Q: I would like to buy ATD (as 5i's stated: it is a great name at a discount price), and have long appreciated its growth trajectory and management seems very astute. However, in order to buy, I would need to sell something and since I am overweight Industrials, the name I come up with in my holdings is WSP. Which of the two names would you favour for a 5 year hold? My hesitation is what I understand to be a growing industrialization in Can and the US favouring WSP. Thoughts on this switch?
5i Research Answer:
We like both, and of course they are significantly different. The problem in comparing is that ATD's future growth will likely come from M&A activity. It may move fast on this, and create value, or it might take its time. WSP, meanwhile, has a very large backlog and leverage to potential new big projects. Sector-wise, we think WSP wins here, as noted in the question. WSP's recent drop on a secondary issue also helps it in this contest. ATD is cheaper on valuation. It is a close call, but we would side with keeping WSP.