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Wesco Expansion Continues to Impress

Stocks in this article: AXE CAT GWW SWK WCC

NEW YORK (TheStreet) -- With more than a few markets enjoying a noticeable improvement in the construction industry, I've spent the past couple of weeks discussing the potential effects to companies like Caterpillar (CAT) and Stanley Black & Decker (SWK) that have strong exposure to both residential and commercial construction.

Given the global footprint and brand recognition of these names, I'm won't pretend to have made any discoveries. On the flipside, it's a little surprising that Wesco (WCC) has had so little coverage given the recent uptick in utility infrastructure demand. If the company's recent moves serve as any indication, management plans to leverage this sudden change in sentiment towards long-term margin prosperity.

As one of the largest suppliers and distributors of electrical construction products in the U.S., Wesco has never been shy about doing deals. Having picking off RS Electronics last year, several weeks ago the company was back on the M&A trail. This time it acquired LaPrairie, a distributor of high-voltage electrical products and services. The terms of the deal were not disclosed. But that bit of detail wouldn't matter in this case.

Over the past couple of years, Wesco has grown where others couldn't, despite the fact that markets like North America has been anything but robust. What's always been impressive about this company is that management has consistently met or exceeded its numbers despite what has been a weak period for construction and utility customers (which make up roughly 50% of Wesco's revenue). But as noted, business conditions have now begun to improve.

With LaPrairie now coming onboard and bringing almost $30 million from one location (Newmarket, Ont.), the deal essentially pays for itself. Plus, with distribution and substation demand expected to come from utility contractors in markets like Ontario, Quebec and Atlantic Canada, Wesco management sees this as the perfect opportunity to add to the 17% revenue the company already generates in Canada.

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