Canada’s Building Push Puts Caterpillar Dealer on a Record Run
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The Canadian dealer of Caterpillar Inc.’s massive earth movers and bulldozers is benefiting from a construction boom that’s powered its stock into an epic rally.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The Canadian dealer of Caterpillar Inc.’s massive earth movers and bulldozers is benefiting from a construction boom that’s powered its stock into an epic rally. Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Shares of Vancouver-based Finning International Inc. have surged nearly 90% this year and are on pace for their best annual run since at least 1987, according to data compiled by Bloomberg. Analysts predict more gains ahead as a surge in the price of commodities — including gold, copper and silver — has boosted demand for mining equipment, just as a nationwide push for building infrastructure is gathering pace. “The sentiment shift within Canada has been very helpful in terms of going from a hard ‘no’ on potential pipeline infrastructure projects to how we’re going to do this,” Mark Rutherford, portfolio manager at Mawer Investment in Calgary, said by phone. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Rutherford, whose firm Mawer has been a Finning shareholder since at least 2016 and currently owns nearly 2.6 million shares, sees long-term benefits for the company from the government’s embrace of infrastructure spending.Analysts covering the stock expect it to rise nearly 17% over the next 12-months, according to data compiled by Bloomberg. Earnings are expected to climb more than 10% this year, and nearly 11% in 2026.While Finning has seen many commodity bull runs in its 56-year trading history, it was Canada’s decision to embark on a series of “nation building” projects — from a high-speed rail to oil and natural gas pipelines — that’s added extra firepower this year. The projects are partly driven by the country’s desire to reduce reliance on the US amid growing trading tensions, by expanding ports and rail lines that will allow exporters reach new trading partners.
Canadian Prime Minister Mark Carney has been pursuing a C$34 billion Trans Mountain pipeline deal to carry crude oil between Alberta and British Columbia. As part of a budget announced in November, the federal government also plans to invest C$115 billion over five years to build out areas like transportation and municipal infrastructure. All of those projects require the heavy equipment that Finning sells.The company has a nearly C$3 billion equipment backlog and a strong foothold in major markets, said RBC Capital Markets analyst Sabahat Khan, adding that it makes for a robust setup heading into 2026. A company’s backlog can be a demand indicator, supported by higher mining activity and the need for heavy machines like drill rigs and loaders.Finning’s shares got another boost Thursday, rising as much as 2.9% before closing 0.5% higher, after the government signed a deal with Ontario to remove duplicate regulation on environmental assessments, speeding up the approval of pending projects. Still, the stock is vulnerable to moves in oil and metals prices, which are volatile and could suffer a pullback after the recent rally. A sustained downdraft in those commodities could dampen demand for Finning’s business. The company, which sells and rents out heavy equipment and also provides parts and service, is one of the top performers in the S&PTSX Composite Index’s industrials group, third only to Quebec-based jet-maker Bombardier Inc. and Badger Infrastructure Solutions — an excavating company. Infrastructure engineering firms like AtkinsRealis Group Inc. and Aecon Group Inc. have also got a lift since September when Carney unveiled the project list, while shares of equipment seller Toromont Industries Ltd. have climbed 40% this year. Rutherford said Finning has found additional success in expanding its product support business which was key to earnings growth. He noted that many oil sands companies in Canada have purchased mining equipment and are using Finning’s equipment services. “They’re very well positioned,” he said. “Stock’s reasonably priced, especially relative to other opportunities in the Canadian landscape.”Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.