As Canada pushes again towards U.S. tariffs with its personal retaliatory measures, the highlight is shifting to corporations that stand to profit from a wave of nationwide help. Governments usually flip inward throughout commerce disputes, prioritizing home suppliers over worldwide ones. Which means homegrown companies may see a surge in contracts and development. One identify that would explode from this shift is Aecon Group (TSX:ARE), a significant Canadian development and infrastructure firm.
About Aecon
Aecon isn’t a family identify, however it has constructed among the nation’s most recognizable infrastructure. It handles every thing from roads and bridges to energy vegetation and water remedy services. When the federal or provincial governments have to construct one thing large, Aecon is usually on the shortlist. In a world the place tariffs push governments to favour Canadian corporations over overseas ones, that places Aecon in a powerful place.
As of writing, Aecon trades round $19.79 per share with a market cap of about $1.3 billion. The Canadian inventory pays a dividend of $0.76 per 12 months, giving it a yield of roughly 3.8%. That dividend has stayed intact at the same time as earnings have been uneven in recent times, and it offers traders some earnings whereas they watch for development to kick in.
In its most up-to-date earnings report, Aecon reported first-quarter 2025 income of $1.06 billion, which was up from $941 million in the identical quarter final 12 months. The Canadian inventory’s backlog of contracted initiatives sits at over $6.5 billion, providing a transparent path to future income. Nevertheless, earnings per share (EPS) got here in at a lack of $0.54, in comparison with a lack of $0.15 anticipated by analysts. That miss was disappointing, however it displays a typical theme in development: timing issues. Delays in initiatives or prices rising quicker than anticipated can harm quarterly outcomes, even when the long-term outlook stays strong.
Extra to return
What makes Aecon fascinating now could be the altering political and financial surroundings. Tariff retaliation often comes with a lift in home procurement. Governments don’t simply discuss defending Canadian jobs, they act on it. That may imply extra contracts awarded to Canadian companies, quicker approval timelines, and additional incentives to make use of native labour and supplies. Aecon is already one of many nation’s largest builders and is well-positioned to soak up that demand.
The Canadian inventory can be concerned in vitality and utility initiatives, which may turn out to be extra essential as infrastructure packages ramp up. Canada has bold objectives for clear vitality and local weather resiliency, and Aecon is already delivering in these areas. It’s energetic in hydroelectric upgrades, transit system development, and even nuclear refurbishment. This type of work is much less delicate to financial cycles and extra tied to authorities spending.
In fact, there are dangers. Aecon’s revenue margins may be skinny when materials prices spike or initiatives get delayed. Its reliance on authorities contracts additionally exposes it to political shifts. A change in management may imply altering priorities or spending cuts. And whereas the backlog is massive, it doesn’t assure easy money move. Funds may be lumpy relying on when milestones are hit. Nonetheless, analysts predict a significant upside for the inventory.
Backside line
For traders seeking to play Canada’s subsequent chapter within the commerce standoff, Aecon affords a compelling case. It’s a gentle operator with nationwide attain, deep relationships with authorities consumers, and publicity to the sorts of initiatives which can be prone to get a inexperienced mild when spending ramps up. It could not explode in a single day, however it’s constructed to maneuver when coverage turns in its favour.
If Ottawa follows via on its tariff retaliation plan and backs it with infrastructure {dollars}, Aecon might be one of many large winners. And proper now, it’s buying and selling like few have observed.
