Pacific Trader: Westshore Terminals offers a safe harbour

The stock: Amid the on-again, off-again tariff war being waged by Washington, a lot of investors are giving the stock market a wide berth. But not every stock has taken on water this year. Take Westshore Terminals Investment Corp. (TSX:WTE), operator of the metallurgical coal port at Roberts Bank in Delta. As of Tuesday’s close (April 15) at $24.77, it’s risen 9.3 percent year to date. For those investors seeking shelter from the tariff storm, it’s worth examining why.

The drivers: Though it’s literally in the business of international trade, Westshore’s operations have nothing to do with the instigator of this trade war, the United States. It takes coal mined in the Canadian Rockies and shipped to the coast by rail, and loads it onto ships bound for the Far East, mostly steel mills in China. So, there are no new trade barriers weighing on its product, nor on its planned future product, potash (Westshore has teamed up with multinational miner BHP to build a terminal to export potash from BHP’s Jansen mine under construction in Saskatchewan. Cargo loadings are to begin late next year).

A couple of other factors make Vancouver-based Westshore relatively stable. It’s an income stock, paying an annual dividend yield in excess of 6 percent. It’s controlled by local billionaire Jim Pattison, with a 47-percent stake. And it has a “moat” in that there’s little prospect of competition for its customers. Another positive sign: insiders have been buying the shares. Chief financial officer Dallas Ross purchased $1.4 million worth in March.

For the fourth quarter of 2024, Westshore reported $42.3 million in earnings on revenues of $110.8 million, which surprised most analysts on the upside. One lingering fear around the stock is capital cost inflation as it invests in the new potash terminal.

Word on the street: Walter Spracklin, co-head of global industrials research at RBC Dominion Securities, rates Westshore “sector perform” with a $25 target. “The BHP agreement not only adds a significant new customer but also reduces its overall coal exposure by as much as half over the long term,” he writes, though the development is, in his opinion, “fully reflected in the shares at current levels.” Morningstar is more sanguine, placing WTE’s fair value at $28.92.

Coming and going: Vancouver-based Canaccord Genuity Group (TSX:CF) has announced the sale of its U.S. wholesale market-making division to American investment firm Cantor Fitzgerald. The terms of the sale were not disclosed. The division was the subject of a regulatory investigation, Canaccord revealed in 2023.