Canam Group (CAM) is a US and Canadian infrastructure play. The company builds arenas, bridges, highways, you name it. While many big ticket items have been shelved due to the current state of the economy, government infrastructure spending has increased and is poised to continue to do so. But don't take my word for it: the company's order backlog at the end of 2008 was around $300 million, flat with year ago levels.
The company also managed to earn $1/share in 2008, with a fourth quarter and full-year result fairly flat against year ago levels. But the stock price recently dropped to below $5, offering long-term investors the opportunity to buy in at a pretty good price! CAM's debt to equity sits at just 17%. Combined with the fact that it is in a contract-based business and therefore has some revenue certainty (and can therefore align variable costs with revenues in advance), it's a very safe bet that this company will emerge from this recession unscathed.
While many companies are too afraid to buy back shares in this economy not knowing what's ahead, Canam management knows its shares are cheap. They have been buying back shares, and have indicated that they will continue to do so, without levering up. Their bridge plants are at full capacity for the next 18 months, which gives management the confidence it needs that its business conditions are okay.
On the conference call last week, CEO Marcel Dutil emphasized that this is now his fourth recession in charge, and Canam is better positioned now than at any other time (looking at Canam's D/E in previous recessions shows this to be very true!). He stated that 2009 and 2010 will be years of growth for this company, which is something rarely heard in the corporate world today!
The market has punished the shares along with the overall equity market, but with a P/E of 5, a P/B of .5 and a safe capital structure, value investors may see great profits with this stock in the next few years.
Disclosure: Author has a long position in CAM