Canada’s WSP Global Inc. (TSX:WSP) is out to steal the thunder from industry rivals this year. The company’s 2019-2021 Global Strategic Plan was released last January 30 and the market reacted positively. Trading volume more than doubled and the share price popped 4.76% to $67.51.
President and Chief Executive Officer Alexandre L’Heureux was overly excited about the three-year plan. He believes the engineering titan would continue its evolution and drive toward profitable growth. The vision of WSP is to have an even more diversified business across geographies, sectors, and services by the end of 2021.
L’Heureux said, “Our 2015-2018 performance has allowed us to build strong foundations for the future. Today, I am proud to unveil our 2019-2021 Global Strategic Plan, designed to achieve our goal of building the premier professional consultancy in our industry.”
WSP Global Inc. belongs to the elite group of International Global Firms. But is the company really future ready given the major uncertainties the global economy is facing? Some observers think the global strategic plan is too grandiose. So, before you get carried away by the “big talk,” let’s look at what the company is doing right.
Pure play engineering design company
WSP is an engineering firm that is more into engineering solutions and design rather than construction projects. The latter is a lot riskier because the awards are fixed-price contracts that can bloat costs and eat up profits. That’s exactly what WSP and many contractors fear.
Further, there is the temptation to participate in bid-rigging and corruption schemes to secure contracts from project proponents or host nations. Thus, WSP remains focused on design work and will not pursue construction projects.
About 90% of the 60-year-old company’s revenues are derived from the nations belonging to the Organization for Economic Co-operation and Development (OECD). However, WSP’s revenues are not from oil and gas projects. The company earns by developing creative, comprehensive and sustainable engineering solutions.
Solid footing in 2019
The engineering design services that WSP Global Inc. provides is needed in practically all sectors from energy, environment, healthcare, maritime, rail/transit and what have you. The company will never run out of infrastructure business whether domestic and international. Maybe it is by “design” that WSP’s 2019-2021 Global Strategic Plan had to come out in late January. It generated investor interest and as of February 4, the stock is up +13.87% year-to-date. WSP rising to $70.00 soon isn’t remote given the good start.
It seems WSP Global is determined to see the global strategic plan play out seamlessly. Aside from the promise of growth in the next three years, investors can expect steady dividend payouts. Some have already included WSP in their dividend portfolios, even if it’s only a little over 2.0%.
Ultimately, your decision to purchase the stock is anchored on the momentum that’s been building. There is less worry about WPS Global Inc. not sustaining and meeting its goals. The company’s illustrious track record speaks volume, which is why the CEO speaks with confidence too.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.