Carney Wants $1 Trillion Invested in Canada: This TSX Stock Could Benefit

Carney’s $1 trillion investment push is huge, and AtkinsRéalis could be paid to design and manage the projects that make it real.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 16, 8:45 pm EDT

Prime Minister Mark Carney didn’t spend the Canada Investment Summit asking investors to nibble around the edges of the Canadian economy. He asked them to help rebuild a fairly enormous chunk of it.

“Our goal is to catalyze one trillion dollars of investment in Canada over the next five years in energy, transportation, data, defence, and beyond,” the prime minister told investors gathered in Toronto.

That trillion-dollar figure isn’t money already committed. Nor is every dollar destined for publicly traded companies. Yet it tells investors where Ottawa wants capital flowing, and Carney followed it with something considerably more useful: the projects that could absorb it.

Canadian Dollars bills — Source: Getty Images

Halfway there

He said 27 initiatives already referred to the Major Projects Office represent $500 billion in private investment opportunities, spanning ports, mines, and energy corridors. Then came the line investors should probably circle.

“This is Canada today. A country that is building, trading and investing with an ambition and speed not seen in generations.”

If Ottawa comes remotely close, somebody has to engineer all that ambition.

Built it

Carney’s pitch wasn’t limited to throwing larger numbers onto the stage. He called Canada an energy superpower, arguing the country could expand oil and liquefied natural gas exports while building nuclear generation and doubling the electricity grid.

“If you need clean, affordable power, and who doesn’t, Canada is your answer,” he said.

Artificial intelligence (AI) adds another enormous electricity and infrastructure requirement. Carney said Canada intends to capture value across “the entire intelligence infrastructure stack,” including the power, computing, cloud infrastructure, AI, quantum technology and robotics behind it.

Then there’s defence, where Ottawa wants its strategy to catalyze another $500 billion of investment over the coming decade. The potential winners therefore aren’t limited to miners, utilities, or AI stocks. Investors looking at Canadian infrastructure stocks should consider the companies paid to design and manage the things everyone else wants to own.

ATRL

That brings me to AtkinsRéalis Group (TSX: ATRL). AtkinsRéalis provides engineering, design and project-management services across transportation, infrastructure, power and defence. It also owns something particularly useful right now. That’s deep expertise in Canada’s nuclear industry and CANDU reactor technology.

The company doesn’t need Ottawa’s $1 trillion ambition to start generating growth, either. Second-quarter revenue climbed 10% year over year to $3 billion, while adjusted earnings per share (EPS) increased 20% to $0.97. Its backlog stood at $20.2 billion, providing years of potential work already under contract.

Nuclear is becoming particularly interesting. Quarterly nuclear revenue rose 18%, prompting management to raise its full-year nuclear revenue outlook to approximately $2.7 billion. That positions AtkinsRéalis for Canada’s planned nuclear expansion while leaving it exposed to transportation, electricity grids, and other major infrastructure projects.

An interesting price

AtkinsRéalis shares recently traded around $85, well below the 52-week high of $106.82. At roughly 19 times forward earnings, the stock isn’t bargain-bin cheap. Yet that’s a far more reasonable valuation for a business with a $20-billion-plus backlog and exposure to several of Canada’s largest spending priorities.

There are risks. Governments are remarkably skilled at announcing projects that take years longer than expected. Permitting delays, project cancellations and cost inflation could all slow the investment cycle. AtkinsRéalis also needs to execute cleanly across an enormous and increasingly international project portfolio.

That’s why investors buying stocks in Canada shouldn’t treat Carney’s $1 trillion target as guaranteed future revenue. They can, however, follow where the money appears determined to go.