This Industrial Stock Defied Pandemic To Skyrocket By 61%

Canada’s construction industry, while significantly beaten by the COVID-19 pandemic in 2020, is expected grow notably this year as construction activities rebound. A report by Research and Markets points that the industry is likely catapult by 0.6 per cent in 2021, up from the fourth-quarter 2020 estimates of a negative two per cent.

Amid this projected growth, one particular Canadian construction player has already recorded a stock price surge of nearly 53 per cent this year. It even defied the pandemic to rocket by 61 per cent in the past year, outperforming the TSX 300 Composite Index.

As per the Canadian Construction Association, the construction industry contributes C$ 141 billion to the economy on an annual basis and employs over 1.4 million people. It also accounts for 7.5 per cent of the country's gross domestic product (GDP).

Overall, the industrial sector is also expanding this year. As per TMX, the S&P/TSX Industrials Index surged by 7.2 per cent year-to-date (YTD) and 1.8 per cent month-to-date (MTD).

With the federal government recognizing green infrastructure, having allocated C$ 200 million for the Natural (Green) Infrastructure Fund, it is time to look closely at a company that is likely to grow amid these developments.

SNC-Lavalin Group has been defying the pandemic crisis over the past year to grow its operations as well as its stock performance. To top that, the company also aims to provide sustainable solutions, something that is likely to work in its favor as Canada shifts toward a green economy.

SNC-Lavalin Group Inc’s (TSX:SNC) Significant Growth Despite COVID

Montreal-based SNC group is an integrated service and project management firm that is majorly involved in infrastructure development and engineering design.

On Thursday, May 27, the company created a buzz as it grabbed an engineering and design contract by Tlingit Homeland Energy to generate an additional power supply for the local hydro facility in Atlin, British Columbia.

SNC-Lavalin President and CEO Ian L Edwards said that this project will support indigenous people and accelerate the transition to renewable energy to support a carbon-free future for the community.

Speaking of its renewable energy drive, SNC-Lavalin announced earlier this month, on May 14, that it is enhancing its Environmental, Social and Governance (ESG) targets. It also revealed plans to achieve net-zero carbon emissions by 2030.

SNC-Lavalin's Stellar Stock Performance

SNC shares achieved a fresh 52-week high of C$ 33.94 on May 19. As per its closing price of C$ 33.14 on Thursday, May 27, the stock made gains of 25 per cent in the past three months.

It also surged by 40 per cent in the past six months.

SNC-Lavalin Group presently holds a debt-to-equity (D/E) ratio of 0.87. It also pays a quarterly dividend of C$ 0.02 to its shareholders.

1-year chart of stock performance, volume and moving average exponential of SNC-Lavalin Group (Source: EODHD/Others)

SNC-Lavalin’s Robust Financials

After incurring a net loss of C$ 62.54 million in the first quarter of 2020, SNC-Lavalin bounced back to report a significant net income of C$ 73.98 million in first quarter 2021.

SNC-Lavalin also recorded a revenue of C$ 1.8 billion in Q1 2021, while the value of its total assets stood at C$ 10.1 billion.

Its cash and cash equivalents were C$ 702.7 million in the first quarter of 2021.

Bottomline

The future for the global construction industry is expected to be positive as most countries are ramping up their vaccination campaign to reopen economies as quickly as possible. Companies looking to sustainable strategies are likely to benefit more as more nations lean toward building green infrastructures and economy.

According to a report by Research And Markets, the global construction industry is expected to grow at a compound annual growth rate of 4.2 per cent till 2023. Its market value, meanwhile, is projected to be worth US$ 10.5 trillion.

In Canada, the residential sector has been booming since last year and that might expand opportunities for the construction industry further in the future.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.