North American Construction Group Ltd. (NOA)

January 17, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Vera Bradley, Inc. (VRA):

Lazydays Holdings, Inc. (LAZY):

Karora Resources Inc. (KRRGF):

Diamond S Shipping Inc. (DSSI):

DHI Group, Inc. (DHX):

Saga Communications Inc. (SGA):

Northwest Pipe Co. (NWPX):

Smart Sand Inc. (SND):

Terravest Industries Inc. (TVK.TO):

LGL Group, Inc. (LGL):

G-III Apparel Group, Ltd. (GIII):

Hummingbird Resources Plc. (HUMRF):

Micropac Industries, Inc. (MPAD):

Barrett Business Services, Inc. (BBSI):

Delta Apparel, Inc. (DLA):

AdvanSix, Inc. (ASIX):

Universal Technical Institute (UTI):

Burnham Holdings Inc (BURCA):

Select Interior Concepts (SIC):

Manitowoc (MTW):

Ciner Resources LP (CINR):

Global Ship Lease (GSL):

Alico, Inc. (ALCO):

Genco Shipping (GNK):


Tidewater (TDW):

TravelCenters of America (TA):

Teekay Tankers (TNK):

Ranger Energy Services (RNGR):

Macro Enterprises (Canada: MCR.V):

This week, we are going to look at North American Construction Group Ltd. (NOA).  North American Construction Group is the premier provider of heavy construction and mining services in Canada.

NOA has a market cap of $299 million, with $40.3 million in cash and $365.5 million in debt.  The stock price is $10.26.

Step One

First we screen for cheapness based on five metrics.  Here are the numbers for NOA:

    • EV/EBITDA = 4.97
    • P/E = 7.41
    • P/B = 1.25
    • P/CF = 2.82
    • P/S = 0.62

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company.  For more on the Piostroski F-Score, see my blog post here:

NOA has a Piotroski F-Score of 7.  (The best score possible is 9, while the worst score is 0.)  This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA).  NOA has TL/TA of 71.7%, which is OK.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders.  At NOA, insiders own 7.3% of the shares worth close to $22 million.  This is good.

Shareholder yield is the dividend yield plus the buyback yield.  At NOA, the dividend yield is 0.6%.  But the company has increased its share count by over 10% in the last year.  So shareholder yield is negative.

Each component of the ranking has a different weight.  The overall combined ranking of NOA places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items, hidden liabilities, and bad accounting; (ii) estimate intrinsic value—how much the business is worth—using scenarios for low, mid, and high cases.

See NOA’s most recent earnings presentation (October 29, 2020):

See also the following writeup:

(You may have to become a guest member of, but it is free to do so.)

Intrinsic value scenarios:

    • Low case: The company is probably not worth much less than book value.  Book value is $8.18 per share, which is 20% lower than today’s $10.26.
    • Mid case: Normalized EBITDA is approximately $150 million.  With an EV/EBITDA of 6, the stock would be worth $19.02 a share, which is 85% higher than today’s $10.26.
    • High case: EBITDA may reach $170 million.  With an EV/EBITDA of 7, the stock would be worth $28.97, which is over 180% higher than today’s $10.26.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


If you are interested in finding out more, please e-mail me or leave a comment.

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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.