Monday, December 31, 2012

Mullen Group Ltd 2

On my other blog I am today writing about being asked for money all the time continue...

I do not own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). This is a small stock that I saw recommended in 2010. 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 has converted from an income trust and has decreased it dividends.

Over the past year according to insider trading report, there was no insider selling and only $0.2M in insider buying. Both the co-CEOs have kept recently exercised options. The co-CEOs have more shares than options with one co-CEO having $53M in shares and $5.3M in options, and the other having $8.9M in shares and $1M in options.

The CFO does not have much in shares or options. The Directors have some shares and no options. Some 74 institutions hold 31% of the outstanding shares. Over the past 3 months they have reduced their shares by around 1%.

The 5 year low, median and high median Price/Earnings Ratios are 8.27, 11.94 and 15.73. The current P/E Ratio is 12.74 based on a stock price of $21.22 and 2012 earnings of $1.64. This shows that the stock price is reasonable, but not cheap.

I get a Graham Price of $19.34. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.09 and 1.35. The current P/GP Ratio is 1.10. This shows that the stock price is reasonable, but not cheap. (See my site for information on calculating Graham Price.)

I get a 10 year median Price/Book Value per Share Ratio of 1.61. The current P/B Ratio is 2.09, a value some 30% higher. This ratio suggests that the stock price is on the high side. However, the book value recently dropped due to the change in accounting rules to IFRS.

I get a 5 year median dividend yield of 4.44%. The current dividend yield at 4.71% is some 6% higher. This suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I get Strong Buy, Buy, Hold and Underperform recommendations. The consensus recommendation is a Hold. Most of the recommendations are in the Hold category. The 12 month consensus stock price is $24.10. This implies total returns of 18.28% with 4.71% from dividends and 13.57% from capital gains.

Even though analysts expect to see growth in earnings and cash flow for 2013, they seem to be cautious because this company is closely tied to the Oil Sands. They think that there is room for an increased dividend, but the company may be cautious about increasing the dividends because of uncertainty surrounding the Oil Sands. Analysts seem to think that the price will rise when this company increases the dividend. Analysts think of this company as being well managed.

However, for the company to do very well in the future oil prices need to rise and there needs to be more demand for gas. The company has recently agreed to provide oilfield services for oil and gas fields in the Northwest Territories. See truckers' forum.

There was some recent downgrades and upgrades to on this stock shown at Daily Political. The happy capitalism blogger also reviewed this stock within the past year.

This stock has a nice dividend of 4.7% and price is reasonable.

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 or StockTwits.

Friday, December 28, 2012

Mullen Group Ltd

I do not own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). This is a small stock that I saw recommended in 2010. 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 has converted from an income trust and has decreased it dividends.

In 2009, dividends were decreased some 83%. Since then they have increased the dividends every year and they are up some 233%. Their last increase was in 2011 and it was a 100% increase in dividends. There was no increase in 2012. Dividends are still some 45% lower in 2012 than at the top dividend of 2008.

It was felt that old income trusts companies would end up with dividend yields between 4 and 5%. This company is in that range with a current dividend yield of 4.2%. Dividend Payout Ratios are good with the 5 year median DPR for EPS at 61%, the 5 year median DPR for CFPS at 42% and the 5 year median DPR for adjusted CFPS at 27%.

The total return over the past 5 and 10 years is 4.12% and 13.92% per year, respectively. The dividend portion of the 5 year return is 6.06% per year and there is a capital loss of 1.94% per year. The dividend portion of the 10 year return is 6.56% per year and the capital gain portion is 7.36% per year. They have made money for their shareholders, especially over the longer term.

The outstanding shares have decreased by 0.2% per year over the past 5 years and increased by 6.42% per year over the past 10 years. Shares have increased because of acquisitions and stock options being exercised. They have decreased because of stock repurchases.

Revenue and revenue per share growth is generally good, with revenue growth at 68% per year over the past 5 years and 15% per year over the past 10 years. Revenue per share has grown at the rate of 68% per year over the past 5 years and 7.8% over the past 10 years.

Earnings per Share is down over the past 5 years by 5% per year and up by 7.6% per year over the past 10 years. This is an industrial stock, so looking at EPS on a 5 year running average, the stock does better with EPS up by 4.3% per year over the past 5 years and up by 11% per year over the past 10 years. Why I am looking at the 5 year running average is because for industrial stocks, EPS does tend to fluctuate.

Cash Flow per Share will also fluctuate. The Adjusted CFPS is up by 6% and 12% per year, over the past 5 and 10 years. The 5 year running average Adjusted CFPS is up by 8.7% and 13% per year over the past 5 and 10 years.

Book Value has not fared well over the past 5 years and BVPS is down some 13% per year. However, it is up by 7.8% per year over the past 10 years. Book value went down some 42% with the change in Accounting Rules to IFRS. If the IFRS accounting rules were used in 2010, Book Value would have increased.

For the financial year of 2011, the ROE was 17.1%. However, the 5 year median ROE was much lower at 7.8%. The financial year of 2011 was a good year and it is expected that the financial year of 2012 will be better. The ROE based on comprehensive income was the same as that for net income.

The current Liquidity Ratio is very good at 2.33 and the current debt ratio is also very good at 2.11. I like to see good debt ratios on industrial stocks because it shows they have a good chance of surviving in the bad times. The current Leverage and Debt/Equity Ratios are also good at 1.91 and 0.90.

You would buy this stock for diversification purposes. Because it is an industrial stock, earnings and cash flow will fluctuate. Most companies will try not to have fluctuating dividends. I like the strong balance sheet this company has. They are making a profit and shareholders are earning money.

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 or StockTwits.

Thursday, December 27, 2012

Stella-Jones Inc 2

First, I have reloaded the index to the stocks that I cover on my blog. You can use your mouse to highlight a line in this index.

Secondly, on my other blog I am today writing about Christmas day dinner at Azure continue...

I do not own this stock Stella-Jones Inc. (TSX-SJ, OTC-STLJF). In 2009 I had read a favorable report on this stock and decided to follow it. This company is considered to be a dividend growth company. The main characteristics are low dividend yield, but high dividend growth.

The insider trading report shows $2.3M of insider selling during the past year and no insider buying. Insider selling seems to be all the exercise of options. Options are often thought of as part of salary. The company is also buying back shares for cancellation.

Insider ownership is a bit complex, but it is at 42% of outstanding shares. As far as holding by CFO, he has $2M in shares and $3.8M in options. The CFO has $50,000 in shares in $0.4M in options. Insiders not only have options, but option like vehicles like Restricted Stock Units. Quite a number of people have these options, but there is not a great deal outstanding.

There seems to be about 32 institutions that hold 36% of the outstanding shares. Over the past 3 months they have, very marginally, decreased their holdings.

The 5 year low, median and high median Price/Earnings Ratios are 9.24, 12 and 14.73. The current P/E Ratio is 17.16 based on stock price of $76.35 and 2012 earnings of $4.45. This rather high ratio suggests that the stock price is relatively high. The P/E has been this high and higher previous when it was hitting peaks (like in 2008).

I get a Graham Price of $48.38. The 10 year low, median and high median Price/Graham Price ratios are 0.54, 0.87 and 1.07. The current P/GP ratio is 1.48 and this rather high ratio suggests that the stock price is relatively high.

The 10 year median Price/Book Value per Share is 1.85 and the current P/BV Ratio is 3.27. This current ratio is 77% higher than the 10 year median ratio and this high ratio suggests that the stock price is relatively high.

The current dividend yield is 0.84% and the 5 year median dividend yield is 1.31%. The current yield is 36% lower than the 5 year median. This low dividend yield suggests that the stock price is relatively high.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. (This is the typical recommendation for a stock.) The 12 months consensus stock price is $84.60. This implies a total return of 11.65%, with 10.84% from capital gains and 0.84% from dividends.

The Financial Post talks about a new acquisition by Stella-Jones. This is the biggest acquisition to date for Stella-Jones. One analyst mentioned that this is an infrastructure play. Daily Political talks about some analysts upgrades for Stella-Jones.

Proactive Investors talked about 2nd quarterly profits for Stella-Jones up 20% and the increase in the quarterly dividend.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella Jones. See my spreadsheet at sj.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 or StockTwits.

Monday, December 24, 2012

Stella-Jones Inc

I wish everyone a Merry Christmas. I will post next on Thursday, December 27th 2012.

On my other blog I am today writing about Dividend Growth companies and I am comparing Chesswood Group (TSX-CHW) to Stella Jones Inc.(TSX-SJ)...continue...

I do not own this stock Stella-Jones Inc. (TSX-SJ, OTC-STLJF). In 2009 I had read a favorable report on this stock and decided to follow it. This company is considered to be a dividend growth company. The main characteristics are low dividend yield, but high dividend growth.

Dividends are certainly low as the 5 year median is 1.31% and the current one is just 0.84%. Dividend growth is very good at 29% per year over the past 5 year and 24.4% per year over the past 10 years. If you bought this stock today, you could expect to have a yield on your original purchase price of 21% in 15 years with dividend increases at 24% per year. ). (See my site for information on buying Dividend Growth Stocks.)

The Dividend Payout Ratios are very good. The DPR for earnings is 15% and for cash flow is 11%. Growing companies do not like to pay out much of their earnings as they need their earnings for growth.

Total return over the past 5 years is not great and this is not surprising. This is an industrial company and would have been hit in the last recession. The total return over the past 5 years is 4.3% per year with capital gain of 3.32% per year and dividends at 0.98% per year. However, total return over the past 10 years is very good at 37.9% per year, with capital gain at 35.1% per year and dividends at 2.4% per year.

The outstanding shares have increased by 5.3% and 5.8% per year over the past 5 and 10 years. Most of the increase is due to acquisitions, but there are small increases due to stock options also.

Revenues are up 23.4% per year and 22% per year over the past 5 and 10 years. Revenues per Share are up by 17% and 15% per year over the past 5 and 10 years. Both rates of growth are quite good.

Earnings per Share are up by 14.6% and 53% per year over the past 5 and 10 years. Cash Flow per Share is up by 15% and 29% per year over the past 5 and 10 years. Book Value per Share is up 19.3% and 19.5% per year over the past 5 and 10 years. All these growth rates are also quite good.

The Return on Equity is also good with the one for the financial year of 2011 at 16.8% and with a 5 year median ROE of 16.8%. The ROE on comprehensive income is similar with the one for the financial year of 2011 at 17.7% and the 5 year median ROE at 17.4%.

All the debt ratios are very good with the current Liquidity Ratio at 5.96 and the current Debt Ratio at 2.16. The current Leverage and Debt/Equity Ratios are 1.77 and 0.77.

There is lots of insider ownership and this is probably the reason for the high debt ratios. It is an industrial stock and having high debt ratios will see it through the bad times. It is an excellent idea to my mind.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella Jones. See my spreadsheet at sj.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 or StockTwits.

Friday, December 21, 2012

Chesswood Group Ltd

I do not own this stock Chesswood Group (TSX-CHW, OTC- CHWWF). In the next paragraph is the hype for the stock and then after than I will talk about what I found.

A reader wrote me that he was researching and found a company that he hoped I could give me a brief outlook on. He said that the company is Chesswood Group (TSX-CHW) and they are basically a financial leasing company. In 2009 they increased dividends from 2.5 to 3.0 cents per month. In 2010 they increased dividends to 3.5 and to 4.0 and to 4.5. In 2011 they increased dividends to 5.0 and this year increased again to 5.5 per month. He writes that he knows I like that sort of a trend. He also said that they do not appear to have much long term debt but in 2011 seemed to really increase leasing obligations and in 2011 cash flow was negative. Currently they are yielding about 7.5%

So, let's first look at the dividends. The dividends were increased since 2009. However, what is not mentioned is that dividends were decreased by 74% over 2008 and 2009. The 5 year dividend growth rate is a negative 6.7% per year. This is not a good sign.

This company does not have growing dividends; rather the dividends have tended to fluctuate. This may change since they are no longer an income trust, but I do not know.

Next question is "Can they afford the dividends being paid?" The basic answer is no. The best year was 2010 when the Dividend Payout Ratio was 67%. It was 106% in 2011. Mostly, they either paid out too much money or they made no money to pay out. This is another bad sign.

They have done better in the Dividend Payout Ratio for cash flow per share, with the ratio around 23%. However, this stock is no longer an Income Trust and earning a profit does become important. They just increased the dividends by 10% in 2012. However, cash flow, over the past 5 years has grown at the rate of 5.72%. You cannot increase dividends faster than cash flow and EPS grows.

Next, has it made any money for the shareholders? To the end of December 2011, the total return was 6.09% per year, with 9% per year from dividends and a capital loss of 2.9% per year. Share prices are up sharply during the current year by 42.9%.

Next thing to look at is debt ratios. For this company, the Liquidity Ratios are not easy to come by as they do not give you current assets and liabilities in their statements. I was depending on others sites and doing my own calculations. Liquidity Ratios have been rather low with a 5 year median of just 1.18. Sometimes they have had good cash flow and sometimes not so much. This is not good.

If you do not have good Liquidity Ratios you need a strong and growing cash flow. This company seems to have a fluctuating cash flow. Cash flow therefore does not seem to be able to overcome low Liquidity Ratios.

The Debt Ratios are acceptable, with the 5 year median being 1.55. The current one seems to be at 1.61. A Debt Ratio of 1.50 or above is acceptable. The current Leverage is a little high at 3.14 and Debt/Equity Ratios are ok at 1.96.

It would be a plus if management had a significant ownership in this company. However, the CEO owns shares worth $0.8M (less than 1% of outstanding shares) and options worth $5.9M. The CFO has shares worth $0.3M and options worth $1.6M. The only significant ownership I can find is by Edward Sonshine who is an Advisor to the Board. He has shares worth $12.2M and almost 14% of the outstanding shares.

There does not seem to be much in the way of institutional ownership. Just under 5% of the shares are owned by 4 institutions. They have decreased their ownership by 18% over the past 3 months. This is not good.

There seems to be one analyst that is following this stock and his rating is a buy. He gives a 12 months stock price of $10.50 with 7.33% from dividends and 16.67 from capital gain. He expects sales to rise over the next two years, and with rising says he expects rising EPS. Over the past 5 years, Revenue has increased by 2.53% per year. However, revenue per share has fallen 3.51% per year. Not a great performance so far.

The future is just speculation. There is nothing in the past that supports it as far as I can see.

Chesswood Group Limited is a financial services company operating primarily in the specialty finance industry. Chesswood's approach is to acquire financial services businesses. It owns Pawnee Leasing Corporation, located in Fort Collins, Colorado, is Chesswood's largest operating company. Pawnee's assets comprise approximately 75% of Chesswood's consolidated assets. Chesswood recently added Case Funding Inc., a U.S. legal finance company, to its specialty finance portfolio. Chesswood owns of one of the larger Acura dealers in Canada, Acura Sherway, in addition to Canada's only eDealer, cars4U.com. Its web site is here Chesswood Group. See my spreadsheet at chw.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 or StockTwits.

Thursday, December 20, 2012

Methanex Corp 2

I do not own this stock of Methanex Corp (TSX-MX, NASDAQ:-MEOH). I started reviewing this stock in 2010 because I had read some good reports on it. It also got a solid "C" grade in a money sense review of stocks in November 2010. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

When I look at insider trading report I find $19.9M in insider selling and a net of insider sell at $16.8M. There is minimal insider buying. The selling is by all types of insiders and seems to be insiders are cashing in their options. There are lots of outstanding options and not only options but Rights Deferred Share Units, Rights Performance Share Units, Rights Share Appreciation Rights and Rights Restricted Share Units.

For example, the CEO has shares worth some $4M, but options worth almost $50M, the CFO has shares worth $0.5M and options worth almost $20M, and officer has shares worth $0.2M and options worth $1.3M and a director has minimal shares and options worth $1.1M.

According to NASDAQ site, 73% of the outstanding shares are owned by institutions. They have marginally reduced their shares in the 3 months prior to September 30, 2012.

The 5 year low, median and high median Price/Earnings Ratios are 10.23, 12.76 and 15.29. Using a stock price of $30.89 and a 2012 EPS of 1.98, I get a P/E of 15.59. This test suggests that the stock price is relatively high. However, the company has cash of $4.26 per share. If you subtract this cash per share from the current share price you get a P/E of 13.44. This P/E is still a bit high but better.

I get a Graham Price of $26.06. The 10 year low, median and high median Price/Graham price Ratios are 0.84, 1.03 and 1.23. The current P/GP Ratio is 1.19. This test shows that the stock price is on the high side, but it is reasonable.

The 10 year Price/Book Value per Share Ratio is 1.89. The current one is 2.03, a value 7% higher. This ratio shows that the stock price is not cheap, but it is reasonable.

The 5 year median dividend yield is 2.53%. The current dividend yield is 2.36%, a value 7% lower and shows that the stock price is above the relatively median stock price, but it is still reasonable. (Note the 10 year median dividend yield is 2.24%, a yield a bit below the current dividend yield.)

So all my stock prices show that the stock price is relatively on the high side, but it could still be considered a reasonable price.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $33.14. This would imply a 9.64% total return with 7.28% from capital gains and 2.36% from dividends.

One analysts with a buy rating thought that the strong cash flow would provide support for future dividend increase and/or share buybacks. One analyst would buy when there is a pull back to a stock price in the mid-$20s. A couple of analysts said that the company is very shareholder friendly. A couple analysts also remarked that this is a cyclical company.

Zacks said they were downgrading this stock to a underperform rating in August 2012. However, no site I saw recently said that any analyst had this stock in this recommendation category. According to Zolmak news, Zacks upgraded Methanex to a Hold in November 2012. A couple of other analysts recommended it as buy in this Zolmak news blog.

Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Head Office is in Vancouver, B. C. Canada. Its web site is here Methanex. See my spreadsheet at mx.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 or StockTwits.

Wednesday, December 19, 2012

Methanex Corp

On my other blog I am today writing about our Secular bear market... continue...

I do not own this stock of Methanex Corp (TSX-MX, NASDAQ:-MEOH). I started reviewing this stock in 2010 because I had read some good reports on it. It also got a solid "C" grade in a money sense review of stocks in November 2010. You might be interested in this link to Money Sense. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

The problem for a Canadian investing in this company is that, not only does the company report in US$, but it also pays dividends in US$. That means that if you invest in this stock in a Canadian currency account your dividends will fluctuate with the US-CDN currency exchange rate. As with a lot of companies reporting in US$, this stock has done better in US$ terms than in CDN$ terms.

This company started to pay dividends in 2002 and that year they only paid dividends for half the year. Over the past 5 and 8 years dividends have grown at the rate of 4.6% and 11.5% per year in CDN$ terms. (In US$ terms they have grown at 6.5% and 14.8% per year.)

With the low dividend yield also comes low Dividend Payout Ratios. The 5 year median DPRs are 32% for earnings and 15% for Cash Flow. This low dividend yield together with the low increase rate will not provide much in the way of a great yield on your original purchase price. So if you bought this stock today, after 10 years, you would probably be only making 4.3% on your original purchase price. This might rise to 6% in 15 years. However, it would be a decent return.

This is an industrial stock, so it has been hit quite hard during recent recessions. Over the past 5 years the total return is down by 3.76% per year. There was a capital loss of 6.07% per year. Dividend income was at 2.31% per year. However, over the past 10 years this stock's total return is 14.05% per year with 10.21% per year from capital gain and 3.84% per year from dividends. You can do well over the longer term with this stock.

The outstanding shares have declined over the past 5 and 10 years by 2.5% and 3.4% per year, respectively. This is because they have bought back shares for cancellation in a number of years in the past. There have been some years of increases lately due to stock options.

Revenue growth is not good in CDN$ with growth at just 1.6% per year and 3.8% per year over the past 5 and 10 years. Growth is better in US$ at 4.4% per year and 8.5% per year over the past 5 and 10 years. Revenue per share is, of course, better because of the decreasing number of outstanding shares. In CDN$ terms, revenue per share has grown by 4.2% and 7.4% per year over the past 5 and 10 years.

Earnings are down over the past 5 years by some 16.4% per year. They are up over the past 10 years by 11% per year. Cash flow per share is down by 6.6% per year over the past 5 year and up by just 3.4% per year over the past 10 years. Book Value per share is up by 2.9% per year and 3% per year over the past 5 and 10 years. These values are in CDN$ terms.

Because earnings do fluctuate due to the business cycle, you might want to look at EPS with a 5 year running average. In this case, EPS is still down over the past 5 years, but by less than 1% per year. EPS are up over the past 10 year by 18% per year.

Return on Equity fluctuates because this is an industrial stock and it would get hit my recessions. The ROE for the financial year ending in 2011 was quite good at 16.2%. The ROE on comprehensive income was also good and around the same at 16.7%. This shows that the earnings are of good quality.

The Liquidity Ratio is good with the current ratio at 2.73 and the one for the financial year ending in 2011 at 1.72. The 5 year median is 2.29. The Debt Ratio is also very good, currently at 1.91 and with a 1.89 value at the end of the 2011 financial year.

The Leverage and Debt/Equity Ratios are fine with the current ratios at 2.37 and 1.24, respectively. The 5 year median ratios are 2.19 and 1.15, respectively.

What I like about the company is that they have good debt ratios. This is good for an industrial company because its business will fluctuate with the business cycle. We are always going to have recession and the good debt ratios will help at these times.

This is a stock you might buy for diversification purposes. You could do well over the longer term. The company obviously thinks that it will do well in the short term as they raised dividends 8.8% in 2012.

Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Head Office is in Vancouver, B. C. Canada. Its web site is here Methanex. See my spreadsheet at mx.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 or StockTwits.

Tuesday, December 18, 2012

Magna International Inc 2

I do not own this stock of Magna International Inc. (TSX-MG.A, NYSE-MGA), but I used to. It is also a stock I have tracked for some time. I have always liked Frank Stronach, the entrepreneur who used to run this company. I held this company between September 2002 and September 2006 and earned 5% return per year including dividends. This is in the automobile industry and this has not been a great industry to invest in for some time.

The insider trading report says that there was insider selling of $22.6M and insider buying of $1M, which leaves net insider selling at $21.6M. Most of the insider selling was by officers of the company who had almost $20M of insider selling. It would seem that officers are mostly cashing in options.

Insiders not only have things call options, but other options like vehicles called Rights Restricted Stock Units, Rights Restricted Shares and Units Deferred Share Units. Insiders do own shares, but there are an awful lot of options outstanding. For example, the CEO has shares worth around $20M and options worth around $66M; the CFO has shares worth $10.6M and options worth around $108M; and an officer has shares worth $1.1M and options worth $5.5M.

As far as I can see some 230 institutions own some 67% of the outstanding shares in this company and as of September 30, 2012 they have sold some 3% of the holdings. This is a negative. Insiders also seem to be also selling shares lately.

The 5 year median low, median and high median Price/Earnings Ratios are 7.61, 10.94 and 14.26. The current P/E ratio is 9.38 based on stock price $48.14 and 2012 EPS of $5.13CDN$. This low P/E ratio suggests that the current stock price is low. (Based on US$, P/E ratio is similar.)

I get a Graham price of $66.47. The 10 year low, median and high median Price/Graham Price Ratios are 0.75, 0.90 and 1.04. The current P/GP Ratio is 0.72. This low P/GP Ratio suggests that the stock price is cheap.

I get a 10 year median Price/Book Value per share Ratio of 1.15 and a current P/B Ratio of 1.26, a value some 9% higher. This ratio suggests that the stock price is still reasonable.

I get a 5 year median Dividend yield of 1.25% and a current yield of 2.26%. This higher dividend yield suggests that the stock price is cheap. (If you look at a longer period, the 10 year median dividend yield is 1.94 and the 10 year median high dividend yield is 2.31%. In any event, the stock is reasonable on this basis.)

My stock tests generally point to a current stock price that is relatively low.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The consensus recommendation would be a Buy. The consensus 12 month stock price is $55.50. This implies a total return of 17.55% with 15.29% from capital gains and $2.26% from dividends.

One analyst thought that the stock price was currently high as no one seems to expect much in the way of growth in EPS for 2013 and that would make the PEG Ratio rather high. (PEG Ratio (i.e. Price to earnings growth ratio) is the P/E divided by the growth rate. In this case the P/E for 2013 is 9.22 and the growth is 1.7%, giving a PEG of 5.32.) Another analyst thought that investors would be better off with a smaller player in this industry rather than Magna.

Another analyst gave it a strong buy because he expects the stock price to rise some 23%; also he liked the new share structure, the recent dividend rise and the fact that Magna is buying back stocks. On analyst liked the stock because the company has a global footprint and the industry is currently experiencing growth.

Zacks research gives this stock a positive review. Jack A. Bass blogger thinks that the valuation is attractive, but growth is limited. Zolmax news commented on recent buy ratings on this stock.

Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.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 or StockTwits.

Monday, December 17, 2012

Magna International Inc

On my other blog I am today writing about REITs, Income Trusts and DRIPs... continue...

I do not own this stock of Magna International Inc. (TSX-MG.A, NYSE-MGA), but I used to. It is also a stock I have tracked for some time. I have always liked Frank Stronach, the entrepreneur who use to run this company. I held this company between September 2002 and September 2006 and earned 5% return per year including dividends. This is in the automobile industry and this has not been a great industry to invest in for some time.

Frank Stronach has been bought out so it will be interesting to see how the company does without him. It certainly does not matter if you are a Canadian or an American investor; no one has made much in investing in this company over the past 5 or 10 years. However, Canadian investors have done worse than US investors.

For Canadian investors, the total returns have been negative over the past 5 and 10 years, with losses at 4.65% per year and 2.12% per year over these periods. Dividend income over the past 5 and 10 years was at 1.42% and 1.77% per year. That leaves capital losses at 6.07% and 3.89% per year over the past 5 and 10 years.

This stock does pay dividends. However, it is an industrial stock and they pay dividends as they can afford to. This means that the dividends have fluctuated. There has been some progress over the past 5 years and dividends are up 2.89% per year. However, over the past 10 years, dividends are down by 0.58% per year.

Dividend yield is currently not bad at 2.33%. However, dividends have often been less than 1% and the 5 year median dividend yield is just 1.25%.

There has been a big change with regards to the classes of stock under this company. There used to be 2 classes of shares, Class B Multiple voting shares and Class A subordinate voting shares. As of August 31, 2010 there are only common shares. Over the past 5 and 10 years the outstanding shares have increased by 1.2% and 3.42% per year. There was a large increased in 2010 (of 7.7%) mainly because of shares issued under the plan of arrangement for Frank Stronach. Otherwise, shares have been issued because of stock options and the company has bought back shares.

As for all companies that report in US$, this stock has done better in US$ terms than in CDN$ terms. Revenue is up by 0.83% and 5.78% per year over the past 5 and 10 years. Revenue per Share is down by 0.37% per year over the past 5 years and up by 2.29% per year over the past 10 years. This is in CDN$ terms.

Earnings per share is up over the past 5 years by 9% per year. EPS is down by 1.4% per year over the past 10 years. Cash Flow per share is not as good, with CFPS up by 1.1% per year over the past 5 years and down by2% over the past 10 years. These are in CDN$ terms.

The Book Value per share performance is not great either with BV down by 1.2% per year and down by 1.9% per year over the past 5 and 10 years. This is in CDN$ terms.

The Return on Equity has improved greatly over the past 2 years. The ROE for 2011 financial year was very good 24.8%. The 5 year median ROE is much lower at just 7.7%. The ROE on comprehensive income tells a different story with improvement also in the last 2 years, but with a 2011 ROE of just 8.9%. The 5 year ROE is 8.9% also. A big difference between the ROE on net income and comprehensive income points to the fact that the net income may not be of good quality.

The Liquidity Ratio has often been a bit low as it was at the end of 2011, being just at 1.42. The current Liquidity Ratio is also a bit low at 1.43. I would prefer to see this ratio at 1.50 or higher. The Debt Ratio has always been very good as it was at the end of 2011 at 2.27. The current one is also very good at 2.23. Both the current Leverage and Debt/Equity Ratios are good at 1.82 and 0.82.

This stock has continued to recover from 2008/2009. Analysts think it was do fine for the financial year ending in 2012. The EPS and CFPS have improved over the past 9 months. The company has increased the dividends by 10% in 2012. This dividend increase points to confidence by management in the ability of the company to improve.

Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.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 or StockTwits.

Friday, December 14, 2012

Crescent Point Energy Corp 2

I do not own this stock (TSX-CPG, OTC- CSCTF). I got this idea from My Own Advisor blog.

The insider trading report is rather interesting with $10.4M of insider buying and $16.1M of insider selling, with a net selling at $5.7M. Most recently there was insider buying and it has been suggested that recent insider buying may point to good time to buy this stock. See Canadian Insider web site.

I see no options, but insiders have options like vehicles like Restricted Share Units and Deferred Share Units. And, insiders certainly own a lot of shares. For example, the CEO has $38M in shares and $11.5M in options. The CFO has $9M in shares and $6.9M in options. A director has $20M in shares and $0.7M in options. It is certainly a good sign when there is large insider ownership.

According to Reuters, there are 245 institutions that own 45% of the outstanding shares. Over the past 3 months they have increased their shares by 7%. This is a significant increase and therefore is a positive.

They have had two negative earnings years in the last 5 years, so I cannot do a Price/Earnings Ratio test. However, the P/E presently at 37.23 is a very high P/E ratio and suggests that the stock price is high. This P/E is based on a stock price of $36.86 and a 2012 EPS of $0.99. The problem with this test is that the stock is not earning much in income.

I get a Graham Price of $22.60. The current stock price of $36.86 is some 63% higher or the stock has a Price Graham Price Ratio of 1.63. A good price is when the stock price is at or below the Graham Price. This P/GP ratio suggests that the stock price not cheap.

Looking at the Price/Book Value per share Ratio, I get a current one of 1.61. A cheap stock is when this ratio is at 1.00 or lower. Obviously, this stock is not cheap. However, it does not show it as expensive either. (I did not complete the spreadsheet, so I do not know what the historical median ratio has been.)

The current dividend yield is 7.49% and this is some 12% lower than the 5 year median dividend yield of 8.57%. This lower dividend yield implies that the current stock price is relatively high. However, this stock used to be an income trust. It is expected that the dividend yields of income trusts would come down to a 4 to 5% dividend yield. This yield is higher and suggests that stock price may be low.

It is difficult to do stock tests when I do not complete the spreadsheets. However, nothing points to this stock being cheap. It is obvious that analysts feel that the stock price is reasonable. My one problem with this stock is that it cannot seem to make much in the way of profits.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold. The consensus recommendation is a Buy. (Almost every stock I review was this set of recommendations.) The consensus 12 months stock price is $47.70. This implies a 36.9% return with 29.41% from capital gains and 7.49% from dividends.

A number of analysts have suggested that the dividend is relatively safe at present. They adjust the Payout Ratio to account for the DRIP program where a lot of the dividend payment is going back to the company for the purpose of purchasing more shares. However, it is also possible that the DRIP program could cause problems in the future for the company because of the big increases in outstanding shares.

One analyst thought the dividend was safe because of today's commodity price environment. The company also has a hedge program to mitigate the price volatility. (This would imply that the company's dividend could be in danger if we hit a recession. A number of economists think we will soon.)

The Happy Capitalism blogger recently gave his analysis on this stock. He says to approach the stock with caution because of the current downward trend of the stock's price. A number of analysts mention that it is a serial equity issuer. They issue stock for their acquisitions and under DRIP. I can only find one analyst who says not to buy because he does not like the income trust structure and thinks it is unsustainable.

What I do not like about this company is that it does not seem to have the ability to make much in the way of a profit. The ROE very low (3.4% for 2011). The earnings do not even come close to covering the distributions. Looking at 2012 it is expected that the distributions will be some 287% of earnings. It may be conventional, but I like companies that can cover their distributions with their profits and this one cannot. I personally would not buy it.

I think that the risk and rewards are not in line for this company. I think that its risks are high. If we go into a recession and we always do eventually, a deep fall in oil prices could seriously damage this company. It cannot make enough in the way of profit now, what will it do in a recession. Yes, I know that so far they have produced ample rewards for their shareholders. But past results do not guarantee future results.

The Liquidity Ratio is really low. The company depends on the cash flow to cover current liabilities. When we hit the next recession this can also cause problems. Companies have gone bankrupt because of this problem. This is not like a utility that can count on cash flow, this company's cash flow will change with the price of oil and gas. The company does have a hedging program because of this problem.

I know that analysts are suggesting high total returns over the next 12 months. I do not believe it. I do understand that the company is buying assets to earn a cash flow to pay distributions. However, I think the company's real weakness is the Liquidity Ratio, but very low profits are also a problem.

I do know that with some stocks we are told that we need to valuate the companies differently using such things as Funds from Operations (FFO). However, I have been investing since the 1970's and I have heard this sort of thing before that some companies should be valuated differently. This has not always worked out.

Crescent Point Energy Corp. is a conventional oil and gas income trust with assets focused in properties comprised of light oil and natural gas reserves in Western Canada. Its web site is here Crescent Point. See my spreadsheet at cpg.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 or StockTwits.

Thursday, December 13, 2012

Crescent Point Energy Corp

I do not own this stock (TSX-CPG, OTC- CSCTF). I got this idea from My Own Advisor blog.

This company started as a junior oil and gas oil and gas company engaged in exploration for and development of oil and gas in western Canada. The stock symbols were TSX-CPG.A and TSX-CPG.B. It converted to an Oil and Gas income Trust on September 5, 2003 with stock symbol of TSX-CPG.UN. In July 2009, this company converted from a Trust to a Corporation with the present stock symbol of TSX-CPG.

When I started to review a new stock, the first question I have is "Have investors made any money?" In this case, the answer is a definite yes. Those that started with this company in 2001 have made a tremendous amount with the stock up 66.29% per year. Some 39.15% per year of this increase is in capital gains. Some 27.14% per year of this increase was in distributions. However, the company is an entirely different one from what it started out as. People interested in dividends generally do not buy junior oil and gas companies.

If you look at the company over the past 5 years, the total return is still wonderful at 31.45% per year. The distributions counted for some 10.85% per year of this return and capital gain was 20.60% per year. This is, of course, excellent.

However, past returns do not and cannot show what the future holds. I would expect the returns to be lower. One reason is that the dividend yield is coming down. Even 5 years ago, yields were in the 10% to 15% range. The current range is 5.7% to 7.4%. Yields are only half what they were just 5 years ago.

Another thing I like to check when I look at a stock to review is dividend growth. The 5 and 10 year dividend growth is at 2.8% and 4.4% per year. This is decent growth with a current yield of 7.5%. I like companies that increase their dividends yearly. This company does not do this. They seem to increase every few years, but they have not increased the dividend at all since the last increase in 2009.

If you look at what the current shareholders' yields are on their original investments 5 and 10 years ago, you get median values of 16% and 85%. However, if you look at dividend increases over the past 5 years and extend that for 5 and 10 years, you get yields on current investment of 8.6% and 9.9% after 5 and 10 years. The return on this stock is going to be a lot lower going forward.

The next thing I like to check is the balance sheet and the Debt Ratios. The Liquidity Ratio for 2011 is quite low at just 0.45. This means that current assets cannot cover current liabilities. Part of this problem is solved with the good cash flow, but even with cash flow, the Liquidity ratio is still rather low at 1.22. However, they can cover the current liabilities with current assets and cash flow.

The Debt Ratio for 2011 is far better at 3.02. This is a very good ratio. The Leverage and Debt/Equity Ratios for 2011 are also good at 1.49 and 0.49.

The next thing to look at is the Dividend Payout Ratios. For 2011, the DPR for earnings is 383%. The DPR for cash flow is better at 60%. Since this was an income trust, I look at the DPR for Funds from Operations (FFO). This is also around 60%. These are good ratios, but I do worry about the DPR from earnings. I have a couple of ex-trust stocks that are struggling to get the DPR ratios for earnings into some sort of reasonable shape. I will not buy this as I do not need another such stock.

Outstanding shares have grown a lot. In recent years the increases have been for cash, to make acquisitions and because of the Dividend Reinvestment Plan (DRIP). There seems to be a big increase via DRIP. For example in 2011, 4.17% of the 8.26 increase was due to DRIP.

The last think I looked at was return on equity. For the financial year ending in 2011 it is very low at just 3.4%. I took a look at the ROE covering the last 12 months and it is even lower at just 2.4%.

No one knows what the future holds, but I would suspect that future returns on this stock is going to be a lot lower going forward. However, with the yield at 7.5%, you do not need much capital gain to get a decent 8% per year return on this stock.

Crescent Point Energy Corp. is a conventional oil and gas income trust with assets focused in properties comprised of light oil and natural gas reserves in Western Canada. They acquire, exploit and develop high-quality, large resource-in-place assets and manage risk through a solid hedging program and a clean balance sheet. Its web site is here Crescent Poin. See my spreadsheet at cpg.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 or StockTwits.

Wednesday, December 12, 2012

FirstService Corp 2

On my other blog I am today writing about My Own Advisor blog Part 3. My Own Advisor has been blogging for a couple of years and has a lot to share with novice investors. This is a third part of my review of this blogger... continue...

I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSRV), but I used to. It is a real estate company and I originally bought it for capital gains. I kept it longer than I intended to originally because the company issued dividend paying preferred shares to shareholders in 2007. However, I did sell in 2010 as it was not really a dividend paying stock and at that time, because I had stopped working, I preferred dividend paying stock.

When I look at insider trading over the past year, I see $9.9M of insider selling and 2.5M of insider buying, with net insider selling at 7.4M. There is some $7.1M of insider selling by officers and most of this was done when the stock was at a peak in the early part of this year. Most of the buying was when the stock hit a low in June of 2012.

There are a lot of options outstanding with the CFO and officers having more options than shares. However, there is also a lot of insider ownership. For example, the CEO has some $74M of shares, plus 100% of the multiple voting shares worth around $24M. He has no outstanding options. The CEO has $5M of shares and $9M of options. One officer has $18M in shares and $9M in options. One director has $14M in shares and a small amount of options.

Reuters says that 98.5% of the outstanding shares are held by institutions and that over the past 3 months they have decreased their shares by 10%. (By the number of shares listed as owned by institutions, I get 94.6% rather than 98.5% owned by institutions.)

I get 5 year low, median and high median Price/Earnings Ratios of 11.47, 14.65 and 17.84. The current P/E is 16.30 using 2012 EPS of 1.72 and stock price of $27.72. This high P/E ratio shows that the stock price is relatively on the high side.

It is hard to know if the EPS for 2012 is the regular EPS or the Adjusted EPS. If we look at the 5 year low, median and high median P/E Ratios for Adjusted EPS, they are 12.43, 15.58 and 18.72. The current P/E is still showing that the stock price is to the high side but still reasonable.

I get a current Graham Price of $10.98 using Adj. EPS. Using the Adj. EPS in the formula, I get 10 year low, median and high median Price/Graham Price Ratios of 1.48, 1.84 and 2.32. The current P/GP Ratio is 2.39. This shows that the stock price is relatively high.

Probably the best test for the stock price is using Price/Cash Flow per Share Ratios. (There are problems in using the Price/Book Value per share and there really is no dividend yield.) I am using the cash flow for the 12 months period to September 2012. The 5 year low, median and high median P/CF Ratios are 6.66, 8.34 and 10.02. The P/CF Ratio based on current price and last 12 month CF is 10.32. This shows that the stock price is on the high side.

When I look at the analysts' recommendations I find Strong Buy, Buy and Hold. The consensus recommendation is a Buy. The 12 months stock price is $32.33. This implies a total return of 16.63% in capital gains.

One analyst with a Hold recommendation gives a 12 month stock price of $30, which is 8.23% total return in capital gains. He felt that the stock was fully valued. (This is what my analysis of the stock price also shows.) However, recent analyst's earnings estimates have been revised with the 2012 moving up from $1.54 to $1.72 and the 2013 earnings from 2.06 to 2.01.

A couple of analysts thought that this stock was undervalued. However, they also think that it is long term buy and that the company will turn around in the next few years.

I am not interested in this stock because it does not pay dividends. However, I must admit that their issuing Preferred shares to shareholders was an interesting idea. Things are looking up for this company; at least analysts think so, because they revised the EPS for 2012 up by around 12%. One negative I see is that I have a hard time valuating the company, especially after the issuance of the Preferred shares.

This company is a global diversified leader in the rapidly growing real estate services sector, providing services in the following three areas: commercial real estate, residential property management, and property services. This is an international company, having business in North and South America, Europe, Asia, Australia and New Zealand. Its web site is here FirstService. See my spreadsheet at fsv.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 or StockTwits.

Tuesday, December 11, 2012

H & R Real Estate Trust 2

Sorry, but I had published my blog entry on FirstService Corp before I realized that I had not finished off this REIT stock.

I do not own this stock (TSX-HR.UN, OTC-HRUFF). I follow a number of REITs and this stock is one that I follow. H&R Real Estate was having trouble in 2009 and decreased their dividend by 50%. They have been increasing their dividends ever since and the current one is now $1.25 per share. The company was taken off the dividend lists I followed because of the dividend decrease in 2009.

When I look at insider trading, I find 1.3M of insider buying and $8.7M of insider selling for net insider selling of $7.4M of insider selling. This is a lot. There are a lot of insider options outstanding. For example, the CEO has options worth almost $28M, the CFO has options worth around $13M and a director has options worth around $22M. The CFO and other officers have more options than shares. The CEO has shares worth almost $79M, the CEO has shares worth $0.3M and a director has shares worth $29.7M. So insiders also have a lot of money tied up in this company.

According to Reuters, there are some 145 institutions that hold 45% of the outstanding shares. Over the past 3 months they have reduced their shares by 1.7%. This is not much and does not tell us much.

I cannot use the Price/Earnings Ratios test as this company had 2 negative earnings years in the past 5 years. The 5 year low, median and high median Price/Funds from Operations (FFO) Ratios are 10.99, 12.84 and 14.02. The current P/FFO Ratio is 15.19. This high ratio suggests that the current stock price is high.

The 5 year low, median and high median Price/ Adjusted Funds from Operations (AFFO) Ratios are 11.06, 13.26 and 15.46. The current P/FFO Ratio is 18.36. This high ratio suggests that the current stock price is high.

The Graham price based on earnings is also unusable, so I have a Graham Price using the FFO. Using the FFO, I get a Graham price of $22.33. The 10 year low, median and high median Price/Graham Price Ratios are 0.82, 0.92 and 1.04. The current P/GP Ratio is 1.10. This rather high ratio suggests that the stock price is high.

I get a 10 year Price/Book Value per Share ratio of 1.69. The current P/B Ratio is 1.80 is 6% higher and this higher ratios suggests a rather high stock price.

The 5 year median dividend yield is 6.1%. The current dividend yield is 5.08% a value some 15% lower. This lower yield suggests that the stock price is high.

All my stock price tests show the same thing. The stock price is relatively higher at this point. It is relatively higher than historical median high points. Generally speaking, if you pay more than the relatively historical median price, you will not do as well over the longer term than if you wait for better entry point. (However, the price is relatively speaking, just a bit higher than historical median high price.)

The analysts' recommendations are Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 month stock price is $27.40. This implies a 12 months return of 16.46% with 5.08% from distributions and 11.38% from capital gains.

One analyst is looking at the Price/AFFO Ratio for 2014 and thinks that would be a P/AFFO of 15 and that this is a good ratio. My analysis says that this is a bit high. (There is also a problem that I see with FFO and AFFO calculations and that is the company and analysts do not always agree on what the FFO or AFFO is for a particular year.)

In an article in the earlier part of this year, Dennis Mitchell, Manager at Sentry Investments admits that that REITs are not cheap, but he says that they are more attractive than a US 10 year bond. See the article at the Financial Post. He also liked this REIT.

Investinvan blogger said he liked the occupancy rate for H&R REIT which is at 98%. See his blog entry. He is not the only one to mention this high occupancy rate as a plus for this company. Several analysts liked this company's exposure to both Canadian and American real estate. Another thought it good value.

The stock price may be a bit higher than the median high, but you cannot ignore a 5% distribution yield rate, which at the point is a very good yield.

They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H&R. See my spreadsheet at hr.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 or StockTwits.

Monday, December 10, 2012

FirstService Corp

On my other blog I am today writing about the Science Myth...continue...

I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSRV), but I used to. It is a real estate company and I originally bought it for capital gains. I kept it longer than I intended to originally because the company issued dividend paying preferred shares to shareholders in 2007. However, I did sell in 2010 as it was not really a dividend paying stock and at that time, because I had stopped working, I preferred dividend paying stock.

So, there are some complications in reviewing this stock because in 2007 the company distributed to current shareholders preferred shares. Shareholders got 20 preferred shares for each 100 shares that they owned. For people who got these shares, the return on this company is higher than for those who bought the stock later. However, the difference is not that significant.

Over the past 5 years the total return on this stock was a capital loss of 3.26% per year. Over the past 10 years, the total return would be a capital gain of 4.36% per year. For people that got the preferred shares, the 5 year total return would be loss of 1.54% per year with preferred dividends contributing 1% per year and the capital loss being 2.54% per year. Also for these shareholders, the total return over the past 10 years would be a total return of 6.77% per year, with dividends contributing 0.63% per year and a capital gain of 6.14% per year.

Another complication for this stock is that they report in US currency and they have decided to go with US GAAP rules for accounting purposes. Another complication is that they report an "adjusted" EPS as well as the regular EPS. When you look at analysts estimates, it is hard to know if they are using the adjusted EPS or the EPS. As with all companies reporting in US$, this company has done better in US$ than in CDN$.

Outstanding shares have changed marginally with shares growth over the past 5 years at 0.01% per year and share growth over the past 10 years at 0.84% per year. Outstanding shares have changed due to shares issued, stock options exercised and some shared repurchased for cancellation. Outstanding preferred shares have been decreasing at 1.5% per year over the past 4 years.

Revenue has grown over the past 5 and 10 years at 7.7% and 11.4% per year, respectively. Revenue per Share has grown at the rate of 7.7% and 10.5% per year over the past 5 and 10 years. These figures are in CDN$ as is all my figures unless otherwise stated.

The earnings per share growth is good with EPS growing at the rate of 11.8% and 9.1% per year over the past 5 and 10 years respectively. The adjusted EPS growth is not quite as good at 6.5% and 12.1% per year over the past 5 and 10 years, respectively.

The cash flow per share has grown at 6.4% and 5.5% per year over the past 5 and 10 years, respectively. What growth is not good is that for book value per share. For shareholders that got preferred shares, over the past 5 year book value has declined by 4% per year, and has grown at 4% per year over the past 10 years. Excluding the preferred shares over the past 5 years, the book value per share has declined by 19% per year.

The Liquidity Ratio is generally low with the current one be 1.17 which is typical for this stock. The Debt Ratio is also a little low but better than the Liquidity ratio with a current ratio 1.43. I rather see these ratios at 1.50 or higher. The current Leverage Debt/Equity Ratios are a little high at 5.37 and 3.75. For this company they are also a bit high as the 5 year median ratios are 3.47 and 2.37, respectively.

I do not know what to make of the Return on Equity figures. If you look at earnings for common shareholders for the end of 2011 you get an ROE of 62.2% with a 5 year median ROE of 17.6%. However, if you look at net earnings (before NCI, preferred shares) you get an ROE of 26.4% and a 5 year ROE of 12.8%. This last ROE has in the denominator the equity value of NCI, preferred shares and common shares. (However, 2011 was a very good year for this company.)

Well, the company is making money even though earnings do fluctuate. The adjusted EPS helps smooth out the earnings. Debt ratios are a bit high. They are doing better in growing the EPS than the cash flow but I think cash flow is more important. Shareholders have not been making any money recently on these shares. I would not buy again, they do not pay dividends.

This company is a global diversified leader in the rapidly growing real estate services sector, providing services in the following three areas: commercial real estate, residential property management, and property services. This is an international company, having business in North and South America, Europe, Asia, Australia and New Zealand. Its web site is here FirstService. See my spreadsheet at fsv.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 or StockTwits.

Friday, December 7, 2012

H & R Real Estate Trust

H & R Real Estate Trust

I do not own this stock (TSX-HR.UN, OTC-HRUFF). I follow a number of REITs and this stock is one that I follow. H&R Real Estate was having trouble in 2009 and decreased their dividend by 50%. They have been increasing their dividends ever since and the current one is now $1.25 per share. However, the dividends are still below those of 2008, which were $1.44 per share. The company was taken off the dividend lists I followed because of the dividend decrease in 2009.

Since decreasing the dividends in 2009, the company has been increasing the dividend several times each year. The latest increase was in October 2012 and the increase was for 4.2%. So far in 2012 the dividends have been increased by 19.1%. The dividends are down by 6.1% per year over the past 5 years and down by 1.8% per year over the past 10 years.

There was two years of earnings losses over the past 5 years, so dividend payout ratios for earnings make no sense. Except for 2009, the company is paying a lot more than earnings in distributions. The 5 year median DPR for cash flow was 47% and this is fine. The 5 year median DPR for Funds from Operations (FFO) was 61.5% and the 4 year median DPR for Adjusted Funds from Operations (AFFO) was 67%.

Well, at least investors have earned money on investing in the stock over the past 5 and 10 years. The total return on this stock is 3.8% per year and 12.48% per year over these periods. The dividend portion of these returns was 4.5% per year and 7.12% per year, respectively. Over the past 5 years there was a capital loss of 0.7% per year. Over the past 10 years, there was a capital gain of 5.36% per year.

One of the problems you get is that not everyone calculates FFO and AFFO in the same way. I looked at an analyst said that the 2011 FFO and AFFO for this stock were $1.60 and $1.36. The company said the 2011 FFO and AFFO were $1.70 and $1.49. Also what was originally called Distributable cash has morphed into FFO. Another problem is Distributable Cash and FFO calculations have changed over the years.

The outstanding shares have increased by 8% and 9.5% per year over the past 5 and 10 years. The increase for 2010 was only 1.6% with increase for the DRIP plan, conversion of Convertible Debentures and options exercised. For 2011, outstanding shares increased by 18.09% with 1.18% increase from DRIP plan, with 15.67% increase due to new share issues, with 1.02% increase because of conversion of convertible debentures and with 0.21% increase due to options being exercised.

Revenue is up by 4.4% and 11.9% per year over the past 5 and 10 years. Revenue per Share is down by 0.1% per year over the past 5 years and up by 3.92% per year over the past 10 years.

Since the Earnings per Share was negative in the financial year ending in 2011, you cannot calculate a growth rate. However analysts expect the EPS for 2012 to be positive this year. A problem is that sites are giving estimates for EPS which are really estimates, most of the time for FFO or AFFO. The FFO per Share was up by 2.7% per year and 2.4% per year over the past 5 and 10 years. The AFFO was down by 0.4% per year over the past 3 years.

Cash flow has done better with CFPS up by7.3% per year and 7.8% per year over the past 5 and 10 years. Book Value per Share growth is little coming in at a growth of just 2.2% and 2.3% per year over the past 5 and 10 years, respectively.

The Return on Equity was negative for 2011 because of the lack of earnings. It was -1.1%. The ROE on comprehensive income was similar at -1%. The ROE has been better but the 5 year median ROE is just 5.7%.

As far as the Liquidity ratios goes, I get a current one of 1.53. However, I should mention that not everyone agrees on what are current assets and current liabilities for this ratio. These assets are not separated in the financial statements. Generally speaking, the cash flow is strong for this stock. (Strong cash flow can make up for a low Liquidity Ratio.)

The Debt Ratio is a bit low at a current ratio of just 1.45. This ratio is generally low. I would prefer it to be at or above 1.50. The current Leverage and Debt/Equity Ratios are a bit high at 3.23 and 2.23, but this is generally what these ratios are for this company. (The 5 year median ratios are 3.27 and 2.24, respectively.)

The taxation on this stock is generally good with a large portion being return of capital. The average Return of Capital each year over the past 10 years is 45% of the distributions. (Of course, sometimes, return of capital is really return of capital.)

Maybe I am old fashion, but I like companies that have earnings. Earnings say a company is profitable. Some REITs actually have earnings.

They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H&R. See my spreadsheet at hr.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 or StockTwits.

Thursday, December 6, 2012

First Capital Realty 2

I do not own this stock (TSX-FCR, OTC-FCRGF). Last year a reader asked me to review this real estate stock. Also, The site Canadian Dividend Stock site mentions this company as a top Canadian REIT.

When I look at insider trading, I see that there is minimal insider buying and $4.85M insider selling with net insider selling at $4.8M. Insiders not only have options, but Deferred Share Units and Units Restricted Share Units. Insiders also have some Warrants. (See definition of Warrants at Investopedia.)

There are a lot of options outstanding and insiders have more options than shares. For example, the CEO has $20M of common shares and $39M of options. The CFO has 1.1M of common shares and $10M of options. An officer has $0.8M of common shares and $3.8M of options. A Director has $0.4M of common shares and $1M of options.

There are 102 institutions that hold 22% of the outstanding shares. Over the past 3 months they have increased their ownership by 2.8%. This is a positive.

Analysts are using AFFO and FFO in place of earnings for a P/E Ratio. This is true REITs in general. I have a 5 year low, median and high median Price/FFO Ratio 9.92, 13.92 and 16.26. I get a current P/FFO Ratio of 18.45. This ratio is based on a stock price of $18.45 and a 2012 FFO of $1.00. This rather high ratio suggests that the stock price is relatively high.

I have a 5 year low, median and high median Price/AFFO Ratio 11.27, 14.68 and 18.31. I get a current P/FFO Ratio of 21.96. This ratio is based on a stock price of $18.45 and a 2012 FFO of $0.84. This rather high ratio also suggests that the stock price is relatively high.

When calculating the Graham Price, I use the FFO rather than the EPS. This is because the recent high increase in the EPS due to the new Account Rules invalidates the Graham Price using the EPS. I get a current Graham Price of $18.73. The 10 year low, median and high median Price/Graham Price Ratios are 0.73, 0.92 and 1.11. The current P/GP Ratio at 0.99 is relatively higher than the median, but suggests that the current stock price is reasonable.

The recent big increase in the Book Value per share because of the change in accounting rules rather invalidates the Price/Book Value per share Ratio test.

The 5 year median dividend yield is 5.99% and the current dividend yield is at 4.55% , which is some 24% lower. This test suggests that the current stock price is relatively high.

The results of my tests may be slightly mixed, but do generally point to a current stock price that is relatively high.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $21.00. This implies a total return of 18.37%, with 4.55% from distributions and 13.82% from capital gains.

If you use the 2014 AFFO of $0.97 and a 12 months stock price of $21 you get a P/AFFO of 21.65. One analyst thinks that a forward P/E of 22 is a good one for this stock. I think, historically, this is a rather high P/AFFO ratio.

Gazit Canada (or Gazit Globe) owns some 46% of the common shares in this company. (It is confusing as some places it says that these shares are owned by Gazit Canada and some by Gazit Globe. However, these Gazit companies and Gazit America seem to be interconnected. Certainly, the Chairman of the Board of both First Capital and Gazit Globe is the same (Chaim Katzman).

Gazit America was taken private and the minority shareholders thought they should have gotten a better deal. See Financial Post article.

Another Israeli company, Alony-Hetz Properties And Investments Ltd. owns just over 10% of the outstanding common shares. Web site is here.

According to Forbes, this stock was named in the top 25 Canadian Stocks by Canadian Stock Channel. The top 25 stocks named by Canadian Stock Channel are here fcr.htm.

I cannot find much in the way of comments on this stock. However, it seems a number of analysts' think highly of the company. I think that its stock price is relatively high, although there seems to be a number of analysts think otherwise.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centers, located predominantly in growing metropolitan areas. Its web site is here First Capital. See my spreadsheet at fcr.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 or StockTwits.

Wednesday, December 5, 2012

First Capital Realty

On my other blog I am today writing Tax Free Savings Accounts...continue...

I do not own this stock (TSX-FCR, OTC-FCRGF). Last year a reader asked me to review this real estate stock. Also, The site Canadian Dividend Stock site mentions this company as a top Canadian REIT.

Dividend increases over the past 5 years is only at 1.03%. The 10 year increase is better at 2.92%. Times might be looking up also as the last dividend increase, for 2012 was for 5%. Investors who have held this stock for around 10 years are getting a yield on their original stock purchase price of around 9 to 11%. This is good.

The Dividend Payout Ratios for earnings was very high (300%) until the company changed to the IFRS account rules. Since then the DPR for earnings is the 42% neighbourhood. The DPR for cash flow has been around 79%.

Total return is at 4.83% for the last 5 years with 4.90% coming from distributions and with a capital loss of 0.07%. The total return for the last 10 years is at 14.74% with 7.05% from distributions and 7.69% from capital gain.

The number of outstanding shares has been increasing with the increase being at 8% per year over the past 5 years and at 22% per year over the past 10 years. Outstanding shares increased by some 9% in 2011 with 0.06% from new issues, 0.76% from interest on convertible debentures, 7.74% from conversion of convertible debentures and 0.48% from stock options. The increase for the first 9 months of 2012 is even higher at 15.7%.

Revenue has increase by 9.6% and 14% per year over the past 5 and 10 years. However, revenue per share is a lot different because of the increasing number of outstanding shares. Revenue per share has increase by 1.4% per year over the past 5 years and has decreased by 6.4% per year over the past 10 years.

Because Earnings per Share was bumped up by around 960% in 2011 with the new accounting rules it looks like EPS has really increased. For real estate companies, analysts look at the Funds from Operations (FFO) and most recently at Adjusted Funds from Operations (AFFO).

I have FFO per share figures from last 5 and 10 years and the FFO has gone down by 0.6% and 0.2% per year over these time periods. For AFFO per share, I only have figures for 5 years and AFFO has gone up by 1.4% per year over the past 5 years.

Cash flow per share is not much better with CFPS increasing 1.1% per year over the past 5 years and down by 4.2% per year over the past 10 years. It is hard to how to judge the book value per share because there was a big bump up in book value (95%) with the new accounting rules. Book Value is down 2% per year over the past 5 years, but up 12.4% per year over the past 5 years.

Return on Equity was running around 3 to 6% until this years and the big bump up in earnings caused it to be 21% for the financial year of 2011. The ROE on comprehensive income is the same at 21% for 2011.

As far as debt ratios goes, the Liquidity Ratio has never been that great. The current one is 1.30. The one for the financial year of 2011 was 0.47. If the ratio is below 1.00 it means that current assets cannot cover current liabilities. If for the financial year of 2011 you exclude the current portion of their debts the ratio is better at 1.22. (However, I like to see the ratio at 1.50 or better.)

The Debt Ratios have been generally ok and they are good for the financial year ending in 2011 at 1.66 and currently at 1.81. The current Leverage and Debt/Equity Ratios are ok at 2.24 and 1.24.

It would be nice to see some growth per share with this company. As an investor you buy shares and it is really the per share values that count.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centers, located predominantly in growing metropolitan areas. Its web site is here First Capital. See my spreadsheet at fcr.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 or StockTwits.

Tuesday, December 4, 2012

Finning International Inc 2

I do not own this stock (TSX-FTT, OTC- FINGF). I am following this stock as it is a dividend paying stock and it is on the Dividend Aristocrats list, (see indices). I do not own any of this stock as the company is quite similar to Toromont Industries Ltd (TSX-TIH, OTC-TMTNF), which I do own.

When I look at insider trading, I find a minimal of insider buying and lots of insider selling. Insider selling is at $2.7M and net insider selling is at $2.4M. Insiders not only have options, but other option like things like Units Deferred Share Units, Rights (Share Appreciation Rights) and Performance Share Units.

There does seem to be a lot of outstanding options. For example, the CEO has around $4.3M in common shares and $22.8M in options. An officer has some $0.3M in common shares and $4.2M in options.

There are some 153 institutions holding 39% of the outstanding shares. Over the past 3 months they have increased their ownership by 4.9%. This is a positive.

The 5 year low, median and high median Price/Earnings Ratios are 13.18, 18.50 and 21.90. The current P/E Ratio is 11.93 based on a stock price $22.79 and 2012 earnings of $1.91. This shows that the current stock price is relatively cheap.

The current Graham Price is $19.13. The 10 year low, median and high median Price/Graham price Ratios are 1.18, 1.45 and 1.62. The current P/GP Ratio is 1.19. The low Ratio shows that the stock price is relatively reasonable. Earnings are expected to jump for this year. However, if we use last year earnings, the P/GP is 1.34. This good ratio still shows that the current stock price is reasonable.

The 10 year Price/Book Value per Share Ratio is 2.46. The current P/B Ratio is 2.68 a value 9% higher. The current ratio points to a reasonable to slightly high stock price. The problem with this test is the book value has been declining lately.

The 5 year median dividend yield is 2.09% and the current dividend yield is almost 18% higher at 2.46%. This test shows that the stock price is cheap.

There is mixed results on my stock price testing. However, the dividend yield is an important test, so the stock price is probably cheap or reasonable to cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Underperform. The most recommendations in in the Buy category and the consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The 12 month stock price is $31.40. This implies a total return of 40.24%, with 2.46% from dividends and 37.78% from capital gains.

One analyst gave this stock a buy rating as he thought the stock price was good. Some analysis points to improving EPS. This is true as the EPS was $1.51 in 2011 and the 12 month EPS to September 2012 is at $1.76. One analysis points to the low P/E and high dividend yield as proof that investors have low expectations for this company.

One analyst suggested that this stock would be a bet on an improving economy. Peter Kennedy on Stock House has a bearish stance on Caterpillar and this company. The Happy Capitalism site has some interesting things to say about the stock and feels caution is in order. However, the Apprentice Millionaire puts up a buy rating at the end of October on this stock.

It is interesting that Bar Chart says that technical indicators point to a sell.

Stock price is good. You can do well in the long term to buy a stock you want to own at a relatively low price. This stock's improvement probably does depend on an improving economy. However, it is difficult to predict what the economy is going to do.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning. See my spreadsheet at ftt.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 or StockTwits.

Monday, December 3, 2012

Finning International Inc

On my other blog I am today writing my friend Kathleen's new art show...continue...

I do not own this stock (TSX-FTT, OTC- FINGF). I am following this stock as it is a dividend paying stock and it is on the Dividend Aristocrats list, (see indices). I do not own any of this stock as the company is quite similar to Toromont Industries Ltd (TSX-TIH, OTC-TMTNF), which I do own.

The company has a good record of dividend increases. The dividend growth over the past 5 and 10 years is at 13% and 18% per year, respectively. Although, when the company first started to pay dividends, they did not do much in the way of dividend increases until 2002. Also, dividend increases have slowed down since 2009 and the latest increase for 2012 was for 7.7%.

The Dividend Payout Ratios are good with the 5 year median DPR for earnings at 34% and the DPR for cash flow is also around 34%. The DPR for earnings is expected to be around 29% for 2012 and the DPR for cash flow around 17% for 2012.

The 5 year median dividend yield at 2.1%. The current dividend yield is 2.46%. Over the years, the dividend yield has often been lower than 2%.

For people who have held this stock for the last 15 years, the dividend yield on their original purchase price would be in the 7 to 8% range. At the current rate of increases, it would seem that holding this stock for the next 15 years would get you into this range.

Total return is low for the past 5 years, coming in at 0.45% per year. The dividend's return was at 1.9% per year. That means that there was a capital loss of 1.45% per year over this period. The 10 year return is better at 10.4% per year. The dividends returned 2.1% per year. There was a capital gain of 8.31% per year.

The outstanding shares have decreased over the past 5 years at rate of 0.9% per year and have increased over the past 10 years at the rate of 1.2% per year. In recent years there has been some increase in shares due to stock options being exercised. In the past they have done some repurchasing of shares, but they have not done this recently.

Revenue has increased over the past 5 and 10 years at the rate of 4% and 6.1% per year, respectively. Over the past 5 and 10 years Revenue per Share has increased by 4.9% and 4.8% per year, respectively. (The difference between these two is of course because of the change in outstanding shares.)

Earnings per Share are up by 6% per year over the past 5years and up 8.5% per year over the past 10 years. The cash flow per share did not do as well as CFPS is down by 3.3% per year over the past 5 years and only up by 3.2% per year over the past 10 years.

Book Value per Share growth is low also, with BV declining some 2.9% per year over the past year and going up 4.4% per year over the past 10 years.

The Return on Equity for net income for the financial year of 2011 was 19.3%, a good ROE. It has been lower in the last few years and the 5 year median ROE is 12.3%. The ROE on comprehensive income for the financial year of 2011 was 16.8%. The 5 year median ROE for comprehensive income is quite low at 7.9%. Ideally, you might want these ROE values to be closer.

The Liquidity Ratio is generally good, with the current one at 1.55 and the one for the 2011 financial year at 1.59. The Debt Ratio is ok with a current one at 1.41 and the one for the 2011 financial year at 1.49. The 5 year median Debt Ratio is better at 1.62. Ideally, these ratios should be at 1.50 or better.

The Leverage and Debt/Equity Ratios are ok at 3.41 and 2.41and relatively higher than in the past as the 5 year median ratios are 2.76 and 1.76, respectively.

The company has a fair bit of debt, but they are getting loans at reasonable rates and they have used some of this money raised to purchase acquisitions. However, this is an industrial stock and it has not been a great market for industrial stocks since the last recession. Comparatively, this stock has not done badly.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning. See my spreadsheet at ftt.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 or StockTwits.