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  5. ARE: Looks like that ARE is leaning towards nuclear, does this look like a boon to this company? [Aecon Group Inc.]
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Q: Looks like that ARE is leaning towards nuclear, does this look like a boon to this company? This stock is starting to do well, and I would appreciate your thoughts toward this and the Co. in general. Thanks, James
Asked by JAMES on September 25, 2024
5i Research Answer:

ARE provides construction and infrastructure development services to private and public sector. Nuclear power certainly does seem like it is a growing part of the business, now at 19% of construction revenues over the last twelve months. Recent second quarter financials were not good, however, the stock jumped as ARE announced a 5% buyback and numerous analysts upgraded their ratings on the expectations that the "worst is likely behind." ARE does have a large backlog at $6.19 billion, and its balance sheet is net cash positive. It is still quite cheap at 15x forward earnings despite being up 89% over the last year and paying a 3.7% yield. If revenue and earnings growth begin to recover in the second half of 2024, the stock could be interesting at this valuation and yield.