Are you looking to buy the best TSX today? If yes, now is the time to take a position in Bird Construction (TSX:BDT). This industrial stock has had an incredible bull run (+222.4%) in the last 12 months and is up 85.4% year to date. The current share price of $26.34 is a steal, considering its growth potential from several projects and new contract wins.
The $1.43 billion construction company operates in Canada’s major markets. It offers construction services to nearly all real estate markets such as new construction, industrial maintenance, repair and operations services. Allied services include heavy civil construction, mine support services, and vertical infrastructure.
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TSX 30 candidate
Bird Construction was established 104 years ago and has wings to fly higher in the next century. The top and bottom lines have been increasing every year since 2020. It also rewarded investors with an overall return of 241.83% in 3.01 years. BDT has a strong chance of making it to the 2024 TSX30 List, a flagship program for Canada’s top-performing growth stocks.
Had you invested $6,500 on year-end 2023, your money would be $12,048.56 today. Because Bird also pays a modest 2.2% dividend, the total return bumps slightly with the additional $143 in dividend payments. Market analysts covering the stock projects a $30 high price target in 12 months (+13.9%).
Financial performance
Bird’s financial performance to the start of 2024 is short of remarkable. In the first quarter (Q1) of 2024, construction revenue increased 28.3% to $688.2 million compared to Q1 2023, while net income jumped 94% year over year to $10 million. Its president and chief executive officer (CEO), Teri McKibbon, said the quarterly results point to significant earnings and cash flow improvements this year.
McKibbon added the combined backlog (contracted and awarded work) is growing along with favourable embedded margins. He noted that the acquisition of NorCan Electric was a major factor. Alberta’s leading electrical service provider boosted Bird’s capabilities, capacity, and recurring revenue.
As of March 31, 2024, the backlog level was at a record $3.5 billion, while the pending backlog of work awarded but not yet contracted was $3.4 billion. Cash flow from operations rose nearly 77% to $31.2 million versus the same quarter last year. Bird’s gross profit percentage improved from 7.4% to 8% during the quarter.
Contract awards and projects
On June 18, 2024, Bird Construction announced securing contracts worth over $625 million. These five new projects include mine infrastructure work in Eastern Canada and several long-term care and institutional projects in Western Canada.
The infrastructure project in the east will enhance mining operations, while the west can expect increased long-term care capacity and sustainable, energy-efficient buildings.
According to McKibbon, the latest contract awards underscore Bird’s expertise and indicate strong demand across its target sectors. More importantly, the projects will keep the top-tier construction firm busy for years.
Strategic focus and objective
McKibbon is confident that a strong balance sheet will enable Bird to invest in profitable organic growth and chase attractive acquisitions in today’s active market. “The company’s strategic focus on being a leading collaborative construction company continues to drive growth and better outcomes for all parties,” he said.
