This month’s Best Buys are making big moves south of the border as the weaker Canadian dollar boosts the value of their U.S. sales.

We expect these factors to drive both stocks—new Aggressive holding New Flyer Industries and new Conservative holding Algonquin Power & Utilities—to further outperformance in 2015. And both are well positioned to sustain and grow their dividends over the long haul.

Get on the Bus

New Flyer Industries (TSX: NFI, OTC: NFYEF) is the leading transit-bus maker in the U.S. and Canada, and its orders for both buses and parts are booming. It also operates the industry’s most sophisticated aftermarket parts network, tracking down components from hundreds of suppliers and providing support for buses of all types. This business continues to benefit from the Chicago Transit Authority’s mid-life upgrade program.

New Flyer lives on the cutting edge of transit technology with drive systems powered by clean diesel, natural gas, diesel-electric hybrid, electric trolley and zero-emission battery-electric. Many transit systems have faced tight budgets in recent years, but spending is bouncing back as fleet-replacement plans kick in.

New Flyer recently landed new contracts with the New York City Transit Authority, the San Francisco Municipal Transportation Authority, the Orange County Transportation Authority (California) and the Canadian city of Hamilton. In all, the company will deliver 774 buses (or about 1,500 “equivalent units,” or EUs) under these deals over the next five years.

The company booked $290.6 million of firm orders, with another $404.4 million “option” orders. It converted many more option orders to firm ones in 2014 than in 2013, as its customers’ finances improved along with the U.S. economy.

As of the end of 2014, New Flyer’s backlog was 6,745 EUs, for a total value of $3.39 billion. That’s up from 6,239 EUs (or $3.07 billion) at the end of the third quarter.

Meanwhile, the company’s aftermarket business saw a 24.1% rise in gross parts orders in the fourth quarter compared with a year ago. Parts shipments were up 23.6%. On a quarter-over-quarter basis, gross parts orders grew 2.8%, while parts shipments were up 2.3%.

Higher Transit Spending Ahead

Business for New Flyer’s customers is improving, thanks to increased federal spending and rising local tax revenue. According to preliminary data from the Rockefeller Institute released in December, state tax collections rose 4% in the third quarter of 2014, compared with a year earlier.

And at the federal level, President Obama signed the combined Omnibus Appropriations and Continuing Resolution in December last year. The resolution extends transit funding to September 2015 and sets full-year funding levels at $10.743 billion—a year-over-year increase of $167 million.

In addition, on June 11, 2014, a $302 billion, four-year surface transportation reauthorization was introduced in the House of Representatives. However, the bill has been referred to a number of House committees and subcommittees and remains under review. No immediate action is expected.  

Meantime, the latest data from the American Public Transportation Association showed a 1.8% ridership increase for all modes of U.S. transit in the third quarter of 2014, though bus ridership did slip a marginal 0.4%. The same report says overall Canadian transit ridership gained 2.2%.

It all adds up to a bright future for New Flyer, which expects continued strong bus sales as its customers grow and update their fleets.

And the stock is trading at just 1.30 times book value and 10.58 time enterprise value-to-EBITDA.

New Flyer Industries is a buy for aggressive investors up to $12.

Algonquin’s Power

Based in Oakville, Ontario, Algonquin Power & Utilities (TSX: AQN, OTC: AQUNF) owns and operates regulated electric and natural gas utilities and power-generation facilities through wholly owned subsidiaries Liberty Utilities and Algonquin Power.

Regulated Liberty Utilities provides water, electricity and gas to 500,000 customers in 10 U.S. states: Arizona, Arkansas, California, Georgia, Illinois, Iowa, Massachusetts, Missouri, New Hampshire and Texas.

It operates 23 water-distribution and wastewater utilities with more than 100,000 customers; two power-distribution utilities with roughly 100,000 customers; and six natural gas distribution utilities with about 300,000 customers.

Liberty continues to expand through acquisitions and partnerships with other firms. Recently, it agreed to acquire Park Water Company, a regulated water utility with operations in Montana and California, for $327 million, including $77 million in debt.

It has also teamed up with Kinder Morgan on the Northeast Energy Direct gas pipeline, which will run from Wright, New York, to Dracut, Massachusetts, helping ease bottlenecks in the northeast U.S.

Last year, Liberty began pursuing Gas Natural Inc. (NYSE: EGAS), which distributes gas through regulated utilities in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky. But so far, Gas Natural insiders have resisted. While a deal for this particular company is still possible, there’s no doubt Liberty will keep adding regulated U.S. revenue streams.

Buy for Growth and Income

Algonquin’s other subsidiary is unregulated Algonquin Power Co., which owns or has stakes in more than 1,160 megawatts of capacity, nearly all of which is covered by long-term contracts. Wind accounts for about 59% of the total, followed by thermal (30%), hydroelectric (10%) and solar (1%).

The unit’s development projects will add another 530 MW of capacity from wind and solar through 2016.

This subsidiary is also growing by acquisition, recently striking a deal to buy the 200 MW Odell wind project in Minnesota, which will come online in the fourth quarter of 2015. Odell will sell its power to Xcel Energy under a 20-year power-purchase agreement (PPA).

In August 2014, Algonquin boosted its dividend by 12.4%, to USD0.35 a share from CAD0.34. The board decided to change to a U.S.-dollar dividend to better align its payout policy with its cash flows’ currency profile.

Regulated operations generate more than 60% of the company’s earnings before interest, taxation, depreciation and amortization (EBITDA), providing solid ballast against the more volatile generation segment.

Also, Liberty Utilities has weather-decoupling mechanisms that help cut its risk, while 90% of Algonquin Power’s output is sold under PPAs with a 14-year average life.

The mix of regulated and contracted revenue helps steady Algonquin’s earnings and cash flow and helps offset what’s been a volatile North American merchant power market in recent years.

But at the same time, Algonquin is pursuing an aggressive expansion plan—highlighted by its pursuit of Gas Natural. Success would boost its regulated operations’ contribution to EBITDA, adding even more stability.

The stock is priced at 15.90 times enterprise value-to-EBITDA, an above-average valuation for its peer group that’s justified by its strong growth prospects and strong dividend coverage.

Algonquin Power & Utilities, which is yielding 3.9%, is a buy under $9.25.