Investment Talk with SPBrunner

TRANSFORMATIONS 2012

2012-01-28T18:02:00.000-05:00

Artists are:

Ethel Christensen

Kathleen Gabriel

Stephanie Ledger

Cathy McPherson

Malgorzata Pienkowski

Show runs:

January 30 – February 12

Opening Reception:

Please join us for the opening reception with jazz guitarist Lawrence Papoff and violinist Molefe Mohamid-Mitchell: Friday, February 3rd, 6-10 p.m.

ART SQUARE GALLERY

334 Dundas Street West, Toronto

(Located across from the Art Gallery of Ontario)

Gallery hours: Monday to Sunday 10am – 11pm

Just Energy Group

2012-01-27T18:00:00.002-05:00

I do not own this stock (TSX-JE). They used to be an Income Trust company called Just Energy Income Trust (TSX.JE.UN), and before that they were Energy Savings Income Fund (TSX-SIF.UN). They have a Wikipedia entry.

I must admit, I wonder at the viability of their business model. Just Energy's business involves the sale of natural gas and/or electricity supply to residential and commercial customers under long term fixed price. The company derives its profit from the difference between the price at which it is able to sell the commodities to its customers and the price at which it purchases them from its suppliers.

For its customers, it seems the choice is lower, but variability rate or a fixed and higher rate. Sometimes the fixed rate is much higher. Why would anyone go the fixed rate when it is a higher rate. It has to be higher rate because if it is not, Just Energy could not make any money. Personally, I would never go for a higher fixed rate.

It would seem that to get people to sign up, the company sales men have been less than honest. The complaints seemed to have slowed down, but maybe they have just switched media. See article in the Toronto Star dated May of 2010. I cannot find print online complains later than May of 2010. However, there are more recent ones on YouTube dated January 15, 2011.

So, what are they doing for their shareholders? Well, they have not raised the dividend since 2009. However, I must admit that most companies that went from Income Trusts to corporations haven’t either and a lot have lowered their distributions. And, the dividend yield is very good at 10.5%. That is higher than a lot of converted income trust companies.

On the down side, the Dividend Payout Ratios are very high. The 5 year median DPRs for earnings is 81% and for cash flow is 110%. The DPR for the financial year ending in March 2011 were lower for earnings at 33%, but not for cash flow at 110%. The DPR for Cash Flow minus the working capital is still high at 88%. For the financial year ending in March 2012, the corresponding DPRs are expected to be 167% for earnings and 88% for cash flow.

Their paying out too much in dividends is showing up in the Book Value. The Book Value turned negative in 2009 and has been negative ever since, although it is improving, if you can say that about a negative Book Value. In 2009 the book value was a negative $6.38 and it is currently a negative $1.58.

There are some bright spots. The revenues have been increasing nicely, with revenue per share up 14% and 29% per year over the past 5 and 10 years. The EPS is showing growth of 50% per year over the past 5 and 10 years, however, it would appear that earnings for the last financial year of March 2011 was usually high, so growth might be really be in the range of 9% and 33% per year over the past 5 and 10 years. This is still good. Cash flow has also been increasing nicely at the rate of 8% and 20% per year over the past 5 and10 years.

However, there are other negatives. Take debt Ratios. The current Liquidity Ratios is 0.67. This means that current assets cannot cover current debts. If a company has a good cash flow, this is not so problematic. The usual thing to look at is Cash Flow after dividends. However, this Ratio is also extremely low at 0.68. Not much improvement. The current Asset/Liability Ratio is also very low at 0.88. (Assets cannot cover liabilities.)

I cannot do any book value/debt type ratios as the company has a negative book value. So I looked at Debt and Cash Flow. The current Debt/Cash Flow Ratio is 9.39. You do not really like to see this over 2.00.

When I look at insider trading, I find insider selling at $4.2M and minimal insider buying. The selling all occurred at a relatively high point early in 2011 and the buying at a relatively low point in October 2010. There are 60 institutions that own 23% of the shares of this company. There has been buying and selling over the past 3 months and they have increased their holdings by 2.5%.

What do the analysts say? Well plainly they do not have the reservations about this company that I do. I can only find Strong Buy, Buy and Hold recommendations. They like the fact that the company has been expanding into long term variable –priced contracts and green energy products. They admit that the company has some challenges, but like the great dividend yield and feel the current stock price is attractive.

There may not be any sell recommendations, but there are some Don’t Buy recommendations. These analysts are worried about the dividend sustainability, about the weak balance sheet and business plan sustainability. (I pointed out the weak balance sheet when talking about debt ratios above.)

However, analysts giving buy recommendations like the dividend and feel it is sustainable. One buy recommendation came with a 12 months stock price of $14. The consensus recommendation is a Hold with a 12 month stock price of $13.17.

Personally, I like long term investing and why buy a company that has lots of problems when there are other great companies to buy. I would not buy this. I do not like the weak balance sheet. I do not like the negative book value. I do not like all the complaints about their selling tactics. I do not like to buy companies that people have complained about how they operate.

Just Energy’s business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The company also offers “green” products through its Just Green program. Through its subsidiary Terra Grain Fuels, the company produces and sells wheat-based ethanol. Its web site is here Just Energy. See my spreadsheet at je.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.

Jean Coutu Group

2012-01-26T16:22:00.002-05:00

I do not own this stock (TSX-PJC.A), but I used to. I bought this stock in 2000 and 2004 and sold in 2007. I made 7.4% per year. The dividend portion of this return would be 1.1% per year. The thing was that they had bought some drug stores in the US and they were not doing well. This was the Eckerd drug stores they bought in 2004. In June of 2007 they sold these stores of Rite Aid in return for a share in Rite Aid.

When I sold in 2007, I felt that the company would not be doing anything for a while. They hit their peak in 2006 and have never recovered. Stock price is back to where it was in 2001 and that was a down year for the company and for the market. When I bought the stock, I bought it was a dividend paying growth stock. The dividend yield was below 1%, but it was increasing fast.

If you had held this stock over the past 5 and 10 years, you would have lost money. It is down about 2% per year including the dividend which was running around 1.5% per year. Since median price in 2005, this stock has lost 26% of its value over these 7 years.

They had stopped dividend increases in 2005 and 2006, but then started to raise the dividends again and have a good record of dividend increases with the 5 and 10 year growth in dividends at 14% and 11% per year, respectively. This is a consumer stock and lots of them have very low dividend yields, very low Dividend Payout Ratios and high dividend increase rates.

When I first bought this stock in 2000, the DPRs were 14% for earnings and 9% for cash flow. These DPRs were in the 30% range for earnings and 25% for range for cash flow for the 2011 financial year ending in February 2011. They are expected to retreat a bit in 2012 financial year to around 27% for earnings and 21% for cash flow. But as you can see, the increases come with higher DPRs. Not what you want to see.

Book Value has suffered greatly in recent years with Book Value being down by 18% and 4% per year over the past 5 and 10 years. One seemly bright point is the increase in earnings of 12% and 5% over the past 5 and 10 years. However, the 5 years measure is from an earnings low point, so is not as great as it initially appear s to be. Earnings are back to where they were in 2004.

Revenue has changed form from sales to Franchise revenue, so by this later measure it is up by around 6% per year over the past 5 years. Revenue is shown as being down on my spreadsheet, because you cannot compare sales figures to franchise figures as they are very different sorts of revenue.

When I look at the insider trading report, I find minimal insider buying and minimal insider selling, with a net of insider selling. Lots of insiders have options of different sorts. Jean Coutu pretty much owns all the B shares which are multiple voting shares. He has a lot of money invested in the company, around $1.5B.

When you look at analysts’ recommendations, there are Strong Buy, Buy and Hold ones. There are a lot of Hold recommendations and the consensus would be a Hold. There are no sell recommendations, but there are some Don’t Buy recommendations, which really do not fit into the current analysts’ recommendation format.

No one expects significant gains in stock price within the next 12 months and dividend is still low at 1.8%. A number of analysts do not like the fact that they still have an interest in Rite Aid. The buy recommendations tend to say how good consumer stable stocks are going to do over the next while and therefore company is a buy. (However, they do not say anything positive about this particular company.)

The 5 year median low and high Price/Earnings Ratios are 10.62 and 13.16, so the current P/E of 15.1 looks high. Since Book Value has been going down, this current Price/Book Value Ratio is way about the 10 year median P/B Ratio. The dividend yield at 1.81 is below the 5 year median dividend yield of 1.88. These tests point to rather high current stock price.

The only test to point to a reasonable price is the Graham Price. I get a Graham Price of $7.44 and the current stock price of $13.27 is some 43% higher. The median difference between the Graham price and stock price is the stock price being some 87% higher.

Personally, I do think that consumer stable stocks should start of do better, but I also think that there are better ones to invest in. They really haven’t recovered from their Eckerd adventure in the US.

The Jean Coutu Group operates a network of 343 franchised drugstores in Canada located in the provinces of Québec, New Brunswick and Ontario (under the banners of PJC Jean Coutu, PJC Clinique and PJC Santé Beauté). The Company also holds a significant interest in Rite Aid Corporation (‘‘Rite Aid’’), one of the United States’ leading drugstore chains with approximately 5,000 drugstores in 31 states and the District of Columbia. Controlling shareholder is Jean Coutu. He has 55%, but has 92.5% voting control.
Its web site is here Jean Coutu. See my spreadsheet at pjc.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.

Home Capital Group

2012-01-25T15:36:00.000-05:00

I do not own this stock (TSX-HCG). This stock falls into the financial category and it is one financial that has done well though our recent problems. This company has a rather low dividend, but it increases at a very fast clip. The 5 year median dividend yield is 1.51, however, the 5 and 10 year growth in dividends is 23% and 31%. However, the dividend increases have been falling lately, with the last one in 2011 at just 11%.

The Dividend Payout Ratios are correspondingly low at a 5 year median rate of 14% for both earnings and cash flow. Total returns over the past 5 and 10 years have been at around 9% and 26% per year. The portion attributable to dividends would be around 1.5% to 1.8% over the past 5 and 10 years. The 10 year figure is higher for dividend, because the growth in dividend over the past 10 years was much faster than over the past 5 years.

Outside of known dividend and stock price for 2011, I am using the last annual statements of Dec 2010 to commend on other growth. For this company it has been increasing its revenues quite fast also, with revenue per share up 16.6% and 20.5% per year over the past 5 and 10 years. Their revenues so far this year have beaten last year’s revenue.

Cash Flow growth is also good, with the 5 and 10 years at 20% and 22% per year. Book Value has also grown well at 27% and 29% per year over the past 5 and 10 years. With the change in accounting rules to IFRS, book value has come down, but less than 2%.

Current Asset/Liability Ratios at 1.04 is rather typical of financial companies, as is the current Leverage and Debt/Equity Ratios of 10.39 and 9.39. These last two ratios have been coming down recently as their 5 year median values are 14.52 and 13.52 which is good. However, the Asset/Liability Ratio has recently gone down from a 5 year median value of 1.08 and this is not so good.

Over the past year there has been $6.5M of insider selling and a minimal amount of insider buying. Selling has been by CEO, officers and directors (not CFO). Both the CEO and directors have more shares than options. It is only the CFO and officers that have more options and both also have little in the way of shares.

Some 59 institutions own some 27% of the outstanding shares. Over the past 3 months they have marginally increased their holdings (by less than 2%).

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The overwhelming recommendation is a Buy and that is the consensus. This buy comes with a 12 months stock price of $63.89. Many analysts feel that this is a well-run company. However, please note that they do have some uninsured mortgages (sub-prime mortgages).

This stock has always had rather low Price/Earnings Ratios. The 5 year median low and high P/E ratios are 7.44 and 10.78. The current P/E of 8.3 is between the median P/E and low P/E ratios. I get a Graham Price of 54.91 and the current stock price of $52.77 is some 4% lower. The median difference between the Graham Price and stock price is the stock price being some 23% higher.

I get a 10 year median Price/Book Value Ratio of 3.44 and a current one of 2.33, which is some 68% lower. The current dividend yield of 1.52 is just above the 5 year median of 1.51. However, this dividend yield has been lower in the past with a 10 year median dividend yield of just 1.05%. All of these tests except the last one point to a very good price. The last one points to a reasonable price.

To me this looks like a good stock to hold. The reason I do not is because I already have too much invested in financials at the present time. I will not be selling most of my financial, especially my life insurance ones as I expect them to recover very well over the longer term. At some point I will have too much in banks and life insurance companies when these areas recover. So, I might consider selling some other financials in the future and maybe take another look at this one.

Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages.
Its stock is widely held. Its web site is here Metro. See my spreadsheet at hcg.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.

Great-West Lifeco Inc

2012-01-24T16:03:00.002-05:00

I do not own this stock (TSX-GWO). However, I own its parent stock of Power Financial (TSX-PWF). The ultimate parent company is Power Corp (TSX-POW). I had owned for many year IFM Financial, another stock of the Power Financial family, but recently sold it and reinvested the into Power Financial as a way to rationalize my portfolio.

The Power Financial Corp is a company that has many fine financial companies under its umbrella. As with all the companies under Power Financial Corp, this company pays good dividends. The 5 and 10 year growth in dividends is still at 5.8% and 12.2% per year despite the fact that the dividends have not been increased since 2009.

All life insurance companies are having a current hard time because of the low interest rates. It is hard to say when this will change. The current 5 year median Dividend Payout Ratios are 70% and 25% for earnings and cash flow. I would suspect that they will have to go lower for the dividend to increase. The expected DPRs for 2011 will be around 63% and 22% for 2011, which is lower than the 5 year median rates, but I do not think quite low enough for a dividend increase.

If you had held this stock over the past 5 years, you would not have made any money, despite the fact this the company was paying you dividends worth 4.3% per year. Over the past 10 years, you would have made between 6 and 7% per year, with dividends payments some 4.5% of your return.

Since the annual statements for December 2011 are not in, I am dealing with those from December 2010. Revenues are up somewhat over the last 5 and 10 years. Revenues per shares have growth of 3.4% and 4.4% per year over the past 5 and 10 years. Growth in revenues this year is expected to be slightly negative.

Earnings growth over the past 5 years is negative and over the past 10 years is up just 7.6% per year. EPS is expected to growth around 12% for 2011. Cash flow growth over the past 5 and 10 years is 6.6% and 7.2% per year. Cash Flow is expected to come in lower in 2011.

Book Value growth has also been low recently, especially the last 5 years at 4.5% and 9.5% per year over the past 5 and 10 years. However, Book Value is expected to be up sharply in 2012 under the new accounting rules.

This is a financial company and as such the debt ratios are different than a lot of companies on the TSX. The current Asset/Liability Ratio is 1.11 and the current Leverage and Debt/Equity Ratios are 11.41 and 10.25. These are what you expect.

When I look at insider trading, I find some $5.5M of insider selling and some $16M of insider buying. All the selling occurred before April 2011 and the buying occurred later. All the selling was by the CFO and officers of the company. All the buying was by directors. For this company, CEO, CFO, officers and other employees have lots more stock options than shares. It is the opposite for the directors.

There are institutions that hold shares in this company, but they hold only 6.4% of the shares. Over the past 3 months they have bought and sold shares in this company and have reduced their ownership by just over 8%. (Note that this company’s is mostly owned by Power Financial Corp.)

I get 5 year median low and high Price/Earnings Ratios of 12.55 and 16.34. The current P/E ratio of 10.48 is therefore low. (However, note that in other financial crisis, Life Insurance companies and banks go P/E ratios below 9.00 at lowest points, so this stock may not yet be as low as it can go.)

I get a Graham Price of $26.63 and a current stock price of $22.43. The current stock price is some 15% lower than the Graham Price. The stock price for this stock has seldom been below the Graham Price and the 10 year median low difference is the stock price being 24% higher than the Graham Price.

I get a 10 year median Price/Book Value Ratio of 2.96 and a current one of 1.39, which is just under 50% of the 10 year median ratio. The current dividend yield of 4.48 is some 17% lower than the 5 year median of $4.65. However, the last few years have seen the dividend yield much higher than historically, where the historic dividend yields has been closer to 3%.

By all measures, the current stock price is low, but it is low for a good reason. Life Insurance companies are not doing well and people do not expect them to do well for some time. However, this could mean that buying them for the long term can be smart, as long as the companies have no trouble recovering, and it would seem that most Canadian Life Insurance companies will recover.

When I look at analysts’ recommendations I find Strong Buy, Buy, Hold, Underperform and Sell. It all depends on your perspective. No one expects this company to recover quickly, but everyone expects it to at some point. The consensus recommendation is a Hold. With a Hold recommendation comes a 12 month stock price of $24. Analysts believe that the current dividend is safe and that it has done better than other life insurance companies in Canada. Even an analysts with a do not buy rating says he thinks that the stock is oversold.

So, if this stock is a buy or not depends on your objectives. It will not recover in the short term, but everyone thinks it will in the longer term.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West. See my spreadsheet at gwo.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.

EnerCare Inc

2012-01-23T16:06:00.000-05:00

I do not own this stock (TSX-ECI). This used to be Consumers Water Income Fund (TSX-CWI.UN) and it converted to a corporation as EnerCare (TSX-ECI). In 2010, it dropped its distributions by almost 50%. Prior to becoming a corporation, they did have some distributions increases. Also, a hopeful sign is that they have increased the dividends by 1.9% for the first one due to be paid in 2012.

One of the problems I see is that they are not making much in the way of earnings. They earned just $.01 in 2010 and are expected to earn just $.10 this year. Next year, analysts expect that earnings will turn negative. They are paying out, of course, more than they are earning. This tends to affect the book value, which has gone steadily down. (Over the past 5 and 10 years, the book value has been decreasing at the 14% and 13% level each year.)

Decrease in Book Value is generally due to paying out more in dividends than the company can afford too. This certainly appears to be the cases over the last few years. To me it is not a good sign that they increased the dividends. I personally prefer companies that do not payout dividends when they cannot afford them. However, management may feel that earnings and cash flow is looking up when the analysts do not see this.

Their Dividend Payout Ratios as regards to cash flow has been much better. The 5 year median DPR for cash flow is 44% and is expected to be in the range of 30% this year and next year. However, cash flow has not been growing over the past 5 and 7 years. It has just been going up and down. It hit its peak in 2008, which really coincides with the latest bear market, so they may do better in the future.

If you had been invested in this stock, you would not have made much money over the past 5 years as the total return is around 1.5% per year. This is in spite of the fact that the dividends earned during this period was around 8.6% per year. However, if you held the stock for 10 years, you would have made a total return of 10.2% per year. The dividends would have been around 11% per year, so you would have lost in capital gain, but got a return in distributions.

The bright point is there has been a modest increase in revenue. The revenue has increased over the past 5 and 10 years at the rate of 6.8% and 6% per year, respectively. The revenue per share has increased over the past 5 years at the rate of 4.8% and 4.5% per year, respectively.

When I look at insider trading I find very modest insider buying and no insider selling. Basically the CFO and officers have more options than shares. This is not true for directors and CEO. Some 16 institutions own 20% of the stock of this company. Over the past 3 months they have only bought more shares and have increased their shares by around 12%.

There are not many analysts following this stock. The analysts’ recommendations I found where Strong Buy, Buy and Hold. The consensus recommendation would be a Buy.

I cannot not get a fix on a Price/Earnings Ratio because of this company’s lack of earnings. The Graham price is going down and is currently at only $2.30. The stock price at $9.60 is some 317% higher. The 10 year median high difference between the stock price and Graham Price is the stock price being 153% higher. This does not show a good stock price.

Since the book value has been moving down, the current Price/Book Value Ratio is, at 3.93, a rather high value. Also this is some 78% above the 10 year median P/B Ratio of 2.21. The current dividend yield at 6.88% is lower by 38% of the 5 year median dividend yield at 11.2%. In other words, my usual stock price tests do not help too much.

One report I found with a buy, gives a 12 month stock price of $10.00. The report was looking at EBITDA margin and Free Cash flow. See Investopedia for a definition of EBITDA margin. Also, see Investopedia for a definition of Free Cash Flow.

A number of analysts mentioned the very good dividend. Also a number mentioned that some regulatory constraints will come off next year and this should help the profitability of this company. A couple of Hold recommendations were made because the recent run up in stock price.

I do know that my stance that company should pay out dividends only as they can afford to could play havoc with my income. However, my experience has been that my dividend income overall has always increased, even though some companies I hold decrease, suspend or do not increase their dividends. I think this is because I have a variety of companies and they are not all in the same business cycle at the same time. I also realize that companies are often heavily punished when they decrease dividends or suspend them, but I find this action illogical. I am a long term investor and I want my companies to act prudent for the long term health of the companies I invest in.

EnerCare Inc owns a portfolio of waterheaters and other portfolio assets, which they rent to primarily residential customers. They rent out waterheaters in the GTA and southern Ontario. EnerCare also owns EnerCare Connections Inc., a leading sub-metering company, with metering contracts for condominium and apartment suites in Ontario, Alberta and elsewhere in Canada. Its web site is here EnerCare. See my spreadsheet at eci.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.

Dorel Industries Inc

2012-01-20T16:47:00.000-05:00

I do not own this stock (TSX-DII.B), but I used to. I started to follow it because it was on the Investment Reporter list of stocks. I bought the stock in 1999 and 2000 and sold it in 2006. I lost 7.8% of the value of my investment. At the time, I did not see that the stock would be going anywhere anytime soon, so I sold.

This was not a dividend paying stock at the time that I held it. However, in 2007 the company started to pay dividends. They were quite low at first, just over 1%. The current dividend rate is 2.34% and the year median rate is 1.68%. The median dividend yield is rather low. However, dividend growth has been good at 12.7% per year over the past 5 years.

What about total return? Well, basically shareholders have not been making any money for the past 5 and 10 years. Share price is back to where it was in 2000 and 2001. The stock price seems to peak in 2004 and has not made it back to that peak yet. It was recovering in 2010, but stock price has fallen down a fair bit in 2011.

The portion of the total return attributable to dividends is less than 1% over the past 10 years and around 1.8% over the past 5 years. The Dividend Payout Ratios are correspondingly low with DPRs for earnings at around 15% and for cash flow around 13%.

This company started to report in US$ in 2000. The dividends are also paid in US$. This will means, that for Canadian stock holders, the dividends will fluctuate with the currency. Also, because our currency has been rising against the US currency, the company has done better in US$ than in CDN$. However, this is a Canadian company and to me, what is important is how well it does in CDN$ terms.

Generally speaking, the company has done better over the past 10 years than over the past 5 years. Since the last annual statement is December 2010, a lot of my figures are to that date. The only figures known for 2011 are the stock prices and dividends as discussed above.

In CDN$ terms, revenue has increased by 2.5% and 6.7% per year over the past 5 and 10 years. It is expected that the revenue for 2011 will be higher than 2010 by 6.6%. (Please note that often when we are getting close to the annual statements the estimates are often more accurate, but not necessarily so.)

In CDN$ terms, earnings has growth by 3.5% and 9.4% per year over the past 5 and 10 years. However, earnings are expected to be substantially lower in 2011 than they were in 2010. Cash Flow, in CDN$ terms, has grown by 1.6% and 7.4% per year over the past 5 and 10 years. Here again, cash flow is expected to be substantially lower in 2011 than in 2010.

This company is owned and controlled by the Schwatz family. As for a lot of such companies, the debt ratios tend to be very good and this company is no exception. The current Liquidity Ratio is 2.37, the current Asset/Liability Ratio is 2.45, the current Leverage Ratio is 1.69 and the current Debt/Equity Ratio is 0.69.

The Return on Equity has generally been, but not always, in the good range of 10% to 15%. The ROE for 2010 was 10.8% as was the 5 year median rate. However, the ROE for last 12 months is lower at 8.4%. The ROE based on the comprehensive income for 2010 was lower at 8.2%. The 5 year median ROE based on the comprehensive income was at 10.8%.

The Price/Earnings Ratios has been rather low on this company, with the 5 year median low and high P/E ratios being 7.48 and 10.48. The current P/E Ratio based on stock price of $25.08 is a little lower than the 5 year median low at 7.37 and therefore shows a good relative price.

I get a Graham Price of $53.05 and this is some 53% higher than the stock price of $25.08. However, the Graham Price has always been higher than the stock price, but the low difference is the stock price being 32% lower than the Graham Price. This also points to a good current stock price.

The 10 year median Price/Book Value Ratio is 1.14, a rather low value. The current P/B Ratio at 0.69 is only 60% of this. This shows a good stock price at different levels. The stock is trading below the Book Value and also it is 60% below the 10 year median value. This shows a very good current stock price.

Looking at dividends, the current dividend at 2.34% is almost 40% higher than the 5 year median dividend yield of 1.68 and this shows a very good current stock price.

Looking at insider trading, there is a very minimal amount of insider buying. Some 38% of this company’s stock is owned by institutions. Over the past 3 months they have marginally reduced their shares (by 1.5%).

When I look at analysts’ recommendations, I Strong Buy, Buy and Hold. The consensus recommendations would be a Buy. The Buy recommendation comes with a 12 months stock price of $31. There are lots more Buy recommendations than any other recommendations.

There was an article on beaten down stocks at G&M and this company was included. There was also an article in the Financial Post about the stock been beaten down and about their Polish purchase. Another blogger has recently reviewed this stock. See the Frankly Speaking blog.

Generally MPL Communications (the owner of Investment Reporter) is good at picking good long term value stocks. They again recommended this stock in November 2011. See their website and insert the “DII.B” symbol. If you click on “profile” tab, other tabs, such as “Advice” will come up. Click on “Advice” tab.

Personally, I have moved to other consumer discretionary stocks and I am not currently interested in this one. I will continue to follow it.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. There concentrated ownership of this company by the Schwartz family (66%) and Segel family (17%). There are two classes of shares, Class A with multiple voting (10) and Class B, with subordinate voting rates (1). Its web site is here Dorel. See my spreadsheet at dii.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.

DirectCash Payments Inc

2012-01-19T16:18:00.002-05:00

I do not own this stock (TSX-DCI). I started to follow this stock as it was one that was recommended at the Toronto Money Show of 2009. A number of speakers were talking about Income Trust and ones that will do well when they were converted to corporations. It was again recommended at the Toronto Money show of 2010. This company converted to a corporation in 2011.

This company has done quite well. First on the dividend front, they have not decreased or increased their dividends since 2007. The dividend yield has been coming down, which was expected for old income trust companies. The dividend yield is still good at 6.77%, although the 5 year median dividend yield is higher at 10%.

They are also bringing down their Dividend Payout Ratios, which is important now that they are a corporation. The DPR ratios for 2010 were 76% and 60% for earnings and cash flow. Unfortunately, the EPS is expected to be lower this year and the DPR for earnings is expected to be over 100%. However, the DPR for cash flow is expected to be fine. (See my site for information on Dividend Payout Ratios).

This company was just stated as an income trust in 2004. I only have financial information going back 5 years. Since the final financial statements are not in, I have growth figures only to the end of 2010. Most of the growth figures are very good. This is especially true of revenue per share which has grown at the rate of 16.6% per year over the past 5 years.

The EPS growth is also good, having grown at the rate of 81.5% per year over the past 5 years. Please note that EPS is expected to be lower in 2011 than it was in 2010. Growth in cash flow is at 9.4% per year over the past 5 years. The only one that is not good is Book Value growth and that has been a negative 2% per year over the past 5 years. However, little or no growth in book value occurs often on income trust companies, so this is not surprising. They had their first increase in book value in 2010.

I have total return to the end of 2011 as information on dividends paid and stock price to the end of 2011 is available. The total return on this company over the past 5 years is around 14% per year, with 8.5% of this total return attributable to dividends.

The current Liquidity Ratio at 0.99 is ok, but this ratio has a 5 year median of just 0.71. The Asset/Liability Ratio has always been very good at a current ratio of 2.12 and 5 year median ratio of 2.06. Both the Leverage and Debt/Equity Ratios are fine with current ones at 1.89 and 0.89.

When I look at insider trading reporting, I find some insider buying and some insider selling. However, over the past year there has been net insider buying of $1.1M. There is little insider selling. There are no stock options. The CEO owns some 17% of the company, worth some $48M. There are 12 institutions that own around 26% of this company. Over the past 3 months they have increased their holdings by 14%. There have been no sales of shares by institutions over the past 3 months.

I get 5 year median low and high Price/Earnings Ratios of 15.83 and 19.18. The current P/E Ratio of 17.26 is around the 5 year median and so shows a reasonable price. I get a Graham Price of $12.65, so the current stock price of 20.37 is some 60% higher. However, the low difference between the Graham Price and the stock price is the stock price being 103% higher. This also shows a relatively reasonable stock price. Fast growing companies often trade above the Graham Price.

The 5 year median Price/Book Value Ratio is 2.07 and the current one of 3.32 is some 63% higher. Also a Price/Book Value Ratio of 3.32 is rather high. However, this is to be expected as book value has been falling. The last test is the dividend yield test. The current yield of 6.77% is good, but it is lower than the 5 year median of 10%. However, this is also to be expected as the dividend yield has been coming down on all companies going from Income Trusts to corporations.

Until 2009, the Return on Equity for this stock was very low. The one for 2010 is 29.2%, but the 5 year median is 3.2%. The ROE for 2011 is expected to be very good also. The reason it was low in prior years is that they were not make much money before 2009.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus would be a Buy. One analyst with a buy recommendation says that the company is not a desk pounder at this point, but it has a nice distribution and Payout Ratios are not that high. Another analyst says it is the largest operator of independent ATMs.

DirectCash does not seem to be in the payday loan business, but they have customers in this business. The majority of the customers for DirectCash's prepaid cards are payday loan and cheque cashing companies. DirectCash has a payday loan customer which accounts for over 29% of DirectCash's overall revenues. This is a risk factor. Losing one big customer or client can severely damage a company’s finances. This is what happened to Cinram that I reviewed yesterday.

DirectCash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. DirectCash operates in Canada, the United States and Mexico. Over 40% owned by Gallacher family. Its web site is here Metro. See my spreadsheet at dci.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.

Cinram Intl Inc

2012-01-18T16:51:00.001-05:00

I do not own this stock (TSX-CRW.UN), but I used to. This is a company that seems to be able to reinvent itself. It has done this before. I bought it in Feb 2000 for $8.50 when it was recovering from a crash and then sold it $26 in June 2007 because I thought it was in problems again. It sure was as it crashed again by the end of 2007 and stopped the distributions. It is now trading at $.03 per share.

Recently the company has issued new units to pay off part of their debts. See G&M article. The company has also formed another partnership. See G&M article.

There is no point in talking about growth because it has none. However, it still has over a $1B of revenue. It made a profit in 2010, but it is not expected to make one in 2011 or 2012. It also made no profit in 2007, 2008 or 2009. It had cash flow until 2010 when that turn negative also.

The company has had no positive earnings for 2011 so far and not much good news in cash flow either. Analysts expect both negative earnings and negative cash flow in 2011 and 2012.

Book Value is negative in 2010 having turned negative in 2009 and it was also negative with the latest quarterly reported of June 2011.

The 2010 Liquidity Ratio was 1.03 and the Asset/Liability Ratio was 0.99. These have gone down and currently the ratios are 0.74 and 0.81. This means that the assets cannot cover the liabilities.

The company had cash or cash equivalents totaling $164M at the end of 2010. However, the latest statements for the third quarter of 2011 gives cash or cash equivalents as $36.5M. So they are running through their cash.

When I look at analysts’ recommendations, I find Buy, Hold, Underperform and Sell. The consensus would be an Underperform.

However, I intend to keep an eye on it as it might become a good investment in the future again.

Cinram has facilities in North America and Europe. It manufactures and distributes pre-recorded DVDs, Blu-ray Discs, audio CDs, CD-ROMs and digital content for motion picture studios, music labels, publishers and computer software companies around the world. Cinram also provides distribution and logistics services to the telecommunications industry in North America through its wireless subsidiaries. The Cinram group of companies now also incorporates 1K Studios, a digital media firm based in Los Angeles. Its web site is here Cinram. See my spreadsheet at crw.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.

Inter Pipeline Fund

2012-01-17T16:08:00.000-05:00

I do not own this stock (TSX-IPL.UN). It is not that this is not fine company, but I already have enough in pipelines. The current dividend yield is good at 5.68% but not as good as the 5 year median dividend yield of 9%. However, this is to be expected since the rules changed for income trust companies.

However, this company intends to remain structured as a limited partnership. As a limited partnership, Inter Pipeline also retains the ability to treat a portion of our annual distributions to unitholders as a tax-deferred return of capital. Here is some information on Limited Partnerships at about.com. Tax reporting can be a bit tricky, so know what you are getting into. IPL has lots of information on this at their web site.

The growth in dividends for the last 5 and 10 years at 3.7% and 3.5% per year, respectively is good considering the high dividend yield and that inflation (according to the Canadian Government was running around 2% per year over the past 5 and 10 years). Also, there was no dividend increases in 2008 and 2009. The most recent dividend increase for 2012 was 9.4%.

The Dividend Payout Ratios are high, with 5 year median ratios at 97% and 66% for earnings and cash flow, respectively. The DPR for cash flow is expected to come down a bit this year to around 63% in 2011, but the DPR for earnings is not expected to retreat at all. The above is probably why the book value is losing ground with it declining by 1.5% and 3.7% over the past 5 and 10 years.

Total returns for the stock over the past 5 and 10 years have been very good with 5 and 10 year returns at 23% and 18.5% per year, respectively. The portion of this return attributable to dividends was 7.4% and 7.7%, respectively. However, expect a lower portion of total return from this stock in the future, as dividend yields are coming down.

The growth in revenue over the past 5 years is not good, but it is over the past 10 years. Growth in revenue per share over the past 5 years is a negative 5% per year. Growth over the past 10 years is 13% per year. Growth in earnings and cash flow are both good.

Recently, the return on equity has been good. The ROE for the end of the 2010 financial year was 17.6%, but the 5 year median at 11.9% was still good, but lower. The ROE for the 12 months ending in September 2011 is good at 18.6%. The ROE on comprehensive income is also good with the one for 2010 at 15.5% and with a 4 year median rate of 13%.

The Liquidity Ratio for this company has often been quite low. Part of this is because it includes a current of the long term debt. The company does have debt facilities in place to handle debt. The Liquidity Ratio given is 0.10. You need a ratio of at least 1.00 for current assets to cover current liabilities. However, if you include the cash flow in the calculation, the ratio is 1.30.

The Asset/Liability Ratio has lately been low also, with a current value of 1.42 and a 5 year median ratio of also 1.42. (I would prefer both Liquidity Ratio and A/L Ratio to be at least 1.50.) The Leverage and Debt/Equity Ratios currently at 3.40 and 2.40 are not unusual for this sort of company.

The Insider Trading report shows no insider trading over the past year. However, insiders are given deferred Unit rights not options. Few insiders actually own any Class A Units (sold on TSX, Limited Liability Units) or Class B Units (Unlimited Liability Units.) Most insiders have Deferred Unit Rights. Institutions hold around 12% of the outstanding units. Over the past 3 months were has been some buying and selling and they have reduced the units they hold by 3.5%.

The 5 year median low and high Price/Earnings Ratios are 9.98 and 16.74. The current P/E ratio of 19 is therefore rather high. I get a current Graham Price of $10.90 and the current stock price of $18.49 is some 70% higher. The 10 year median high difference between the Graham Price and stock price is 22%. By this measure, stock price is high.

The Price/Book Value Ratio is going to be relatively high because the book value has been decreasing. However, it is also absolutely high at 3.40. The current dividend yield is also relatively low as the dividend yield has been decreasing.

The analysts’ recommendations on this stock are Strong Buy, Buy and Hold. The consensus recommendation is a Hold. The 12 month stock price for a couple of Hold recommendations is $18, which is slightly below the current price. A number of analysts say they like the company and that it is well managed. However, they also say buy on weakness, or buy at or below $16.50 to $17.00.

There is a recent G&M article from a technical analyses view.

As I have said, I will not be buying this as I have enough pipeline companies in my portfolio.

Inter Pipeline is a major petroleum transportation, natural gas liquids extraction, and bulk liquid storage business based in Calgary, Alberta, Canada. Structured as a publicly traded limited partnership, Inter Pipeline owns and operates energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. The company is a limited partnership, not an income trust. Its web site is here Inter Pipeline. See my spreadsheet at IPL.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.

CI Financial Corp

2012-01-16T15:54:00.000-05:00

I do not own this stock (TSX-CIX). This was an income trust company and it switched back to a corporation in January 2009. As an income trust it increased its dividend substantially (around 200%). When it switched back to a corporation it lowered its dividends (around 75%). It was an income trust between 2006 and 2009.

For the year ending in December 2011, the growth in dividends is 4.7%, as this period starts before the income trust increase. As an income trust, the dividend yield was quite high. It was much lower before becoming an income trust and it is much lower after. Currently, the dividend yield is 4.4%. The 5 year median is much higher at 8%.

Part of the reason for the higher past dividend yield was due to the fact that earnings and cash flow peaked in 2007 and this company has not been able yet to get back to these peaks. In the past the Dividend Payout Ratios were very high. The 5 year medians are still quite high at 98.5% for earnings and 92% for cash flow. However, the corresponding DPRs for 2011 are expected to be 68% and 62%, respectively, which are much better.

Total return over the past 5 years is basically 0, with dividends providing some 6.5% return. That is, you broken even because of dividends paid. The total return over the past 10 years is much better at 10%, with 5.7% of this return attributable to dividends. The portion of the total return in the future that is attributable to dividends will probably be lower.

Because the financial statements are not yet available for 2011, I only have growth to the last year’s final statements of 2010. Growth over the past 5 is modest, with generally the 10 year growth being better. The growth in earnings over the past 5 and 10 years is 3.3% and 39% per year. Revenue growth is more modest, with 5 and 10 year growth at 2.8% and 6.9% per year. Cash growth is low, with 5 and 10 year growth at 5.2% and 3.4% per year. I would not expect any better growth figures for 2011.

The current Liquidity Ratio at 1.13 is better than it has been for some time, as was generally below 1.00. Part of the reason for the low Liquidity Ratio was that the company included a portion of the long term debt in current liabilities. They do have credit facilities to handle their long term debt.

The Asset/Liability Ratio has always been quite good with a current one of 2.09. The Leverage and Debt/Equity Ratios have been quite good and the current ones are 1.92 and 0.92, respectively.

The Return on Equity has always been good with a 5 year median at 20.5%. The ROE based on the comprehensive income is also good with the 5 year median also being 20.5%.

The insider trading report shows some $14.1M of insider selling, with the majority of this selling by directors. There is a very modest about of insider buying. Insider selling seems to be of options. The insider trading report shows that insider own more shares and options and this is a good thing. There are 96 institutions who own some 66% of this company. This probably includes the 36.5% owned by the Bank of Nova Scotia. Institutions have been buying and selling shares over the past 3 months and they have very modestly reduced their investment in this company.

I get 5 year median low and high Price/Earnings Ratios of 11.19 and 18.34. The current P/E Ratio of 15.4 would in between these and towards to lower ratio. I get a Graham Price of $13.35 and the current stock price of $20.60 is some 54% higher. This is a better ratio that the median one where the stock price is 69% higher than the Graham Price.

I get a 10 year median Price/Book Value ratio of 4.21 and the current one of 3.56 is some 89% lower. The only test that does not show a currently relatively reasonable stock price is the dividend yield where the current one of 4.4% is higher than the 5 year median of 8%. However, the 10 year median high dividend yield of 4.3% is probably a better test as the dividends were greatly increased while this stock was an income trust.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Hold. A Buy recommendation comes with a 12 months stock price of $24. One analyst remarked on the attractive dividend yields and a dividend yield over 4% is certainly attractive for a mutual fund company.

Mutual funds tend to suffer in market downturns as investors pull out funds during such periods. One analyst felt that CI Financial funds solid performance will allow it to compete effectively in the current market. However, a couple of analysts said that they do not think this stock will go anywhere anytime soon.

I have heard to said that you are better off buying mutual fund companies rather than mutual funds because will you get a better return. I do not know if this is true or not because I have not invested in this area. However, the price of this particular stock seems reasonable, so it might be the time to invest in this stock. However, I would not expect to make much money on it over the next couple of years.

Should Bank of Nova Scotia sell their shares in this company? See Financial Post article. Barclays Capital downgraded CI Financial from overweight to equal weight. See Financial Post article.

CI Financial Corp. is a diversified wealth management firm and one of Canada’s largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI Funds. See my spreadsheet at cix.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.

Intact Financial Corp

2012-01-13T16:43:00.000-05:00

I do not own this stock (TSX-IFC). TD Waterhouse put out a report on good dividend paying stocks to own. This was a stock they named. I had not heard of it before, so I decided to investigate it. TD reports is at TD Waterhouse. (Note that this company used to be ING Group)

The company has only been paying dividends only since 2005. The growth in dividends over the past 5 years is 8.16%. The most recent dividend increase, at the beginning of 2011 was 8.8%. In the past they have increase their dividends at the beginning of the year. They have not yet announced their increase for 2012, but this is not due until March 2012.

The 5 year median dividend yield 3.1% and the current one is 2.6%. The Dividend Payout Ratios are good at 37.5% for earnings and 28.5% for cash flow. The potential return in 10 years’ time, if you purchase this stock today, is 5.64%.

Growth has been just ok. However, this is a general insurance company and you can expect to see more volatility in earnings and cash flows that what you would see in other insurance companies, like life insurance. The upside to this is that this stock can offer some really good entry points for buying.

Growth in Cash Flow is best with a 5 year growth at 11% per year. The worse is in earnings, which is down 9% per year over the past 5 years. Growth in both revenues and book value are mediocre. Revenue growth over past 5 years is 4.6% per year and book value growth over the past 5 years is 4.8% per year.

The Liquidity Ratio has fluctuated, but the current one at 18.05 is extremely good. On the other hand, the current Asset/Liability Ratio is mediocre at 1.27. This is lower than the 5 year median ratio of 1.37. The Leverage and Debt/Equity Ratios are a little high at 5.27 and 4.14. These are also higher than the 5 year median ratios of 3.76 and 2.76.

The Return on Equity has fluctuated, but the one for the last quarter ending September 30th is good at 12.7%. The ROE for the end of the 2010 financial year was only a bit better at 13.7%.

When I look at insider trading, I find that there has been $1.9M of insider selling and a minimal amount of insider buying. This company does not seem to have stock options for insiders, but they do have a similar long term stock incentive plan. There are a lot of insiders under this plan, and they generally have more stock incentive shares than stock shares.

There are 414 institutions that hold some 41% of the shares of this company. There has been buying and selling over the past 3 months, however, they have increased their exposure to this company by3.6% over the past 3 months.

The 5 year median high and low Price/Earnings Ratios are 11.96 and 14.94. On a relative basis, the current P/E of 10.07 would be low. (The 10 year median P/E is 10.13.) I get a current Graham Price of $60.58 and the current stock price of $56.70 is some 6.4% lower. The median and high difference between the Graham Price is the stock being 12.2% lower and 10.8% higher, respectively. This points the stock price above the median one, but below the high one, relatively.

I get a 10 year median Price/Book Value of 1.69 and a current one of 1.96. This puts the current ratio some 16% above the long term one. I get a 5 year median Dividend Yield of 3.09% and a current one of 2.61%. The low yield over the past 7 years is 2.32%.

All these tests, except for the P/E Ratio, show a reasonable, but not great stock price. Since the P/E ratio is based on earning estimates, I think the price is reasonable, but not great.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. With this Buy recommendation comes with a 12 months stock price of $66.98. A Hold recommendation comes with a 12 month stock price of $64. Analysts agree that this is a well-run company. Many think that earnings are going to soar in 2012 and this is the reason for the low P/E Ratio.

A number of analysts mention the recent growth by 40% when they acquired a Canadian subsidiary of a French company, AXA Canada. I have not invested in any general insurance companies. I took a look at this because of the TD report I mentioned. Dividend is ok at 2.6%. I have always thought of general insurance companies a rather volatile as far as earnings go. However, if you are patient and wait for the next down turn in the general insurance industry, you could probably pick this company up cheaply.

Intact Financial Corporation (www.intactfc.com) is the largest provider of property and casualty insurance in Canada. Intact offers home, auto and business insurance through Intact Insurance, Novex Group Insurance, Belairdirect, GP Car and Home and BrokerLink. Its web site is here Metro. See my spreadsheet at ifc.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.

Metro Inc 2

2012-01-12T16:17:00.002-05:00

I own this stock (TSX-MRU.A). I bought this stock in 2004. I have made a total return of 18.23% per year. The portion of this return attributable to dividends would be only 1.35%. This is quite typical of grocery stocks. Dividend yields are usually always low, but dividend increases are good.

Over the past year there has been insider trading, but mostly insider selling to the tune of $16.3M and minimal inside buying. It would appear that insiders are selling off stock options. All insiders, except for directors, have more stock options than shares. Metro is also buying back shares.

There are 139 institutions that own some 36% of this company. Over the past 3 months they have reduced their exposure to this company marginally (by less than 1%).

The 5 year median high and low Price/Earnings Ratios are 9.08 and 13.18 respectively. The current price of $52.41 has a P/E of 12.27. This shows a relatively high stock price. I get a Graham Price of $49.40. The current stock price is some 6.1% higher. The median difference between the Graham Price and the stock price is the stock price being 6.98% higher. This difference points to a relatively reasonable stock price.

I get a 10 year median Price/Book Value Ratio of 2.16 and a current P/B Ratio of 2.06, some 3% lower. This lower P/B Ratio points to a reasonable stock price. The 5 year median Dividend Yield is 1.6%. The current dividend yield is only 1.47%, a value 8% lower. This difference points to a relatively high stock price. The 10 year median dividend yield on high stock prices is 1.33%. This says that the stock price has been relatively higher.

My stock price tests are mixed, but I believe that they point to a relatively high price, although the stock has, in the past been relatively higher.

So, what do the analysts say? I find recommendations of Strong Buy, Buy, Hold, Underperform and Sell. The consensus recommendation would be a Buy. There are more recommendations on the buy side, than the underperform/sell side. One Buy comes with a 12 month stock price of $56. One analyst said that the company is cost-focused.

Another analyst said that this company is well-run, but he felt that the whole industry is suffering from margin compression, which he does not like. This is similar to my worry about lack of increase in revenues discussed in my posting of yesterday.

See a recent reports from G&M, with one dated November 16, 2011 and another one dated the same day.

Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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.

Metro Inc

2012-01-11T15:38:00.000-05:00

I own this stock (TSX-MRU.A). I bought this stock in 2004. I have made a total return of 18.23% per year. The portion of this return attributable to dividends would be only 1.35%. This is quite typical of grocery stocks. Dividend yields are usually always low, but dividend increases are good.

This stock is on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). It is considered to be a dividend paying growth stock. These stocks are characterized by low dividend yields, high dividend growth and good capital gains.

I have had this stock for 8 years and the yield on my original investment is 4.36%. The dividend growth over the last 5 and 10 years has been at 11.8% and 15.4% per year, respectively. The last dividend increase for the 2011 financial year was for 13.2%. The 5 year median dividend yield is 1.6%.

The dividend yield has always been quite low on this stock and with this comes very low Dividend Payout Ratios. The DPRs for Earnings is 19.4 and for cash flow is 13%. The 5 year median DPR for earnings is 19% and for Cash Flow is 12%.

Mostly growth is good. The exception is growth in Revenue. Revenue growth over the past 5 and 10 years is up by 1% and 8.9% per year, respectively. Revenue growth per share is up 3.5% and 8.8% per year, respectively. The reason for the difference in revenue and revenue per share over the past 5 years is that the company has been buying back stock, so there are fewer shares now than 5 years ago.

Future revenue growth over the next two years is not expected to be very high either. This could be a problem as it is revenue growth that ultimately fuels a company’s growth. Without growth in earnings and cash flow, you cannot grow dividends.

For total return over the past 5 and 10 years, growth has been at 7.4% and 19.3% respectively. The portion of the return attributable to dividends is 1.5% and 2.2%, respectively. Earnings, Cash Flow and Book Value growth are all good. For example, EPS growth over the past 5 and 10 years is at 11.3% and 12% per year, respectively.

Liquidity Ratios are fine. The current one is 1.16 which is low but ok. It is better than the 5 year median one of 1.09. The Asset/Liabilities ratio has always been very good. The current one is at 2.07 and this ratio has a 5 year median value of 1.94. The Leverage and Debt/Equity Ratios are fine at 1.93 and 0.93. They are better than the 5 year median values of 2.06 and 1.06, respectively. (See my site for further information on Debt Ratios.)

The Return on Equity Ratios has generally been good and the one for the end of the financial year ending in September is 15%. The 5 year median ROE is 15%. The ROE based on the Comprehensive Income is also good at 15%. The good range for the ROE is the 10% to 15% range. A lot of companies are now reporting the Comprehensive Income. For more information on this, see Wikipedia.

I have been pleased with the performance of this stock. It is classified as a consumer staple stock. I started to invest in such stock once I had invested in enough utilities and financial stocks. However, I am keeping an eye on the revenues.

Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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.

Year 2011 and Last Quarter

2012-01-10T15:12:00.002-05:00

How did the TSX do last year? Over the past 5 years, the TSX has declined 7.4%. This is the 4th such occurrence of a 5 year decline in the TSX since 1956. For 2011, the TSX declined 11%. The 5 year compound return on the TSX is a negative 1.52% per year.

For the TSX it is hard to get any long term data on dividends. However, the TSX site does provide some current information. See TSX Money site and go Indices & Constituents. If you click on the S&P/TSX Composite Index you will get some current information. One piece is current dividend yield which is running around 2.8%. If that was also the dividend yield for last year, it would imply a loss of 8.2% for the TSX last year.

Today, Thursday, January 12th, one commentator said including dividends, the TSX is down 8.7% in 2011.)

I have read a number of studies on this subject and none seem to agree with each other. I had read a study in the past the said that dividends add 2% return to the TSX over the long term and considering the dividend yield is current 2.8%, this sounds reasonable. Do not forget that dividend yield and the stock market go in the opposite direction. So, as the stock market goes up, the dividend yield will go down and visa versa. Also, Boom and Echo twitted a link on this subject for S&P 500. See Dividends.

So, how did I do? Over the past 5 years my portfolio’s return is 4.72% per year. The part of my return attributable to income is 67% per year. Since I am taking money out each year, my portfolio has increased at the rate of 1.84% per year. The difference between the 1.84% per year and the 4.72% a year is the money I have taken out each year, which is around 3% per year.

Last year my portfolio’s total return was 4.92%. I took out 3%. The part of my total returns attributable to dividends last year was 70%. (This compares to 25% in 2010 and 14% in 2009.) This would mean my stocks were up 1.92 %.)

Today, I am updating my spreadsheet on dividends. I have marked in blue those stocks I hold that have increased their dividends in the last quarter of 2011. These stocks are:

AltaGas Ltd (TSX-ALA);
Alimentation Couche Tard (TSX-ATD.B)
Emera Inc. (TSX-EMA)

McCoy (TSX-MCB)
Toronto Dominion Bank (TSX-TD)
Toromont Industries Ltd. (TSX-TIH)

AltaGas Ltd changed from an income trust in 2010 and reduced their dividends by some 38%. In 2011 they made their first increase after this change. The dividend was increased by 4.5% in the 4th quarter of 2011. Prior to the change from an income trust this company had a habit of yearly dividend increases. Current dividend yield is good at 4.34%.

For my last blog entries on this stock in April 2011, click here or here.

Alimentation Couche Tard has a habit of yearly increasing their dividends. The 5 year growth in dividends is 12.5% per year. In the 4th quarter they increased their dividends by 20%. This is the second increase for 2011. However, the dividend yield is low on this stock at 1%.

For my last blog entries on this stock in August 2011, click here or here.

Emera Inc. also increases their dividend yearly, and increases over the past 5 years were at 5.5% per year. The 5 year median dividend yield was 4.4%. Their dividend increase for 2011 occurred in the last quarter of 2011 and was for 3.8%.

For my last blog entries on this stock in June 2011, click here or here.

McCoy Corp is a rather risky small cap stock that pays dividends. I used it to soak up the small amount of cash I had left in the TFSA after my main purchase. Dividends are a little inconsistent as they stopped them entirely in 2010. It was a prudent move on their part not to pay dividends they could not afford. However, with the dividend increases in the last quarter of 2011, dividends are the highest they have ever been. Dividends are currently at a great yield of 5.1%.

For my last blog entry on this stock in May 2011, click here.

Toromont Industries Ltd. had a dividend increase of 10%. If you look at some charts, the stock seemed to fall off a cliff in June and decreased their dividends. However what happened was that they spun off Enerflex. Their dividends were not decreased if you held on to Enerflex. (Personally I was not interested in holding as a stock and have sold off the shares I received.)

For my last blog entries on this stock in March 2011, click here or here.

Toronto Dominion Bank ended their last financial year of October 2011 with another dividend increase. This is the second increase for this bank in that financial year. This last increase was for 3%. The total increase in dividends for this last financial year was 11.5%. The current yield for TD is 3.56%. Before this latest crisis, TD had a good track record of dividend increases.

For my last blog entries on this stock in December 2011, click here or here.

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.

Automodular Corp.

2012-01-09T15:28:00.000-05:00

If you have a Tax Free Savings Account (TFSA), and everyone should, you will find that you have bits of money in this account that is not doing much for you. This is because you can invest a maximum of $5,000 a year and this is not much. After you bought the stock you want using your yearly deposit, there will be money left over. Also, if you are buying dividend paying stock, you will have dividends.

There are several ways of handling this. One way is to use DRIPs, where you use the dividends to buy more shares in your company. For a review of this see My Own Adviser’s write up on this subject at Dividend Ninja and his site.

DRIPs are a good idea, but I have been there and done that. I used DRIPs to build up shares in my stocks when I first started to invest. I had to keep track of the Adjusted Cost Basis (ACB) of my stocks and I ended up with odd number of shares in my stocks that are harder to sell. It wasn’t particularly fun. It was rather boring, but it also was profitable for me.

What I do now is invest in some dividend paying small cap, like this stock. I just bought this stock (TSX-AM), for my TFSA. This is a risky stock in several ways. It is a small cap so it will not be traded much or in good volumes. It is dependent on one large company as a customer and that is Ford. However, investing in such stock can be a lot more fun in soaking up your bits of cash than doing other things.

This is a small cap that got hammered in the 2000 recession. This happened to a lot of small caps. This stock has slowly been coming back. A lot of small caps have never recovered. Dividends have been an on and off affair for this stock for a while. They issued no dividends from 2004 to 2009. Then they did a special dividend in 2010. They restarted dividends in 2011 and now have full quarterly dividends.

The dividend rate is current great at 9%. In the last couple of years, dividend income has been a big part of the return. Beside the great dividend, the next great think about this stock is the debt ratios. The current Liquidity Ratio is 2.60 and the Asset/Liability Ratio is 3.71. For these ratios, you are looking for ones at or above 1.50. The current Leverage and Debt/Equity Ratios are also very good, with current ones at 1.37 and 0.37, respectively.

As far as growth goes it was mixed in 2010 with Revenues and Cash Flows up smartly, but the EPS was negative. So far in 2011, revenues are down a bit and cash flow is up a bit, but the real winner is a better EPS than this company has had for some time. They are also trying to get other customers rather than just relying on Ford Oakville plant.

The 5 year median low and high Price/Earnings Ratios are 1.18 and 3.98. These are very low ratios. Mostly this is because there were a number of years with negative earnings. The current P/E ratio of 4.11 is also very low. The yield has always been high on this stock, but even for this stock, a 9% yield is high, but it has been up in this neighborhood before. However, the median yield when it was last paying dividends was 6.3%.

The 5 year median Price/Book Value is low at just 0.97. That is a book value higher than the stock price. The current one of 1.19 is higher, but it is still, in absolute terms low. I get a Graham Price of $4.35. This is 49% above the current stock price. This in itself shows a good stock price. However, it has been better, but the median difference between the Graham Price and Stock price is the stock price 26% lower. So, on a relatively basis, the stock price is good.

In any event, the current stock price of $2.22 seems low.

Needless to say, there are not many analysts following this stock. I found one who said it was a buy because the shares are cheap given the company's earnings and dividends. He thinks it will be a market beater in 2012. He said it was also a Buy because it is debt-free. Automodular should be bought for long term gains and dividends. However, it is also risky because of limited customers.

It is interesting who owns this stock. The CEO owns some 21% of the shares. There are 3 institutions that hold 44% of the shares. Two of these are The Bank of Nova Scotia and Bissett Investment Management (of Franklin Templeton Investments Corp).

See a G&M article on this company dated April 2011.

Automodular Corporation is a supplier of sub-assembly, sequencing and transportation services to the automotive industry - Ford's Oakville Assembly Plant and the renewable energy industry. The Company has three operating facilities. Its web site is here Automodular. See my spreadsheet at am.htm.

I follow a number of these small cap stocks. They include:
Pulse Seismic (TSX-PSD)
TECSYS Inc (TSX-TCS)
Wi-Lan (TSX-WIN)
McCoy (TSX-MCB)
EnerCare (TSX-ECI)

I own TECSYS and McCoy currently. See my site stocks followed to look up my reviews on these stocks.

So how well have I done on this. The first stock I bought was Matrikon Inc. This was dividend paying small Tech cap. One problem with small cap tech stocks is that they can be bought out if successful. I made two purchases on this stock, one in 2009 and one in 2010 totaling $1,047.98. I had to sell because of a buy out in June 2010. My total return was $1,822.01 a 74% increase in value.

The next stock I bought was Pareto Corp. This was to replace Matrikon and then a separate purchase in January 2011. Total purchase was $3,007.98. Total return on this stock was $4,659.01 when I was forced to sell in buyout on February 2011. This was a 55% increase in value.

Next I used some of the money to buy Davis and Henderson Corp (TSX-DH) and what was left over ($403.99) and some extra money in May 2011($412.99) and a total of $816.98 to buy McCoy Corp (MCB) as a filler stock. The value of this stock is currently at $655. This 20% decrease in value. (I, of course, expect this to do better in the future. I didn’t buy more this time as I only have $274.19 in the account, the MCB is going currently at $3.20 a share.)

I was reading a report on Automodular Corp and decided to try it.

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.

Canada Bread Co

2012-01-06T16:32:00.000-05:00

I do not own this stock (TSX-CBY). I started to follow this stock some years ago because it was recommended by MPL Communications. You can see some of their advice at their site at Advice for Investors.

I had not really thought of this stock as a dividend paying stock as they had not changed their dividends since 1991. However, mid 2011, dividends suddenly spiked some 233%. Yes, that is right; they were increased by 233%. However dividends remain low with a dividend yield of just 1.8% and Dividend Payout Ratios at 16.5% of earnings and around 10% of Cash Flow. This is a consumer staple stock. These stocks tend to have low dividends, but it is hardly a dividend paying stock if it takes 20 years to raise their dividends. Another problem with this stock is that it owned, almost 90% by Maple Leaf Foods.

In November of 2011, The Investment Reporter, an MPL Communications newsletter, said this stock was a good buy for long term gains and dividends. This stock is down over the past 5 years, as are a lot of stocks. However, over the past 10 years ending in 2011, the total return on this stock is up 8.24% per year, with the dividend portion of this return at .9% per year.

As far as growth goes, the 10 year figures are all better than the 5 year ones. Revenue per shares is up 7.4% and 13.5% per year over the past 5 and 10 years. Earnings per Share are up 11.6% per year over the past 10 years, but are down 4% per year over the past 5 years.

Cash Flow is up in the same manner as the Revenue per shares. Book Value is up 8% and 11% per year over the past 5 and 10 years. However, Book Value has decreased by 15% between the end of 2010 and the third quarter of 2011, mainly due to new IFRS accounting rules.

What about the current stock price? The 5 year median high and low Price/Earnings ratios are 13.33 and 20.91. The current stock price of $43.01 looks low considering it has a P/E Ratio of just 12.47. The low and median difference between the Graham Price and the stock price is the stock price being 9.8% lower and 13% higher. So with a Graham Price of $45.13 the stock price at 4.7% lower looks good also.

I get a 10 year median Price/Book Value Ratio of 2.01. The current one at 1.66 is 82% of the 10 year median price and points to a good current stock price. This is in spite of the fact that the Book Value has gone down 15% because of the new accounting rules. No need to look at relative dividend yield, as yield is relatively high due to the recent big increase.

There is no insider trading over the past year. Maple Leaf Foods own 90% of the shares. Insiders all seem to hold a few thousand shares each. There are also some 5 institutions that hold 2% of the outstanding shares. There has been no buying or selling by these institutions over the past 3 months.

Not surprisingly, I can only find one analyst that follows this stock. The analyst’s recommendation is a Buy. A 12 months stock price of $54 is given. An analyst commented on this stock in October 2011, saying it was a buy because it is a stable business in uncertain times. He also suggested by Maple Leaf could possible take over the rest of the shares they do not own. However, this has been mentioned over the past few years and nothing has occurred.

There is a fairly recent blog entry on this stock at Canadian Dividend Stock. See blog.

Canada Bread is a leading manufacturer and marketer of value-added flour based products, including fresh bread, rolls, bagels and sweet goods, frozen partially baked or par-baked breads and bagels, and specialty pasta and sauces. The Company markets products under a number of leading brand names, including Dempster’s, Olafson’s, POM, Ben’s and Olivieri. Canada Bread has operations in Canada, the United States and the United Kingdom. The Company is 89.8% owned by Maple Leaf Foods Inc. Its web site is here Canada Bread. See my spreadsheet at cby.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.

Wajax Corp

2012-01-05T15:37:00.003-05:00

First of all, I have to admit that I did not cover all the stocks that I follow in 2011. I guess my pace was too slow. So, until the annual statements for December 2011 come in on the stocks that I own, I will pick up the pace and review one per day.

The first one I want to talk about is Wajax Corp. I have not previously followed this stock and I do not own this stock (TSX-WJX). However, TD Waterhouse put out a report on good dividend paying stocks to own. This was a stock they named. I had not heard of it before, so I decided to investigate it. TD reports is at TD Waterhouse.

This company was an income trust under Wajax Income Fund (WJX.UN). When they decided to switch to a corporation, the dividend was decreased almost 60%. This was in 2009. The dividend was held level in 2010 and since 2011 they have been increasing their dividends. They did 2 dividend increases in 2011. The first was for 20% and the second was for 11%. I think that this bodes well for the futures as far as dividends go, although the 5 year grown in dividends is a negative 7% per year.

The Dividend Payout Ratios over the past 5 years ending in 2011 have a median value of 90% for earnings and 65% for Cash Flow. However, these values are expected to be around 57% and 65% respectively for 2011 and then 65% and 82% respectively for 2012. Lots of companies decreased dividends when they were no longer income trust companies. They had to, to bring their DPRs into line. (See my site for information on Dividend Payout Ratios).

As far as total return goes, this company had returns at 13% and 39% per year over the past 5 and 10 years. The dividend portion of these returns attributable to dividends was 10% and 15% per year. That means that over the past 5 and 10 years 97% and 41% of the return was in dividends. This is likely to be different in the future because this company is now a corporation.

For other growth rates, the last annual statement is dated December 2010. Other growth rates were not as good as dividends and total returns. The growth in revenue per share was basically 0%. Analysts expect the growth for revenues per share to be a healthy 21% for 2011.

Earnings per share growth have been much better at 10% and 22% per year over the past 5 and 10 years. EPS growth is expected to be around 13.5% for 2011. Cash Flow per share has been fairly good at 7.4% and 9% over the past 5 and 10 years. Unfortunately, analysts feel that CF will be lower this year by almost 19%. Usually this close to the annual statement time analysts estimates tend to get more accurate, but they have been known to far off the mark also.

Book Value per share has not grown over the past 5 and 10 years. BV does not tend to grow under income trust companies as they pay too much in distributions. However, BV grew 12% from the end of 2010 to September 2011.

Now I should go on to look at the stock price. The 5 year low and high median Price/Earnings Ratios are 5.82 and 10.89. The current P/E of 10.73 would look high relatively speaking, but the P/E ratios on this stock are quite low and 10.73 is not a high P/E in absolute terms.

I get a current Graham Price of $33.56. The stock price of $39.93 is some 18% higher. On this stock the high difference between the Graham Price and the stock price is the stock price being some 3.5% lower. By this measure the stock price is high. Ideally, a good stock price is at or below the Graham Price, so whatever way you look at this, the stock price seems high on this measure.

I get a 10 year Price/Book Value Ratio of 1.76 and the current one is 2.95, a value some 68% higher and this would point to a rather high stock price. Although the current dividend yield at 6% is good, the 5 year median dividend yield is 12.5%. By this measure, the stock price is high. However, when companies go from income trusts to corporations, it is expected that the dividend yields would go lower.

As far as insider trading goes, there has been a minimal amount of insider buying over the past year, but so small as to not say much to us. There was been no insider selling over the past year. There are 33 institutions that hold 22% of the shares of this company. Over the past 3 months there was been some buying and selling and these institutions have minimally increased their stake in this company (a less than a 1% increase).

When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. One Buy recommendations comes with a 12 month stock price of $51. A consensus 12 months stock price is around $46. One Buy recommendation says they feel that the P/E Ratio for this stock should be 14.5, which is an reasonable assumption.

This is an Industrial Products stock and would have a medium risk level. A number of analysts with buy recommendations mention the good dividend yield. One analyst mentions the good balance sheet. The current debt Ratios are certainly good. The Liquidity Ratio is 1.76 (although the 5 year median on this ratio is lower at 1.69. The Asset/Liability Ratio is 1.62. The current Leverage and Debt/Equity Ratios at 2.60 and 1.60 are also good.

At the moment I am not looking to buy any stock, but this stock certainly looks good and I can see why the TD Waterhouse put it on a good dividend paying stock list.

There was also an article on this stock in the G&M in October 2011.

Wajax is a leading Canadian distributor and service support provider of mobile equipment, industrial components and power systems. Reflecting a diversified exposure to the Canadian economy, Wajax has three distinct business divisions. The organization’s customer base covers core sectors of the Canadian economy - mining, oil and gas, forestry, construction, manufacturing, industrial processing, transportation and utilities. Its web site is here Wajax. See my spreadsheet at wjx.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.

Calian Technologies Ltd 2

2012-01-04T14:53:00.002-05:00

I own this stock (TSX-CTY). This is the stock I am buying for my TFSA purchase this year. This is a small tech stock, so it is riskier than a lot of dividend paying stocks that I own. This stock has very good dividends. The 5 year median dividend yield is 4.42%. The current dividend yield is 5.96%.

When I look at insider trading, I find that over the past year there has been $3M of insider selling, mainly by officers of the company. For this company, it is only the directors that have more stock options than shares. (This is the reverse of most companies giving out stock options.)

There are 9 institutions that own 40% of the shares of this company. Over the past 3 months 1 of these institutions sold a very minor amount of these shares. (What was sold was less than 1% of outstanding shares owned by these institutions.)

I get 5 year median low Price/Earnings Ratio of 8.82 and 5 year median high P/E of 11.82. These are rather low P/E ratios. On a relative basis, the current P/E Ratio of 9.93 shows that the $17.57 stock price is reasonable.

I get a Graham Price of $18.07. The current stock price of $17.57 is 2.9% lower. The median difference between the Graham Price and the stock price is the stock price being 14% higher. The low difference between the Graham Price and the stock price is the stock price being 9.5% lower. So, here again, we have a test that shows that the stock price is reasonable.

The 10 year median Price/Book Value Ratio is 2.23 and the current P/B Ratio is 2.14. The current ratio is 95% of the 10 year median and shows a relatively reasonable stock price. The current dividend yield is 5.96%. This is 34% above the 5 year median dividend yield of 4.42. Ever since they are started to pay dividends, the dividend have been increasing faster than the stock price. This means that the yield has been steadily going up.

The dividend increases have been increasing faster than any other growth including EPS and CF per share growth. At some point this will have to change. It may be doing that now as the first increase of the 2012 financial year was just 4% and the lowest increase this stock has had.

When I look at analysts’ recommendations, there appears to be only one analyst following this stock. The recommendation is a Buy. This makes senses as the price is a reasonable, but not great one. A point to make is that the company gets a lot of business from the government. A number of analysts remarked on the fact that they thought the company was well run. Another point is that this is a small cap stock and it might be a bit illiquid. That is there are not a lot of buyers and sellers and the bit and ask can vary a lot.

I still like this stock and have purchased more for my TFSA account. However, I do not have much invested in this company.

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.

Calian Technologies Ltd

2012-01-03T16:19:00.002-05:00

I own this stock (TSX-CTY). This is the stock I am buying with my TFSA money this year. This is a small tech stock, so it is riskier than a lot of dividend paying stocks that I own. This stock has very good dividends. The 5 year median dividend yield is 4.42%. The current dividend yield is 5.96%.

They have only been paying dividends for 8 years, but the increase to in dividends over this period is 24% per year. The 5 year dividend increase is also 24% per year. They often raise the dividends more than once in a financial period which ends at September 30th each year. For the financial period that will end September 30, 2012, they have already raised the dividends 4%.

Their dividend payout ratios are good. The 5 year median DPR for earnings is 42.5% and for cash flow is 36.3%. However, the DPR ratios for the financial year ending in September 2011, the DPR for earnings was higher at 56.7% and the DPR for CF was 51.3%. This are still good rates.

Total return over the past 5 and 10 years has been great. The total return for the last 5 and 10 years is 16.5% per year and 30% per year, respectively. The portion of this total return attributable to dividends is 6% and 6.7%, respectively. This means that 37% and 22%, respectively, of its total return is attributable to dividends. However, do not forget that future returns may not be as good as past returns.

The worse growth for this company is revenues per share. This has only grown at the rate of 6.3% and 9% per year over the past 5 and 10 years. Earnings are better with growth at 17% per year over the past 5 and 9 years. My longer term earnings are just for 9 years as this company lost money in 2001. This is not surprising as a lot of tech companies had problems in 2000 and 2001.

The growth in cash flow is not bad with the 5 and 9 year growth rate at 14% and 8.8% per year, respectively. (They also had negative cash flow in 2001, so my longer term period is 9 years.) Growth is also good for Book Value with growth for the last 5 and 10 years at 8.7% and 11% per year, respectively.

Return on Equity has generally been quite good. The ROE for the financial year ending in September 2011 is 20.9%. The 5 year median ROE is the same at 20.9%. The ROE based on Comprehensive Income is slightly lower at 18.9% at the end of September 2011. The 5 year median for this ROE is 19.8%. For further information on comprehensive income and it uses, see Wikipedia.

The last thing to talk about today is debt ratios. Debt Ratios are very good on this stock. The current Liquidity Ratio is 2.77. The current Asset/Liability Ratio is 3.27. For these ratios, anything at 1.50 and better is considered good. The current Leverage and Debt/Equity Ratios are correspondingly low (and therefore good) at 1.44 and 0.44 respectively.

There is one negative remark that I like to say and that is I think that they give a lot of stock options out. Also they have an employee stock purchase plan. Under the stock option plan, they issued ¼ of 1% of the outstanding shares this year. Under the stock option plan, they issued 1% of the outstanding shares last year. The number of shares outstanding went down both years as the company purchased shares on the open market. On the other hand, the CEO owns more than $1M in shares in this company.

Tomorrow, I will continue talking about this company, mostly in connection with the current stock price, but also what analysts say about it.

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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.

First Capital Realty

2011-12-30T17:27:00.000-05:00

I do not own this stock (TSX-FCR). I was asked to take a look at this Real Estate stock, so I am. First of all, most Real Estate stocks are having a hard time. It would be ideal for the dividend increases to at least keep up with inflation. Some are not, including this stock which over the last 5 years has not.

The 5 year growth in dividends is just 1.03% per year. Inflation is currently running around 2% per year. (Long Term inflation tends to be around 3 %.) The reason for this is that there has been no distribution increases since 2008. The 10 year growth in dividends is better at 3.63% per year.

Since Real Estate stocks tend to growth their number of shares outstanding, the values as a shareholder you want to be concerned with is always values per shares. One of the problems I see with this stock is lack of growth in Revenue. The 5 year growth is 4.8% per year. However, the 10 year growth is a negative 6.7% per year. That is revenue is less now than 10 years ago.

The thing with this stock is that it was doing well until 1999 when it lost money. It also had negative earnings in 2000. The stock was severely punished. This is the reason the 10 year total return is at 19.7% per year. The distribution portion of this stock was some 9.2%. The 5 year grow is not as good at 6.7% per year, with distribution contributing 5.7% per year.

Another problem with the stock is that Funds from Operations (FFO) is down slightly over the past 10 years. Over the past 5 years, it is up by 1.6% per year. The thing is that distributions have grown from 61% of FFO to an expected 83% for this year.

Although only 1999 and 2000 had negative earnings, earnings have only gone down over the last 5 and 10 years, by 3.6 and 9.6% per year, respectively. Cash flow is up over the past 5 years at 4.5% per year, but it is down by 6.9% per year over the past 10 years. They only had one year of negative cash flow in 2000. Although, for Real Estate stock, FFO rather than earnings are looked at, cash flow does count.

Book Value has gone down over the past 5 and 10 years. However, this should improve with the new account rules of IFRS. Another thing that might improve, for all Real Estate, stock is earnings. However, the Return on Equity for this stock has been very low with a 5 year ROE of just 3.6%. (Do not forget that this is relatively low for a Real Estate company. It will improve under the new accounting rules, but it will also improve for all other Real Estate companies.)

In comparison, Canadian Real Estate has a 5 year median ROE of 12.9% and RioCan Real Estate has a 5 year median ROE of 9.9%. The ROE on this stock ranges from 3.2% to 7.7% over the past 10 years. Canadian Real Estate ranges from 7.7% to 12.9% over the past 10 years. RioCan range ranges from 6.1% to 14.1% over the past 10 years.

As far as debt ratios go, the Asset/Liability Ratio has often been low with a 5 year median ratio of just 1.42. However, the latest one is better at 1.61. Leverage and Debt/Equity Ratios have been a bit high, but are at probably normal Real Estate stock levels currently at 2.65 and 1.65.

The insider trading report shows some $3M of insider selling and minor insider buying. All insiders but directors have lots more stock options than shares. I cannot find any information on institutions holding this stock, so they probably do not.

The current Price/FFO Ratio is 18. The 10 year median low P/FFO is 10 and the high is 14, so this price looks a bit high. Current distribution yield is 4.63% and the 5 year median is 5.45%, a distribution some 15% higher. So by this measure the price is on the high side.

The Price/Book Value Ratio is currently at 1.38 and this is 80% lower than the 10 year median P/B Ratio of 1.73. This ratio points to a good price, but Book Value has increased significantly (81%) due to new account rules, so not a fair measurement. I cannot really compare stock price to Graham Price as it looks like this will change substantially with new calculations of the EPS under the new accounting rules.

When I look at analysts’ recommendations I find Strong Buy, Buy and Hold recommendations with the Buy being the consensus recommendation. One buy recommendation comes with a 12 month stock price of $20. Another has a 12 month stock price of $18. One Analyst says he is cautious on shopping centers because retail sales remain soft, but does own shares in First Capital Realty Inc.

The site Canadian Dividend Stock mentions this company as a top Canadian REIT.

I am not personally interested in this stock as I already have RIOCAN and Canadian Real Estate Investment Trust REITs.

Because of the New Year’s holidays, my next blog entry will be Tuesday, January 3rd, 2012.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighborhood and community shopping centers, located predominantly in growing metropolitan areas. Its web site is here First Capital Realty. 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.

All the Bank Stocks That I Track

2011-12-29T14:28:00.002-05:00

For all the Canadian bank stock I follow, I have shown the link to my blog entries. The first blog entry should help you answer the questions of whether or not you might like to invest in the stock.

The 2nd blog entry deals with its current price, but you can compare the past median values to current ones to see if you would want to invest in it today. For example, you can compare current P/E Ratios from financial sites to the median P/E Ratios given in my blog. The G&M and Reuter can both give you current ratios. For Reuter, use TO after the stock symbol to find stock listings for Canadian companies. For Bank of Montreal would be the symbol of “BMO.TO”.

For a dividend paying stock portfolio, you might want to buy safer Utilities and financial stocks first. See my site for information on setting up a portfolio. Also, Industrial stocks cover a wide field of endeavors. One definition is “in stock market vernacular, general, catch-all category including firms producing or distributing goods and services that are not classified as utility, consumer, or financial companies”.

Bank of Montreal (TSX-BMO, NYSE-BMO). The 5 year median dividend yield is 4.85%. This is the highest 5 year median yield of all the Canadian banks. This is the only one of the big 5 not to increased dividends this year. The DPRs, especially for Cash Flow are expected to be much more reasonable in 2012. Stock is selling at a relatively good price. For my blog entries dated December 2011, click here or here.

Royal Bank (TSX-RY, NYSE-RY). The 5 year median dividend yield is 3.92%. They restarted dividend increases in 2011 with an 8% increase. DPRs seem good. Stock price is relatively good also. For my blog entries dated December 2011, click here or here.

TD Bank (TSX-TD, NYSE-TD). The 5 year median dividend yield is 3.67%. They restarted dividend increases this year and did two increases. Total increase in Dividends for 2011 is 11.5%. DPRs are fine. Stock price is relatively low for this stock. For my blog entries dated December 2011, click here or here.

Bank of Nova Scotia (TSX-BNS, NYSE-BNS). The 5 year median dividend yield is 3.9%. They raised the dividends this year by 6.1%. DPRs are fine. Stock is also relatively cheap. For my blog entries dated December 2011, click here or here.

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.

Bank of Nova Scotia 2

2011-12-28T14:26:00.000-05:00

I do not own this stock (TSX-BNS), but I have been following it for some time. This bank also only had dividends increases on hold for 2009 and 2010. They increased their dividends by 6.1% this year. This is one of the lowest increases for this bank that they have had for some time. The 5 and 10 year dividend growth is 6.45% and 12.7% per year, respectively.

As for all Canadian Banks, the insider trading report shows lots of insider selling. The gross insider selling is $28.9M and the net is $27.9M. Insider selling is by CEO, officers and directors. They seem mostly to be selling stock options. There is some insider buying by directors of just over $1M. There are 504 institutions that own some 65% of this stock. Over the past 3 months there has been buying and selling and they have increased their shares by a modest 1.3%.

I get a 5 year low median Price/Earnings Ratio of 11.4 and a high median P/E Ratios of 14.2. (Note that the 10 year median P/E ratios are virtually the same.) The current P/E Ratio of 10.78 is therefore a low one and that suggests a low stock price.

I get a Graham Price of 52.66. The current stock price of $50.97 is 3% lower. The 10 year median low difference between the Graham Price and Stock price is the stock price being the same. So the stock price being lower than the Graham Price suggests a low stock price also.

I get a 10 year median Price/Book Value Ratio of 2.40 and a current one of 1.96. The current one is 80% of the 10 year median and would suggest a low stock price also. The current dividend yield is 4.08% and the 5 year median dividend yield is 3.92%, some 4.2% lower. This also suggests a low stock price. (Note that the 10 year median high dividend yield at 3.71% is lower than the current yield also.)

When I look at analysts’ recommendations, I find them all. I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. Most of the recommendations are either Buy or Hold. The consensus recommendation would be a Buy. With the Buy commendations come 12 months stock prices between $55 and $68, a rather big range. One Hold says that all Canadian Banks are fully valued.

I think that this is a good Canadian Bank. They also have exposure to the Caribbean and Central America which other Canadian Banks do not. The only reason I do not consider buying this stock is that I also have too much Canadian Bank stock.

The blogger addicted2dividend has blogged about this stock recently at The Loonie Bin.

This is a pretty dull report. All our banks are priced relatively low. I cannot imagine a completely recovery until the EU solves their problems. No one knows when this will occur.

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is here Bank of Nova Scotia. See my spreadsheet at bns.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.

Be back on December 28, 2011

2011-12-24T23:13:00.002-05:00

This is just a note to say that my next post will be on Wednesday, December 28th, 2011.

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.

Bank of Nova Scotia

2011-12-23T14:54:00.002-05:00

I do not own this stock (TSX-BNS), but I have been following it for some time. This bank also only had dividends increases on hold for 2009 and 2010. They increased their dividends by 6.1% this year. This is one of the lowest increases for this bank that they have had for some time. The 5 and 10 year dividend growth is 6.45% and 12.7% per year, respectively.

As far as Dividend Payout Ratios goes, their 5 year median DPRs are 50% for earnings and 35% for Cash Flow. Their 10 year median DPRs are lower at 44% and 36%. Their DPRs for 2011 were 44% and 35% and therefore closer to the 10 year median. Their DPRs peaked in 2008 and have been coming down since. (See my site for information on Dividend Payout Ratios).

If you had held this stock over the past 5 and 10 years, you would have had a total return of 4.7% and 13.5% per year. Dividend portion of this return would have been 3.7% and 4.4%. The portion of this return attributable to dividends would be 80% and 32% respectively.

Revenues have been growing over the past 5 and 10 years at around 1.6%. This is low, but revenue growth for all Canadian banks has been low. Earnings have been growing over the past 5 and 10 years at 5.4% and 8.6% per year, respectively.

Cash Flow has been growing at 10.8% and 5.9% per year over the past 5 and 10 years. Book Value has been growing at 8.8% and 7.4%. Concerning the trouble this last recession has caused our banks, this is not bad.

The Return on Equity has always been good for this bank. The ROE for 2011 was 17.5% and the 5 year median was 17.1%. The ROE based on Comprehensive Income is a bit lower, but not significantly lower. The ROE for Comprehensive Income for 2011 was 16.2. However the 5 year median ROE based on Comprehensive Income is lower at 13.6. All these ROE are in the desirable 10 to 15% range.

The Asset/Liability Ratio is low at 1.06, but within typical range for a bank. The Leverage and Debt/Equity Ratios are a bit high at 20.27 and 19.10, but lower than the 10 year medians of 22.11 and 20.89. They are also pretty typical for a bank.

The basic reason I do not own this bank is that I have enough bank stock. I think it is better to own some, but not all, our banks. You can over diversify

I have made transfers from my RRSP accounts for this year. I therefore had a bit of money to invest and so bought some more shares in Ag Growth International (TSX-AFN) today. This is a stock I already own.

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is here Bank of Nova Scotia. See my spreadsheet at bns.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.