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Stantec Inc. (USA) (STN), BHP Billiton Limited (ADR) (BHP), Freeport-McMoRan Copper & Gold Inc. (FCX): Why This Consulting Firm Merits Investors’ Attention

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Since consulting company Stantec Inc. (USA) (NYSE:STN) operates behind the scenes, its gains can be overshadowed by the fortunes it helps create for its clients. But if you overlook this company, you might miss out on a great investment.

The broad range of services which Stantec Inc. (USA) (NYSE:STN) offers is one of the Edmonton, Alberta-based company’s major strengths. Its areas of expertise include planning, surveying, designing, engineering, and managing projects involving infrastructure and buildings.

Stantec Inc

Serving both government and private clients in Canada, the U.S., and internationally, it operates 170 North American locations and four other international offices. Its clientele is as diverse as the company’s service offerings, consisting of players in the oil and gas, mining, transportation, construction and property development sectors.

The company’s second quarter of 2013 yielded positive organic revenue growth for all of Stantec Inc. (USA) (NYSE:STN)’s regions. Gross revenue for the quarter rose year over year by 19.7% to $566.7 million, from $473.4 million.

In the same period, net income increased 17.5% to $36.2 million, up from $30.8 million. Diluted EPS rose 16.4% to $0.78, from $0.67. These results were substantially ahead of analysts’ expectations of $0.62 per share in earnings, on revenues of $411.10 million. This marked the fourth consecutive quarter that Stantec Inc. (USA) (NYSE:STN) beat earnings predictions.

Solid contracts

During the quarter, the company also won a contract as lead design engineer and architect for a $614.8-million design/build project with the U.S. Army Corps of Engineers, New Orleans District, for storm mitigation facilities.

The company’s backlog could also drive future earnings. It rose to $1.5 billion at the end of this year’s second quarter, from $1.3 billion at the end of the first quarter.

A substantial slice of this backlog comes from Stantec Inc. (USA) (NYSE:STN)’s $44 million contract on the $14 billion Jansen potash mine project of BHP Billiton Limited (ADR) (NYSE:BHP) in Saskatchewan, which reflects Stantec’s leading position in underground mine engineering. Stantec is supplying the design and related services to help BHP Billiton Limited (ADR) (NYSE:BHP) solve challenging mining operations, such as freezing the ground to prevent groundwater inflow.

The recent departure of Russian producer Urkali from one of the top two global cartels on potash shouldn’t endanger Stantec’s contract with BHP Billiton Limited (ADR) (NYSE:BHP). The latter company has indicated that it won’t delay the Jansen mine development .

“We think very long term. This is something that’s happened short term,” BHP Billiton Limited (ADR) (NYSE:BHP) CEO Andrew Mackenzie said regarding the cartel breakup’s potential effect on the Jansen project.

Eye on mining rebound

As expected, Stantec is in synch with such bullish mining industry sentiments. The company is now on the lookout for big mining-related jobs in the mold of its underground mine feasibility study contract in the Grasberg Block Cave mine of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) in Indonesia. This minerals district reputedly holds one of the world’s largest single deposits of copper and gold, reputedly good until 2042 — which could make it a potent source of future Stantec contracts.

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