North American Construction Group
Western Australia Acquisition
It’s the best small-cap market in years
With interest rates falling
And managements calling you back without fears
It’s the best small-cap market in years
It’s the best stock picking season of all
With micro-cap meetings and non-formal greetings
When brokers do call
It’s the best stock picking season of all
There’ll be parties for hosting
Pelosi’s be toasting
Pork-barreling plans we don’t know
There’ll be scary debt stories
And stock return stories of
Bull markets long long ago
It’s the best small-cap market in years
There’ll be much mistletoing
With balance sheets growing
Advisors are near
It’s the best small-cap market in years
It’s the best small-cap market in years
There’ll be much mistletoing
With balance sheets growing
Advisors are near
It’s the best small-cap market
It’s the best small-cap market
It’s the best small-cap market in years
It’s Christmas time and we are working like little elves to give you some great ideas for next year. We didn’t have to look far, one of our holdings, North America Construction Group (Ticker: NOA) made an acquisition this week that makes us even more excited about the company’s future earnings power.
NOA announced on December 18 that it is acquiring Iron Mine Contracting for $115 million. This deal will give the company exposure to the fast growing Western Australia market which is a global supplier of base metals, precious metals, and the muy popular rare earth/critical minerals. This deal is accretive and transformative. Post the deal: Australia’s Queensland, New South Wales, and Western regions will represent 75% of 2026 revenue.
Concurrent with the acquisition, management gave guidance for 2026 and 2027. The upcoming year’s earnings estimate is $2.85 – $3.15 and there is line of sight for north of $4.00 in the out year. Thus, the stock trades for less than 5x this year and less than 4x 2027 estimates. Meanwhile, most comparative engineering & construction firms trade at multiples north of 20x earnings. By the way, NOA also pays a dividend. If management executes on their model into 2027, the stock could easily double.