Thursday, July 22, 2010

IESI-BFC Ltd 2

I first bought this stock (TSX-BIN) in November 2007. My total return to date is -2.3% per year. This company did not have a good year in 2009. It is not surprising, as a lot of companies did not have a good year in 2009. My negative return is also not surprising, as most stocks bought in the last 5 years would not show much in the total return category.

When I looked at Insider Trading, I am quite pleased. This stock is showing Insider Buying over the past year of $1.3M, including some very recent buying. Lately it seems that every company I have reviewed has had insider selling, so it is refreshing to see one with insider buying. There has been no insider selling under this company during the past year. Insider buying is a good sign as it signals that insiders have faith in the future of the company. There has been insider buying by the CEO, CFO, officers and directors. This is another good sign.

When looking at the average P/E ratios on this company, I have excluded the ones for 2005. That year, the earnings dropped some 70%, but the stock price went up. That made the P/E for 2005, very high. So I am looking at a 5 year low P/E ratio of 24 and a 5 year high P/E ratio of 38. Given this, the current P/E ratio, of 26 is not a bad ratio and it is pointing to a relatively good price. However, this is high ratio in absolute terms.

For 2010, I get a Graham price of $13.91. So the current stock price of $23.06 is some 66% above this. The problem with this stock is that the share price got hammered in the later part 2008 and early part of 2009, and the stock price moved quite a bit below the Graham price. Before that, the stock price was way above the Graham price. I doubt that the stock price will go as low as the Graham price in the near future, unless we go into a double dip recession.

When I look at the Price/Book Value ratio, I get a current one of 2.39 and a long term average of 1.91. So the current P/B ratio is 25% above the long term average. This would indicate that the stock price is relatively high. The Book Value decreased in 2009 and the stock price, since hitting a low in last 2008 and early 2009 has been climbing quite rapidly. Because this stock decreased their dividends when it changed to a corporation, the dividend yield is the lowest it has ever been.

When I look at the analyst recommendations, all I find are Strong Buy recommendations and Hold recommendations. I can find no other. (See my site for information on analyst ratings.) Lately, when most analysts talk about this stock, they refer to the successful recent merger with Waste Services Inc. One analyst says it is a hold because the company is more interested in growing that in increasing their dividends. The difference in Hold and Strong Buy is the expected stock price within the next 12 months that range from $22 to $28.

I will continue to hold the shares that I have at the moment and continue to track this company. However, I am not interested in buying more at the moment. I do not have a lot invested in this company at the current time.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here IESI-BFC. See my spreadsheet at bin.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.

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