Wednesday, June 30, 2010

Toromont Industries Ltd

I originally bought this stock (TSX-TIH) in 2007 and then bought more in 2008. My total return on my investment in this stock is -1% per year. The reason I invested in this stock was to diversify away from a portfolio of Banks and Utility stock. If I had such a portfolio in the US when we went into the current recession, I would be in a much worse position than I am currently. I am only earning some 2% in dividends on my original investment. This is a stock with a low dividend yield, but a fast growing dividend.

When you look at growth figures for this company over the last 5 and 10 years, most are good to very good. For example, the 5 and 10 year growth figures for Book Value are 15% and 14% per year, respectively. The worse growth figures for the last 5 and 10 years are for revenue per share, which were 3.6% and 8% per year respectively. The main reason for the lower Revenue growth figures is that Revenues declined some 14% in 2009. These figures are good considering we are in a recession.

This is a dividend paying growth company. The company pays a rather low dividend yield, but it is increasing at a good clip. The 5 and 10 year growth in dividend yield is 17.8% and 15.5% per year respectively. In both the last recession and this recession, the increase in dividends dropped substantially, with the increase in 2009 being just 5.4%.

So far this year there has been no dividend increase and they have declared the 3rd dividend to be paid this year. Without a dividend increase, it is expected that the Payout Ratio for dividends from the Cash Flow will be about 30%, and this is higher than normal. However, I noticed that in the last recession, the Payout Ratio from cash flow spiked higher during the recession.

The Liquidity Ratio and the Asset/Liability Ratio are both very good. The Liquidity Ratio for 2009 was 2.57 and for the 1st quarter of 2010, it was 2.01. For the A/L Ratio, the one for 2009 was 2.67 and one for the 1st quarter was 2.05. Yes, they have come in lower recently, as they did in the last recession. However, when for these ratios a ratio of 1.50 and above is good, I see no problems. The last thing is the Return on Equity. The 5 year running average is still over 15% and this is good. However, the ROE for the 1 quarter of 2010 is rather low at 5.3%.

I guess that last thing to mention is that this company did not do as well in the first quarter of this year as it did in the 1st quarter of 2009. As a result, the earnings and cash flow estimates were decreased. I am pleased with my investment in this company and I will continue to hold the shares I currently have. I probably will not buy any more as I do not like any one company to be a too high a percentage of my portfolio. The thing with growth stocks is that even if you start with a modest amount, they can grow faster than the rest of the stocks in your portfolio. I am currently comfortable with the amount I have invested in this company at this point in time.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Toromont. See my spreadsheet at tih.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, June 29, 2010

Thomson Reuters Corp 2

I originally bought this stock (TSX-TRI, NYSE-TRI) in 1985. The stock I bought was Thomson. Since that time, I have earned a total return of 7.6% per year. Over the past 5 and 10 years, I have not earned much from this stock. This international stock has suffered in this recent financial turmoil, but it is expected to start to recover in 2010 and to be fully recovered in 2011. However, predicting the future is not an exact science and who knows how our current problems will or will not work out.

The first unpleasant news is that over the past year there has been Insider Selling on this stock to the tune of 14.5M. This is about ½ of 1% of the value of this company. It would seem that this selling was of granted stock options. The problem with Insider Selling is that you do not know why the selling is taking place. There has been a very minimal amount of Insider Buying (less than .4M). The rising of the dividend by some 3.6% (in US$ terms) is a good sign. It shows that the company has confidence in the company’s future.

When I look at the 5 year average low P/E ratio I get one of 20.8 and for the 5 year average high P/E ratio, I get one of 27.2. Both these ratios are high, but this is because the company is thought of as a growth type company. I get a current P/E, based on earning estimate for 2010 of 20.7. This is just below the 5 year average low. So the current P/E is good on a relative basis. I get a current Graham Price of $31.36. This is some 22.8% below the current stock price of $38.51. This spread is lower than the 10 year average of 27% and about at the 5 year average of 21%. So here again, the price is good on a relative basis, but not an absolute basis. On an absolute basis, you want the P/E ratio to be 10 or lower and the Stock Price at or below the Graham Price. Unfortunately, growth companies only get to these levels when they become a mature company, or are in financial difficulties, (or maybe when we are in a severe bear market).

The next indicator is the Price/Book Value Ratio. I get a current ratio of 1.64 and a 10 year average of 2.09. The current one is less than 80% of the 10 year average, so this points to a good current stock price. The last thing to look at is the dividend yield. The current one is 3.11%. It has been higher over the last 2 years, but it is higher than the 5 year average of 2.82% and even the 10 year average on the low stock price, which is 2.99%. So the current dividend yield does point to a good current stock price.

When I look at analyst’s recommendations, I find lots of Strong Buy, some Buy and lots of Hold recommendations. I can also find one Underperform and one Sell. The consensus would probably is a Buy. (See my site for information on analyst ratings.) Most analysts think this is a well managed company and that it will be a great one once the effects of merger with Reuters come into effect.

It is interesting that one analyst who does not like the stock says that Thomson was always a company that was going to make a bunch of money in the future, but never seems to. This company certainly has not done well lately and for investors has basically made no money for them for the past 10 years. However, we are in a recession and many feel that the merger with Reuters will be great for this company. I guess, only time will tell. At the moment, I intend to hold what shares I have. This stock is not a large part of my portfolio and currently, I am not inclined to buy more.

What I like from a company is for it to provide a total return of 8% per year on a long term basis. I also like it to provide a dividend yield on my initial investment of 10 to 15% after 15 years. For this company the long term total return is under 8% at 7.6%. Also, the dividend yield after some 24 years is just 7.2% and this is a little low also.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson Reuters. See my spreadsheet at tri.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, June 28, 2010

Thomson Reuters Corp

I originally bought this stock (TSX-TRI, NYSE-TRI) in 1985. The stock I bought was Thomson. Since that time, I have earned a total return of 7.6% per year. Over the past 5 and 10 years, I have not earned much from this stock. This is an international stock and over the past 10 years has not done well in Canadian Terms. It was doing better coming into 2008, but has suffered in this recession.

This company’s reporting currency is US$ and it has done better in US$ terms, but even here the returns have been mediocre. For example, the US$ 5 and 10 year growth in Revenue is 9.9% and 8.5% per year respectively. The CDN$ 5 and 10 year growth in Revenue is just 7% and 4.9% respectively. However, the problem is when you look at revenue per share and these growth figures come down. The US$ 5 and 10 year Revenue growth per share is just 4.9% and 5.4% respectively. The Canadian ones are quite low at a 5 and 10 year growth of just 2% for each period.

You get the same sort of problem looking at dividend growth. The US$ dividend growth is quite good for the 5 and 10 year periods at 8.2% and 5.5% per year. In Canadian dollars, this comes in quite a bit lower for the last 5 and 10 years at 4.6% and 2.4% respectively. When you look at total returns, in Canadian currency you have barely broke even. In US terms, the 10 year total return is just under 5%, with the 5 year return just over 1%. At least this has not been a big loss. I guess the good thing is that the stock price has made some headway this year.

For this stock, the growth in cash flow, in Canadian terms is not great. The best growth in Canadian $ terms is for the Book Value, which over the past 5 and 10 years has grown 6% and 5.7% per year, respectively.

When looking at the Liquidity Ratio it is quite low at 0.78, but they have enough cash flow to pay short term debt. The Asset/Liability Ratio has always been strong and it is currently at 2.27, a very good ratio. Also, moving on to the Return on Equity, I find that the ones for 2008 and 2009 are low at 7% and 4.5%. The one for the first quarter of 2010 is even lower at 2.8%. However, the 5 year average for ROE is still above 10%.

Tomorrow, I will look at what the analysts are saying about this stock. I will also look at ratios that point to whether or not this stock is a good buy.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson Reuters. See my spreadsheet at tri.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, June 25, 2010

Sun Life Financial Inc 2

I have this stock (TSX-SLF) in two different accounts. For one account, I bought shares in 2001 and then again, in 2006 and in this account I have lost some 3% per year. The yield I am making on my investment is just 3.4% and this is below the current yield of 4.8%. In the other account, I bought in 2000, 2001 and again in 2003. For this account, I have made a total return of 7.6% per year. Also, in this account, my current yield is 6.5%, and this is better than the current yield.

When I look at the Insider Trading report, I find that there has been Insider Selling to the tune of $4.7M. There has been a minimal of insider buying. Most of the selling would appear to be stock options and insiders seem to have more stock options than stock. This may look like a lot of selling, but since this company is worth some $16.9Billion, it is only some .03% of the company’s value. When I look at this stock last year, there was not much happening in this area. I guess the real negative is the lack of dividend increases, which show lack of the company’s confidence in the near term.

When I look at the P/E ratios, I get 5 year average low of 13.4 and a 5 year average high P/E Ratio of 24.7. Using the current earnings estimates, I get a current P/E of 10.8. Turning to the Graham Price, I get a current Graham Price $43.51 and this is some 32% above the current stock price $29.80. During most years, the Graham Price has at sometime been below the stock price and I have an average of the low stock price being some 22% below the Graham Price. So, by both these measures, the current stock is good on a relative basis. It is also good on an absolute basis, because a price at or lower than the Graham Price is good and a P/E at or below 10 is good (and the stock P/E is not much above 10.)

Turning to the Price/Book Value Ratio, I get a current one of 0.97 and a 10 year average of 1.57. The current P/B ratio is only some 62% of the 10 year average and anything below 80% of the 10 year average is good. The last thing to look at is dividend yield. The current yield is 4.8% with a 5 year average of 3.3% and a 10 year average of 2.5%. So, all these factors show a very good current price.

When a stock price looks very good on a lot of levels, you have to question the viability of the company. Some times stock prices are low because people are worried about the company’s future. This is not the case with this company. Yes, it has had a recent rough time, but it is a solid company. No analyst seems worried about its long term viability. The worst analysts’ comments on this company are that they prefer Manulife or Power Financial to this company.

When I look at the analysts recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. There are as many Hold recommendations as Buy recommendations on this stock and there is slight less Strong Buy recommendations. (See my site for information on analyst ratings.) These recommendations fit into what I said in the last paragraph. There are no Underperform or Sell recommendations, as all the analysts seem to feel this company has no long term problems. The worse is that they feel other companies will do better in the shorter term than this company will.

As I said yesterday, I will continue to hold on to the shares I have and I, of course, will continue follow this stock.

Sun Life Financial is an insurance company. It provides a diverse range of protection and wealth management products and services to individuals and corporate customers. It operates internationally. Its web site is here Sun Life. See my spreadsheet at slf.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, June 24, 2010

Sun Life Financial Inc

I have this stock (TSX-SLF) in two different accounts. For one account, I bought shares in 2001 and then again, in 2006 and in this account I have lost some 3% per year. In the other account, I bought in 2000, 2001 and again in 2003. For this account, I have made a total return of 7.6% per year. Overall, I have made a return of 4% per year on this stock.

This is a dividend paying stock, but it is no longer on any dividend list that I follow, as the company has not raised their dividend 2008. This company had previous had a good record of dividend increases and the growth in dividends over the last 5 and 10 years was 10.8% and 11.6% per year respectively. The company has been hit hard by this recession (and by the last recession). The payout from cash flow has been decreasing in the last couple of years to a more reasonable level, so there is more hope of an increase in the future.

For this company, growth figures are ok and generally, the 10 year growth figures are better than the 5 year ones. Book Value growth has been better than most, with the 5 and 10 year growth figures at 4.8% and 8.2% per year, respectively. The important cash flow and revenue growth has been minimal, but both these items picked up well for the year ending in 2009. These are the items that must pick up for this stock to do better in the future.

The Asset/Liability ratio is ok at 1.17. This is pretty typical for an insurance company, as is the Leverage at 6.88. The Return on Equity has not been great over the last couple of year with 2008 and 2009 years being at 4.9% and 3.6% respectively. However, ROE has picked up for the 1st quarter of 2010 to be 9.8%. This is also a good sign.

I think this stock will prove to be a good long term investment and I intend to continue to hold the shares I own. I will not be adding to my shares as I feel that I have enough exposure to this company, to Insurance Companies and to the Financial Services sector in general. Tomorrow, I will look at what analysts say about this company.

This is an insurance company. It provides a diverse range of protection and wealth management products and services to individuals and corporate customers. It operates internationally. Its web site is here Sun Life. See my spreadsheet at slf.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, June 23, 2010

Atlantic Power Corp 2

I always like to first look at the Insider trading reporting. I find that there is no insider selling, and very little insider buying. The other thing I see is that the CFO and CEO have both been keeping recently issued stock options. This is generally considered a positive point with many analysts. The other thing to note is that Caisse de Dépôt et placement du Québec used to own some 19% of this company, but does not anymore. However, they still own a lot of this company’s debentures. As far as I can see, all this company’s debentures are convertible into common shares.

So, let’s go on to look at the P/E ratio. Since this company has in the past only earned money in one year, I have no comparison to make. However, in 2008 they made $2.04 CDN, so the P/E was really low, at around 4 or 5. The current P/E on estimated earnings for 2010 is 28. This is quite a high P/E for a utility company. The current Graham price is also built on earnings estimates and for 2010, I get a Graham Price of $8.21. This is some 55% below the current stock price of $12.70. Here, again the difference is very high for a utility company.

We do have some history for this company on Price/Book Value and dividend yield. The P/B ratio average for the last 5 and 6 years is 3.27. The current P/B ratio at 1.90 is some 40% of the 6 years average. You expect to have a good stock price if the current P/B ratio is 80% of lower of the long term average. Since the dividends have just been jacked up from $.46 a share per year to $1.09 a share, the yield is also up quite a bit. The 5 year average is 4.2% yield. The current yield is 8.6%.

A yield of 8.6% is a very good yield. Also, the company has stated that it can maintain its dividend until 2015. However, if you look at comments on the internet, some people are concerned about how high a percentage this company pays from the cash flow for dividends in 2009 and worry that the dividends are not sustainable. Others note that this company has a very stable revenue stream. This company will shortly be listed on the NYSE.

One thing I have not mentioned on this stock is the Liquidity Ratio and the Asset/Liability Ratio. Both these ratios are currently very good, with 2010 ratios being at 2.10 and 1.82 respectively. Any ratio over 1.50 is good. However, I should point out that these ratios have just recently improved; the 5 year average for these ratios is 1.61 and 1.30 respectively and both these ratios have fluctuated and have not been always above 1.50. I have not discussed the Return on Equity either. Since the company has no earnings, the ROE has been negative and this, of course, is not good.

So, what do the analysts say? There are not that many analysts following this stock and the recommendations are only Hold or Underperform. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.)

I have not changed my mind on this company. I do not like companies that make no profit.

Atlantic Power Corporation is a power income fund that owns interests in a diversified portfolio of power generation and transmission projects situated primarily in major U.S. markets.
This company has a collection of gas-fired plants in the US and is generally in the lower cost quadrant of generation in its region. Its web site is here Atlantic Power. See my spreadsheet at atp.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, June 22, 2010

Atlantic Power Corp

Because I like utility companies and just recently, I have read two columns that recommended this particular utility company (TSX-ATP), I decided to investigate it. After investigating this stock, my impression is that I would not be a stock I am interested in. However, I will talk about it and upload my spreadsheet so that you can decide for yourself. This company has recently converted from an income trust to a corporation. This company is in the TSX Utility Index. (Perhaps this is why it is recommended?)

The main point I have against this stock is that it cannot make a profit using EPS (Earnings per share) criteria. I know that this value is somewhat fake, but it does allow investors to compare different companies on basic level terms. This company has only been around since 2004 and it is only in 2008 that it had earnings of $1.67 (EPS). It is expected to earning some $.44 this year and $.76 next year, but these are only estimates and estimates can be wrong.

The other thing to note before going on to talk about what growth has been good, is that if you had bought this stock in 2008, the price has hardly moved and the return is just over 1% per year. However, the total return would be just over 5% per year because of dividends. The thing to note about dividend, besides being at a good rate, is that they are, on average at 34% of the cash flow from operations. This is not bad. However, the payment from cash flow for 2009 was up to some 42%.

The other think to note about dividends is that the growth in dividends has been at the rate of almost 5% per year over the past 5 years. This is a good growth. Also, if you had been invested in this stock over the past 5 years, the dividends paid on your investment would be just over 10%. The growth in revenues, cash flow and book value has all been good. For example, the growth in cash flow and book value over the past 5 years has been just over 20% per year.

Tomorrow, I will look at what the analysts say on this stock. However, it will never be on my buy list until it can consistently have some earnings. I do not like stocks that have no earnings.

Atlantic Power Corporation is a power income fund that owns interests in a diversified portfolio of power generation and transmission projects situated primarily in major U.S. markets.
This company has a collection of gas-fired plants in the US and is generally in the lower cost quadrant of generation in its region. Its web site is here Atlantic Power. See my spreadsheet at atp.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, June 21, 2010

Stantec Inc 2

I bought this stock (TSX-STN) in April 2008. I have lost some 4.7% per year on this stock. This is a small non dividend paying stock that is into infrastructure. I like to invest in a few odd non-dividend paying stocks for fun. The loss I got would be rather typical for investments in the last couple of years.

When you look at Insider Buying and Insider Selling, I find, as I did in July 2009 that there was quite a bit of selling by directors of the company, and some buying by the CEO and the CFO. Most of the selling was done in 2009 and most the buying in the first part of this year. The interesting thing is that the stock price has not changed significantly, but most of the selling was done at a higher price than the buying. I do not think we learn anything from Insider Trading.

When I look at the P/E ratios, I get a 5 year average low of 17 and a 5 year average high of 30.6. Both these ratios are rather high, but this is a growth type company. Using earnings estimates for 2010, I get a current P/E of 12.5, which is a rather good ratio. Using earnings estimates also, I get a current Graham Price of $23.23. This is only 7.7% off the current stock price of $25.01. This is also showing a rather good current price. It is hard to find growth stocks with stock prices even close to the Graham Price.

Next, I am looking at the Price/Book Value Ratio. I get a 20 year average of 2.47 and a current P/B ratio of 2.09. This current P/B ratio is just 84% of the 10 year average. It is better if the current P/B ratio is just 80% of the 10 year average, but this ratio, which does not depend on estimates, also shows a relatively good current price.

So, what do the analysts say about buying this stock? When I look at recommendations, I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The remarks of people who think this is a great pick talk about the company being a diversified North American infrastructure play. One analyst says the current price is historically attractive. There are a number of analysts following this stock and I do not find any negative comments.

I intend to hold on to my stock currently and to continue to track this stock. This stock has recently done worse than the TSX market, but over the long term, it has done much better than the TSX. I am always into stock for the long term, but since this is not a dividend paying stock, I will sell it at some point.

Stantec Inc is a profitable Construction & Engineering company that trades on the TSX. It provides professional services in planning, engineering, architecture, interior design, landscape architecture, surveying and geomatics, environmental sciences project management and project economics for clients, from initial concept and financial feasibility, to project completion and beyond. They work in North America, the Caribbean, United Kingdom, Australia, and New Zealand. Its web site is here Stantec. See my spreadsheet at stn.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, June 18, 2010

Stantec Inc

I bought this stock (TSX-STN) in April 2008. I have lost some 4.7% per year on this stock. This is a small non dividend paying stock that is into infrastructure. I like to invest in a few odd non-dividend paying stocks for fun.

This is a solid growth company and the only current problem I see is the lack of growth in Cash Flow from operations over the past 5 years. This growth was only at 1.3% per year. This is rather low. However, the 10 year growth in cash flow is much better at 25% per year. One of the good things about this stock is the good growth in revenue. The revenue growth per share over the past 5 and 10 years has been 19% per and 16% per year respectively. The Revenue growth has been higher at 23% and 22% per year respectively. The difference between the revenue growth and the revenue growth per share is because the company has issued shares to cover acquisitions.

The growth in earnings per share is also good, with the 5 and 10 year growth rates of 9% and 15% per year, respectively. We have yet to fully recover from the last recession, but the 5 and 10 year growth in returns on this stock has been very good at 18% and 27% per year, respectively. I see no problem with the long term growth in this company and this is why I will hold my shares. Although, I must admit I do not have much invested in this stock for the simple reasons it is not a dividend paying stock.

The stock has a fairly strong balance sheet with Liquidity Ratio of 1.62 after the 1st quarter of 2010 and an Asset/Liability Ratio of 1.98 after this same quarter. The Leverage Ratio is just 2.05. The Return on Equity is also good at around 10% for last year and for this first quarter of 2010. The 5 year average is a bit higher at 11%. The Accrual Ratio is very high at 12%, and the problem is that the cash flow was negative for the first quarter. However, it was also negative for the first quarter of 2009, so this should not be a problem.

I like this stock and I will continue to follow it and hold what shares I have. On Monday, I will review the stock price, connected ratios, and also look at what analysts say about this stock.

Stantec Inc is a profitable Construction & Engineering company that trades on the TSX. It provides professional services in planning, engineering, architecture, interior design, landscape architecture, surveying and geomatics, environmental sciences project management and project economics for clients, from initial concept and financial feasibility, to project completion and beyond. They work in North America, the Caribbean, United Kingdom, Australia, and New Zealand. Its web site is here Stantec. See my spreadsheet at stn.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, June 17, 2010

The Trouble with Small Caps

Today I sold my holdings in Matrikon Inc (TSX-MTK) stock. This is because this stock is being acquired by another company. I received notice of a special meeting to be held to discuss this, but I have been down this road before. It is being acquired by Honeywell International Inc. and I see no reason why this purchase will not go through. I was very happy with my investment in Matrikon.

I had bought this small cap as a way of soaking up the excess bit I had left in the Tax Free Account. I had bought stock in this company in January 2009 and again in January 2010. According to Quicken, I have made a total return on this company of some 80% per year. The total return included dividends paid. This stock had a good dividend return and it had even given out some special dividend payments.

The price offered is considered a fair one. It is, of course, higher than what this stock had been recently trading at. However, this stock lost over 50% of its value because of the recent recession. The stock price has been higher than the $4.50 offered today. This price is just better than recent prices. I am lucky as I bought this stock at a rather low price and so have made money. Of course, buyouts can happen to much bigger stock, but it is more likely to happen to small caps.

When such buyouts occur, you can usually sell your stock right away, if you care to. When I looked at the price that traders were willing to buy this stock at, I found a good price of $4.49. There were people offering this stock at $4.50, but no one will pay that much, but $4.49 is not a bad price. Whoever bought my shares are willing to wait until the buyout and earn an easy $.01 a share. Note that by selling early, I have to buy a fee to sell my stock. If I had waited until the buyout, there would be no fee to be paid.

Matrikon Inc. is engaged in the sale of software and information technology professional services to industrial facilities. This company has customers in the oil, gas, mining, petrochemical, forestry and power-generation industries. Its web site is here Matrikon.

Now I have to decide what I will replace this stock with. I am looking at the only other dividend paying small cap I own, which is Pareto Corp (TSX-PTO). A new purchase in this stock would fit into my portfolio. However, I do not think that now is the time to buy as the market is on a bit of an upswing. By selling my Matrikon stock now, I can wait for an opportune time to use the money to buy a replacement without having to worry about getting a decent price for my Matrikon stock.

Pareto is a Canadian marketing services and execution company committed to helping clients sell more. They service Canada’s most successful businesses through our network of services; Retail Merchandising, In-Retail Messaging, Direct Marketing, and Incentives. Its web site is here Pareto. See my spreadsheet at pto.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, June 16, 2010

SNC-Lavalin Group Inc 2

I first bought this stock (TSX-SNC) in December 1989 and I sold some in July 2008. I have made a total return on my investment of 30% per year. The reason I sold some stock in 2008 is that the value of this stock was too high a percentage of my portfolio. I look at getting rid of some of my holdings when I stock reaches 5% of my portfolio. I definitely sell some when the stock reaches 10%. This stock is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats .

The one thing I do not like about this stock is the amount of insider selling. Over the past year, there has been some $12.6M in inside selling, with $1.8M in insider buying. A lot of the selling is in connection with stock options and insiders seem to have lots of stock options. I do not think that giving out stock options align insiders interests with shareholder interest. More people are beginning to see this, but not enough to change stock options policies.

When I look at the 5 year low average P/E ratio, I get one of 20.5 and when I look at the 5 year high average P/E ratio, I get one of 32.6. Both these ratios are high, but it is not untypical for growth companies to have high P/E ratios. Based on the earnings estimates I get for 2010, I get a current P/E ratio of 19. This is not a very low P/E ratio, but it is lower than the 5 year average low P/E. When I do the Graham Price calculation, I get one of $23.12. The current stock price of $46.69 is just over 100% higher. Unfortunately, the stock price of this stock has often been this high over the Graham Price. This is a growth stock and this often happens with a growth stock. Over the past 5 years, the Stock Price has been at an average low against the Graham Price of 88% and an average high against the Graham Price of 203%.

I get a 5 year average Price/Book Value ratio of 4.51 and a current one of 4.82. They are close, but to signal a good stock price you want to see this P/B Ratio at 80% of the 10 year average. The last ratio I will look at is the dividend yield. I get a current yield of 1.5% and 5 year average of 5 year average of 1.12. The 5 year average high is 1.5%. This would all point to a good current stock price. So all this points to a relatively good stock price, however, it is not an absolutely good stock price.

So, what do the analysts say? When I look at the analysts recommendations, I find Strong Buy, Buy, Hold and Sell. I can only find one sell recommendation. The consensus would be a Buy recommendation. (See my site for information on analyst ratings.) It is hard to find negative comments on this stock. The closes is that it is not a stock you can buy and put away in your portfolio forever. Most analyst feel that is company is very well run and is the best infrastructure play in Canada. It also earns half it money outside Canada.

I am certainly pleased with my investment in this company and I will continue to hold this stock.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC. See my spreadsheet at snc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, June 15, 2010

SNC-Lavalin Group Inc

I first bought this stock (TSX-SNC) in December 1989 and I sold some in July 2008. I have made a total return on my investment of 30% per year. According my spreadsheet, only 2% of the total yearly return is in dividends. The reason I sold some stock in 2008 is that the value of this stock was too high a percentage of my portfolio.

If you look at my yield on my original investment, I am getting a return each year currently of almost 20%. If you want to live off your dividends, this is the sort of stock you want to buy. Also, if you look at the growth in dividends for the last 5 and 10 years, they have been growing at the rate of 27% and 22% per year, respectively. The growth for dividends for 2010 has been just at 13%, but we are just coming out of a recession.

For this stock, you have great growth in everything. I have mentioned above the great growth in dividends. Other growth that is good is revenue and the 5 and 10 year growth is 12% and 16% per year, respectively. The cash flow growth is also very good, where the 5 and 10 year growth is 32% and 20% per year, respectively. With Operational Cash Flow, I have excluded from my calculations the changes in working capital that is shown on their annual report. For this company, the changes in working capital distort the Operational Cash Flow so that it does not properly reflect how this company is doing.

When I look at the Liquidity and the Asset/Liability Ratios, I find them a little low at 1.18 and 1.27, but assets do cover liabilities. The Leverage Ratio is also a bit high at 5.02, but not unreasonably so. The Return on Equity ratio is also usually quite good on this stock with a ROE of 25% for 2009 and a 5 year average of 22%. The only ratio that is a bit too high is the Accrual Ratio, which is currently at 10.8%, but this is usually high.

I am very pleased with my investment in this stock. However, since I already have enough of it in my portfolio I will not be buying any more. I do not like any one stock to dominate my portfolio, no matter how good the stock is. Tomorrow, I will look at spreadsheet ratios for the current stock price and also look to see what analysts say about this stock.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC. See my spreadsheet at snc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, June 14, 2010

Want to Retire Well?

Retiring well is a two prong attack. You need to have money to live on and you need to live within your means. To get some extra money, it is helpful to invest some of your earnings. The best way to start out investing is to invest in some nice utility stock. The first list is the utility stock that I currently follow.

ATCO Ltd (TSX-ACO) operates primarily in Alberta, Canada. ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations. For my reports dated October 2009, click here or here.

Canadian Utilities (TSX-CU) operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. It is 74% owned by ATCO. For my reports dated November 2009, click here.

Consumers Waterheater (TSX- CWI.UN) operate in Ontario. Consumers' Waterheater Income Fund owns a portfolio of waterheaters and other portfolio assets, which they rent to primarily residential customers. For my reports dated September 2009, click here or here.

Emera Inc (TSX-EMA) operates in Canada, US and the Caribbean and has electric utilities and pipelines. For my reports dated March 2010, click here or here.

Enbridge Inc (TSX-ENB) operates in Canada and US. The company is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. For my reports March 2010, click here or here.

Fortis Inc TSX-FTS) operates in Canada, US and the Caribbean. Fortis is a diversified, international distribution utility holding company. For my reports dated April 2010, click here or here.

Gas Metro (TSX-GZM.UN) is a Limited Partnership whose core business is the distribution of Natural Gas in Quebec. For my reports dated January 2009, click here or here.

Innergex Power Inc (TSX-IEF.UN) operates in North America. Innergex Power Income Fund acquires and operates a portfolio of hydroelectric facilities and wind farms that produce electricity exclusively from renewable energy sources. For my reports dated January 2010, click here or here.

Superior Plus (TSX-SPB.UN) operates in Canada and US. Superior’s Energy Services division provides distribution, wholesale procurement and related services in relation to propane, heating oil and other refined fuels. For my reports dated in May 2010, click here or here.

Transalta Corp (TSX-TA) operates in Canada, the U.S., Mexico and Australia. It is an electric generation and marketing company. For my reports dated June 2009, click
here or here.

TransCanada Corp (TSX-TRP) operates in North America. TransCanada is a leader in energy infrastructure. For my reports April 2010, click here or here.

This is a list of ones I am not following, but they are in the TSX’s Utility Index.

Atlantic Power Corp (TSX-ATP) operates primarily in the US. It owns interests in a diversified portfolio of power generation and transmission projects. Its website is Atlantic.

Brookfield Renewable Fund (TSX-BRC.UN) operates in Canada and US. The Fund owns, operates and manages 42 hydroelectric generating stations and one wind farm. Its website is Brookfield.

Capital Power (TSX-CPX) operates in Canada and US. It is an independent power generation company. (It has really only been operating since June 2009.) Its website is Capital Power.

Just Energy Fund (TSX-JE.UN) Operates in Canada. Just Energy's business involves the sale of natural gas and electricity to residential and commercial customers under long-term, irrevocable fixed price contracts. Its website is Just Energy.

Northland Power Fund (TSX-NPI.UN) operates in Canada. It is a trust that indirectly owns interests in five power projects. Its website is Northland.

The other part of what I am talking about, of course, is living within your means. This is basically that you do not spend more in any year than you make. Get a program like Quicken or Money and start to track how you spend your money. Once you know this, you can start deciding on how you want to spend your money. I have no problems with credit cards, but I do pay off my bills every month. I know how much I can spend on the credit card and I keep to that. The best think you can do when buying things on credit is to remind yourself that you are indeed spending money.

What you need to do is start to cut back on the spending that is the least important to you. First, you need to stabilize your debt and then you need to start to pay it off. Now is an excellent time to do this, as interest rates are low. You can get a line of credit or a cheaper credit card (in regards to interest rates) to lower your interest payments. There are agencies you can go to, to get help with debt.

The important think is to not retire until you have spending and debt under control

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, June 11, 2010

Saputo Inc 2

I first bought this stock (TSX-SAP) in September 2006 and some more in November 2007. My total return to date is 14.25% per year. This is a dividend paying stock. This stock has a great record for increasing dividends with a growth rate for the last 5 years at almost 14%. However, the increase for 2010 was one of lowest increase with it being around 3.6%.

The first thing that I see when I look at the Insider Selling and Insider Buying reporting is lots and lots of insider selling to the tune of almost $11M. Just over $8M was by officers of the company getting rid of options. I reported on the same thing when I last reviewed this stock. The interesting thing is that insiders seem to get rid of options when stocks hit a high. I do not know what this means. The problem is insider selling may not mean anything besides the selling want or need money.

When I look at low 5 year average P/E ratio for this stock, I get a ratio of 14.8. When I look at the high 5 year average P/E ratio, I get one of 20.5. I get a current P/E ratio, based on earnings estimates for 2010 of just 14.5. So this ratio shows a good current price. The next thing I looked at is the Graham price. I get one for 2010 of $21.10. The current stock price of $29.35 is about 40% higher than this, but this is about average for this stock. (That is, most of the time, the stock price is about 40% above the Graham price.)

The next thing I like to look at is the Price/Book Value Ratio. The 10 year average P/BV ratio is 2.84 and the current P/BV ratio is 3.00. This would suggest the current stock price is not low. The last thing to look at is the dividend yield. The current yield is about 2% and the 5 year average is about 2%. Expect for the P/E ratio, all this seems to point to a current relatively average price for this stock.

So what do the analysts say? The recommendations I can find are Strong Buy, Buy and Hold. The consensus would be a Buy. (See my site for information on analyst ratings.) Analysts seem to like the long term potential of the stock.

This company is a dairy processor and cheese producer in Canada, USA, Argentina, UK and Europe. It is also the largest snack-cake manufacturer in Canada that accounts for about 3% of its business. Its web site is here Saputo. See my spreadsheet at sap.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, June 10, 2010

Saputo Inc

I first bought this stock (TSX-SAP) in September 2006 and some more in November 2007. This has been a wonderful stock. My total return to date is 14.25% per year. This is a dividend paying stock. However, the dividends are not high and the amount of my return attributable to dividends would be just over 2%. This stock has a great record for increasing dividends with a growth rate for the last 5 years at almost 14%. However, the increase for 2010 was one of lowest increase with it being around 3.6%. The best you can say about this increase is that it is higher than inflation.

When you look at the spreadsheet, there are no trouble spots. Revenue growth over the past 5 and 10 years is 8.6% and 12% per year, respectively. The growth in cash flow over the past 5 and 10 years is 17% and 13.3% per year, respectively. These are important growth figures as it is revenue and cash flow that drive increases in stock value and dividends.

If you had invested in this company at the average stock price, you would have 5 and 10 year total returns of 11.3% and 13.4% per year, respectively. The stock would be generally classified as a dividend paying growth stock. Although the increases are very good for the dividend, after having this investment for 10 years, your dividend yield on your original investment would be only around 6.5%. This is not a bad return, but stocks that have higher yields would do better. The yield on this stock is currently around 2% but this is high as in most years the dividend yield lower. However, the yield has been increasing over the years and this is good.

The other good things to report on this stock are that the Liquidity and Asset/Liability ratios are good. The Liquidity Ratio is 1.51 and the Asset/Liability ratio is even better at 2.66. The stock has a strong balance sheet. The Return on Equity is also good at 18.9% for 2009 and with a 5 year average of 16.1%. Even the Accrual Ratio for 2009 is good as this ratio is a negative at -.86%.

Needless to say, I am very happy with my investment in this stock. However, I will not be buying more in the future as I already have enough of it in my portfolio. I do not like any stock to be a too high a percentage of my portfolio, even the great stocks.

This company is a dairy processor and cheese producer in Canada, USA, Argentina, UK and Europe. It is also the largest snack-cake manufacturer in Canada that accounts for about 3% of its business. Its web site is here Saputo. See my spreadsheet at sap.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, June 9, 2010

Shoppers Drug Mart 2

I bought this stock (TSX-SC) for my TFSA, so I did a purchase in January 2009 and in January 2010. To date, I have lost some 21% per year. This is not a stunning performance. After I had purchased this stock, analysts seem to have come up with all sort of negative things to say about this company.

When I look at the Insider Buying and Insider Selling information, I find that there has been, over the past year, Insider Selling to the tune of $1.8M. However, this selling all occurred last year. Lately, insiders have been keeping their stock options. As I find a problem in lots of company, I find that the insiders of this company have more stock options than shares in this company. There has been an extremely small amount of insider buying this year. I do not think all this tells us much. All the selling of last year occurred prior to the recent drop in share price.

The 5 year average low P/E ratio is 18.9 and the 5 year average high P/E is 22.8. These ratios are both rather high and rather close. The current P/E ratio that I get is 12. This is better than the average low and is not a bad ratio. For 2010, I get a Graham price of $34.18. The current stock price of $34.77 is less than 2% higher. I do not see a time since this stock went public 9 years ago when the stock price was so close to the Graham price. Prior to this the closes the stock price has been to the Graham Price was 25% above the Graham Price.

The current stock yield of 2.6% is quite a bit above the 5 year average of 1.4%. This is the highest the yield has been so far. The last thing to look at is the Price/Book Value Ratio. The 10 year average is 3.36 and the current P/B is just1.74. This P/B ratio is less than 60% of the 10 year average and also points to a good price.

So what are the consensus recommendations? When I look at the recommendations, I find lots of Strong Buys, Buys and Holds. I find no other recommendations, The consensus would be a Buy. (See my site for information on analyst ratings.) A lot of analysts feel this is a great company. However, it is the Ontario government’s generic drug policy that has put this stock under pressure. There is also the fear that other provinces may follow Ontario’s lead. No one feels that this stock will rise anytime soon.

I found a couple of reports by RBC dated March 26, 2010 and April 8, 2010 on this company. (I do not know how long this link will last.) Wikipedia has an item on this company, see Shoppers. Also, Wikinvest has an article at TSE:SCfor this company.

At the moment, I will be holding on to my stock, as this is a long term solid investment. However, I doubt if I will see the fruits of this investment anytime soon.

Shoppers Drug Mart Corp. is a licensor of Shoppers Drug Mart in Canada and Pharmaprix in Quebec. The company owns and operates Shoppers Home Health Care stores. It also owns MediSystem Technologies Inc. and the new Murale Stores. Its web site is here Shoppers. See my spreadsheet at sc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, June 8, 2010

Shoppers Drug Mart

I bought this stock (TSX-SC) for my TFSA, so I did a purchase in January 2009 and in January 2010. To date, I have lost some 21% per year. This is not a stunning performance. After I had purchased this stock, analysts seem to have come up with all sort of negative things. One problem is the Ontario change in how much pharmacies can charge for generic drugs. One analyst recently said that Shoppers was ringing up as sales, items bought with Optimum points. This will not affect earnings, but can certainly make sales look better than they are. I just have that feeling that this investment may not turn out to be one of my better investments. Or, maybe I just bought this stock at the wrong time.

First, what gives me a bad first impression is that when you look at the investor section on their site, you cannot access anything. Either you get the PDF document is damaged and cannot be shown or you get a 10 second time out from their servers. Although, I found you if you open Adobe Reader ahead of looking at their statements, you can sometimes get something (and sometimes not). The next thing to address is that I cannot seem to get much stock data prior to 2001. This company went public in its present form in 2001.

A lot of the growth figures are not bad. Take for example dividend growth. Dividends were started in 2005 and over the past 4 years has increase at the rate of over 21% per year. They increased their dividends in 2010, of which I might say, many companies did not do. If you had held this company for the past 5 years, you would have made about 7 to 8% per year return. The 10 year figure is better at 12 to 13% per year.

Cash flow and revenues, two items that must have growth for a company to have growth, have not fared badly over the last while. The 5 and 10 year growth figures for revenue per share have grown by almost 8% per year and 11% per year, respectively. The 5 and 9 year growth figures for cash flow have been 8.8% per year and 16.5% per year, respectively. I guess the main thing is that this stock has taken a beating since the end of 2009 and the stock price is down some 24%. Over the same period, the TSX is down just over 2%.

The next thing to talk about is Liquidity and Asset/Liability Ratios. These ratios are quite good, as the current ones are 1.71 and 2.43 respectively. Any time these ratios are over 1.50, they are good ratios. The last thing to talk about is Return on Equity. The ROE at the end of 2009 was 15.3% and the 5 year average is 15.7%. Both these figures are very good.

Tomorrow, I will take a look at what the analysts say on this stock and look at spreadsheet ratios in connection with the stock price.

Shoppers Drug Mart Corp. is a licensor of Shoppers Drug Mart in Canada and Pharmaprix in Quebec. The company owns and operates Shoppers Home Health Care stores. It also owns MediSystem Technologies Inc. and the new Murale Stores. Its web site is here Shoppers. See my spreadsheet at sc.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Monday, June 7, 2010

Russel Metals 2

I am continuing my review of this stock (TSX-RUS) which I bought in April 2007 and I have lost 4% per year. However, the total return on this stock over the past 5 years is 11.5% and over the last 10 years is 25%. Past performance does not in anyway guarantee future performance, but I have had this stock for only 3 years and we are in a recession.

The first thing I like to look at is Insider Buying and Insider Selling. There is a very tiny bit of both with more buying. This tells us nothing. However, it would appeal that the stock options that have been granted this year seem to have been kept and this is positive. This is a widely held stock, so there is no big owner. The only negative I see is that generally, insiders have more stock options than actual shares.

When I look at the 5 year average P/E low it is quite low at just 7.2. The 5 year average P/E high is also quite a low figure at 11.4. I get earnings estimate of $1.30 for 2010 and this puts the current P/E ratio at 14. This is a rather high one for this stock, although the P/E has varied widely on this stock, it is above average. When I look at the Graham Price, the current price comes off a bit better. I get a Graham Price of $19.64 for 2010 and this is higher than the current stock price if $11.38, at just over 6%. This shows a good current stock price. There is one problem and that is the stock price on this stock is often below the Graham Price and at times, substantially.

When looking at the dividend yield, I get a current one of 5.4%. This is lower than the 5 year average of 6.6%. Also, past dividend yields have been much higher, often over 7%. This would tend to say, the current price is not a great one. The last thing to look at is the Price/Book Value. I get a 10 year average P/B of 1.33 and a current P/B of 1.39. What you want to see is a current one about 80% of the 10 year average. Part of this problem was the dropped in book value for this stock in 2009 (and another drop for the first quarter of 2010). So, this does not point to a current good price. The best thing I can say about the current price is that it is lower than it was in 2006 and 2007. So, on an absolute basis, the stock price is low, but it is not on a relative basis.

The next thing is what do the analysts say? When I look at the recommendations, I see Strong Buy, Buy, Hold and Underperform. It would seem that the consensus is a Buy with Buy and Hold being the most common recommendations. (See my site for information on analyst ratings.) Analysts seem to like this stock for the good dividend yield and feel it is reasonably safe. The main difference between the Buy and Hold recommendations is where the analysts’ feel this company will be in terms of price and earnings in 2011.

I will continue to hold the shares I have. I have no intentions of buying more at the present time.

This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors. Its web site is here Russel. See my spreadsheet at rus.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Friday, June 4, 2010

Russel Metals

I am now back reviewing my stock portfolio stocks. I bought this stock (TSX-RUS) in April 2007 and I have lost 4% per year. However, the total return on this stock over the past 5 years is 11.5% and over the last 10 years is 25%. Past performance does not in anyway guarantee future performance, but I have had this stock for only 3 years and we are in a recession. Therefore, the performance does not surprise me.

It is obvious that 2009 was not a good year for this company. There was a sharp turn down in revenues, earnings and cash flow. All these items were in negative territory. These items are expected to start recovering this year, but the recovery will take us to at least 2012.

The dividends on this stock tend to fluctuate depending on what they can pay. However, dividends are up well in both the last 5 years and the last 10 years, by 7% and 19.5% per year respectively. As mentioned already, the total return on this stock over the last 5 and 10 years is very good, and this is largely to do with the dividends paid under this stock. However, the company lowered the dividends in 2009 and they have not changed the dividends paid yet.

The book value on this stock has been growing over the last 5 and 10 years at the rate of 7.7% and 9.5% per year respectively. This is not bad considering that the book value decreased in 2009. The other good thing about this stock is the strong balance sheet. The Liquidity and the Asset/Liability Ratios are very good at 4.32 and 2.28. It is very good when these ratios are at or over 1.50.

When I look at the Return on Equity, the 5 year average ROE in 2009 is good at 13% considering there was a loss in 2009. The current one is at a still respectable one of 8.4%. The last thing to look at is the Accrual Ratio and this is generally good and low. The bad thing about this ratio for the 1st quarter of 2010 is that the earnings are higher than the cash flow from operations. What you really want to see is the reverse.

I am happy with my investment in this stock as I think that it will turn out to be a good long term investment. Tomorrow, I will look at what the analysts say about this stock and some more of the spreadsheet Ratios.

This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors. Its web site is here Russel. See my spreadsheet at rus.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Thursday, June 3, 2010

Ballard Power Systems Inc

In the late 1990’s I read about investing in small cap stock. The article said that you should invest in a basket that contained at least 5 stocks. The theory was that you could only lose what you have invested, but the sky’s the limit to what you can gain. What you needed was only about 20% or 2 in 5 stocks being successful to make money on small caps. So, I bought a number of small caps, but I never made money on any of them.

The main problem was the bear market that occurred in the 2000. None of my stock recovered from that. Take this company, Ballard (TSX-BLD, NASDAQ-BLDP), which I invested in, in 1997 and sold in 2006. I lost 5.3% per year or 38% of my investment. While, at least this stock is still around and on the stock market. I am still following this stock. I still think that fuel cells are a good idea, but I am also curious to see if they will ever make any money.

This company has a Wikipedia entry. There is also an article on the fuel cell industry today.

This company is not making any money and there has been very few years in the past when it has. Analysts’ looking at this stock talk about their sales, which was $46M in 2009. However, in terms of sales growth, it is not bad over the last 10 years with growth of 7.5% per year in US$ (but only 4% per year in CDN$). There has been no growth over the last 5 years, and sales have been declining around 11% per year (and worse in CDN$). The one way of valuing non-profit making companies is to look at the Price/Sales Ratio. What you want is a Ratio about 1.00. However, the 2009 P/S ratio is around 3.40 and the 5 year average is even worse at 7.30.

Surprisingly, there are a number of analysts who follow this stock. When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. (See my site for information on analyst ratings.) The consensus recommendation would be a Hold. No one seems to expect this stock to have any positive earnings or cash flow for 2010 or 2011, but many expect the stock price to go up from where it is currently. There is some minor Insider Selling and no Insider Buying. All the Insider Selling seems to be in connection with stock options.

It was interesting investing in small cap stocks. Most of the ones I invested in were not making any money. I am presently looking at small cap stocks that pay dividends. These stocks, in order pay dividends, by definition, have to be making money. And, who knows, maybe if the recession and bear market of 2000 had not come along and been so strong, I might have made some money on these small caps. It certainly was a learning experience and one I do not regret.

Ballard Power Systems designs and manufactures clean energy hydrogen fuel cells. Better energy, delivered through our focused fuel cell innovations, offers the Power to Change end-user applications, while also improving the environment. Its web site is here Ballard. See my spreadsheet at bld.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Wednesday, June 2, 2010

Mullen Group Ltd 2

I will continue my review a new small cap dividend paying stock (TSX-MT). I have not invested in this stock, but I like to look at recommended small cap dividend paying stock to see if they would be a possibly good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends.

The first thing I like to look at is the Insider Buying and Insider Selling reports. What I found was selling to the tune of 7.2M. However, this was by a single director, who was retiring from his directorship. This was done near the end of 2009. There was also a tiny bit of Insider Buying about one year ago. Recently, there has been no Insider Buying or Selling action at all.

When I look at the 5 year average low P/E Ratio, I get a ratio of 8.6, which is quite low. The 5 year average high P/E ratio is 17. I get a current P/E ratio of 15.3 which is based on earnings estimates and a forward P/E Ratio (for 2011) of 12.5. This P/E ratio is a bit high, but earnings are still recovering from the recession. Next, when I look at the Graham Price, I get one of $17.52. This is almost 19% higher than the current stock price. This would show a good current stock price.

Next, I look to the Price/Book Value Ratio. For this ratio, I get a current one of just 0.97. That means the current stock price is lower than the Book Value. The P/B Ratio is just 50% of the 10 year average P/B Ratio of 1.94. The last thing to look at is the dividend yield. Currently this stock has a dividend yield of 3.5%. The 5 year average is 6.5%, because this stock used to be an Income Trust. I show point out that this stock’s dividend yield was often under 2% in the past before it was an income trust. However, I think we should focus on the yield at 3.5% being a good yield for a dividend paying stock.
There is a recent article about this stock in New Technology Magazine. If you like timing the market, there is a blog entry about this stock being bullish.

When I look at analysts’ recommendations, I find recommendations of Strong Buy, Buy, Hold and Sell. There is no Underperform rating and there is only one Sell. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) I see no negative comments on this company. Even those analysts that feel now is not the time to buy, say it is a well run company. Others think that it will pick up with the oil and gas industry, and that this has started to happen. They also point to the strong balance sheet of this company.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in Western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen. See my spreadsheet at mtl.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

Tuesday, June 1, 2010

Mullen Group Ltd

What I want to do today is review a new small cap dividend paying stock (TSX-MT). I have not invested in this stock, but I like to look at recommended small cap dividend paying stock to see if they would be a possibly good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. Since the current yield is 3.5%, it is a very acceptable dividend.

What I like to mention next is that 2009 was not a great year for this company. What I should say next is that the first quarter of 2010 was not great either. However, the analysis I read expected this company to recover as the oil and gas industries do. The thing is that having mentioned the above, this stock’s 10 year growth figures are generally quite good. It is the 5 year growth figures that are not great.

The thing is, if you had this stock for 5 years, buying at an average price, you would have make some 6.3% return per year and this is not bad considering we are in a recession that is especially affecting the oil and gas industry. If you had bought this stock at the year end price, you would have made a slightly higher return of 7.5% per year. I should also point out that past results can not be to used as a guarantee of future results.

This company has issued shares to do acquisitions, so the number of shares has increased over time. This especially true of 2006, when they last did major acquisitions. This can affect the per share valuations. The worse 10 growth is in revenues and this has only grown some 6.7% per year. The problem is the low revenue of in 2009. The Cash Flow growth for the last 10 year is also low at just 8%. However, this is also due to the low cash flow for 2009.

One very good thing about this stock is the strong balance sheet. The Liquidity and the Asset/Liability Ratios are very good. These ratios are 3.35 and 2.54 respectively. For these ratios, anything over 1.50 is good. And the last thing to talk about today is the Return on Equity. The ROE was fairly good until 2009 and then the ROE came in at 7.8%. The 5 year average looks low at 7.6% because of the earnings loss of 2007. However, without this loss, the ROE would be a much healthier 12%. So this is nothing to worry about at the present.

Tomorrow, I will look to see what various analysts are saying about this stock.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in Western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen. See my spreadsheet at mtl.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.