Topic: Growth Stocks

STANTEC INC. $33.78

STANTEC INC. $33.78 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 93.9 million; Market cap: $3.1 billion; Dividend yield: 1.3%) sells a range of consulting, project-delivery, design and technology services.

Stantec has made a big acquisition that will give it a major global presence in the water infrastructure industry. It’s paying $795 million U.S. to buy MWH Global. The infrastructure firm has 187 offices in 26 countries.

MWH Global works on a number of large water infrastructure projects around the world, including the Panama Canal Third Set of Locks project. It also develops dams, hydroelectric power plants, water treatment facilities, coastal restoration and environmental assessment programs.

Stantec cuts its costs by sharing financing, administrative expenses and employee benefits among its group of businesses. It can also sell its range of services through its newly acquired companies such as MWH Group.

But continually buying new firms adds risk, including the risk of writedowns. That’s especially so with a purchase as big as the MWH Global acquisition.

Stantec is still a hold.

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