TSmartCentres Real Estate Investment Trust $31.23
SMU-UN-TSummit Industrial Income REIT $23.38
TCS-TTECSYS Inc. $59.73
TD-TToronto-Dominion Bank $88.68
TCN-TTricon Residential Inc $17.46
TWC-TTWC Enterprises Ltd. $18.50
WILD-TWildBrain Ltd. $3.65
WSP-TWSP Global Inc $167.72
NEGATIVE BREAKOUTS
AEZS-TAeterna Zentaris Inc. $0.75
BOS-TAirBoss of America Corp $34.52
APS-TAptose Biosciences Inc $2.70
ORA-TAura Minerals Inc. $12.13
ACQ-TAutoCanada Inc $43.00
BLN-TBlackline Safety Corp. $6.99
CGO-TCogeco Inc $85.20
UFS-TDomtar Corp. $67.74
EMP-A-TEmpire Co Ltd $37.69
FTS-TFortis Inc $55.49
FOOD-TGoodfood Market Corp. $8.42
GWO-TGreat-West Lifeco Inc $37.32
GTMS-TGreenbrook TMS Inc. $8.81
MTY-TMTY Food Group Inc. $63.51
NVO-TNovo Resources Corp. $1.62
QSR-TRestaurant Brands International Inc $75.42
SOY-TSunOpta Inc. $9.69
THNC-TThinkific Labs Inc. $12.54

Source: Bloomberg and The Globe and Mail

Please note that this report is not an investment recommendation. The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

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