Friday, October 24, 2014

The North West Company 2

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Andrew Busch.

I do not own this stock of The North West Company (TSX-NWC, OTC-NWTUF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock changed from an income trust to a corporation in 2011.

When I look at insider trading, I find $1.2M of insider selling and $0.5M of insider buying with net insider selling at $0.7M. There is some insider ownership with the CEO owning shares worth around $6.7M and the CFO owning shares worth around $1.6M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.63, 16.12 and 17.60. The 10 year corresponding values are 12.84, 13.67 and 14.05. It would appear that the P/E Ratios are currently increasing. The current P/E Ratio is 20.11 based on a stock price of $23.33 and 2014 EPS estimate of $1.16. This stock price test suggests that the stock is relatively expensive. On the other hand a P/E of 20.11 is not particularly high.

I get a Graham Price of $13.18. The 10 year low, median and high median Price/Graham Price Ratios are 1.09, 1.31 and 1.56. The current P/GP Ratio is 1.77 based on a stock price of $23.33. This stock price test suggests that the stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 3.06. The current P/B Ratio at 3.50 is some 15% higher. The P/B Ratio is based on a stock price of $23.33 and BVPS of $6.66. This stock price test suggests that the stock is relatively reasonable, but to the higher end of the reasonableness range.

The 5 year dividend yield is 5.14% and the current dividend yield is only 3% lower at 4.97%. This historical average dividend yield and historical median dividend yields are much higher at 7.73% and 7.38%, but this is expected as this company used to be in income trust. When income trust companies convert to corporations, their dividend yields go down. By the 5 year dividend yield stock price test suggests that the stock is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommends. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 months stock price consensus is $24.80. This implies a total return of 11.27% with 4.97% from dividends and 6.30% from capital gains.

The Net News Ledger reports on the company's second quarterly results. This article at BNN talks about a recent proxy fight with Montrusco Bolton.

Sound bit for Twitter and StockTwits is: Not cheap, but could be reasonable. This dividend growth consumer staple stock seems to be reasonably priced on some levels. The dividend is good and the company has had decent dividend increases in the past. See my spreadsheet at nwc.htm.

This is the second of two parts. The first part was posted on Thursday, October 23, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 225 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center, and Cost-U-Less. Its web site is here North West Company.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, October 23, 2014

The North West Company

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Peter Hodson.

I do not own this stock of The North West Company (TSX-NWC, OTC-NWTUF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock changed from an income trust to a corporation in 2011.

When this company changed to a corporation, they cut their dividend almost 30%. Since then they have been again raising the dividend. The last dividend increase was in 2014 and the increase was for 3.6%. The 5 and 10 year change in dividends is a decline for 2.6% per year and an increase of 8% per year over these periods.

The dividend yield is good and the dividend increases are moderate. The current dividend yield is 4.97% and the 5 year median dividend yield is 5.14%. The 5 year median Dividend Payout Ratios for EPS is at 85% and for CFPS is at 56%. The DPR for the financial year ending January 2014 for EPS is 85% and for CFPS is 60%.

Shareholders have done well with the total return over the past 5 and 10 years at 9.88% and 14.25% per year. The portion of this attributable to capital gains is 4.19% and 9.23% per year. The portion of this attributable to dividends is 5.69% and 8.02% per year. Note that the dividend yield has gone down from a median of 7.4% to a median of 4.8% since the company changed from an income trust company to a corporation. This means that the dividend portion of total return will be lower in the future than in the past.

Outstanding shares have not changed over the past 5 and 10 years. It would seem that there have been some very minor increases due to Stock Options and this has only been in the last 2 years. There has been moderate growth in revenue over the past 5 and 10 years, but not in EPS or CFPS. There has been no growth in EPS and CFPS over the past 5 years. There has been growth in EPS over the past couple of years, but not in CFPS.

The Revenue per Share has grown by 2% and 7% per year over the past 5 and 10 years. EPS is down by 3.3% per year over the past 5 years and up by 6% per year over the past 10 years. CFPS is down by 3.5% per year over the past 5 years and up by 2% per year over the past 10 years. The Operational Profit Margin (CF/Revenue) Ratio is trending down and this is not good.

The Return on Equity is good with ratio above 10% each year of the past 10 years. The ROE for the January 2014 financial year is 19.9% and the 5 year median is 22%. The ROE on Comprehensive Income for the January 2014 financial year was 24.7% and the 5 year median is 24.7%. You want these ROEs to be close as that suggests that the earnings are of good quality.

The Liquidity Ratio is fine, but a bit low with the one for last year at 1.43. The Debt Ratio is good at 1.93. The Leverage and Debt/Equity Ratios are a little high but also fine at 2.08 and 1.08.

Growth in revenue is good and you need this for growth in EPS and CFPS. It would be nice to have better growth in EPS and CFPS. The second quarterly results should a slight decline in EPS, but strong growth in CFPS. The strong growth in CFPS is a good sign.

Sound bit for Twitter and StockTwits is: Consumer Staple dividend growth stock. It is a good chance that anyone investing in this stock could have a dividend yield of 10% on their original investment in 10 years' time. This is good. See my spreadsheet at nwc.htm.

This is the first of two parts. The second part will be posted on Friday, October 24, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 225 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center, and Cost-U-Less. Its web site is here North West Company.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, October 22, 2014

Equitable Group Inc.

On my other blog I am today writing about the presentations at the World Money Show in Toronto by Peter Schiff and by Camila Sutton .

I do not own this stock of Equitable Group Inc. (TSX-EQB, OTC-EQGPF). I had read a glowing report on investing on this company in 2013, so I decided to check it out. It was interesting as it was loaning money to new immigrants, a class of people who generally have a difficult time getting loans and mortgages from our regular banks.

Let's look at dividends. The dividend is low with moderate growth. The current dividend yield is 1.07%. The 5 year median dividend yield is 1.72%. The growth in dividends over the past 5 and 8 years is at 8.2% and 7.7% per year.

The Dividend Payout Ratio is low with a 5 year median DPR for EPS of 11% and for CFPS at 9.9%. The corresponding DPR for 2013 is at 10% for EPS. Since the cash flow was negative for 2013 there is no DPR for it.

Shareholders have done well recently. The 5 and 10 year total return is at 26.03% and 12.28% per year with 24.48% and 11.05% per year from capital gains and 1.55% and 1.24% per year from Dividends.

Outstanding shares have increased by 0.6% and 4% per year over the past 5 and 10 years. Revenue and earnings has grown well. I cannot measure cash flow as it negative in 2013. Analysts have been looking a net interest income and that has grown at 22% and 21% per year over the past 5 and 10 years.

Revenues have grown at 17.5% and 22.7% per year over the past 5 and 10 years. Revenue per Share has grown at 16.8% and 18% per year over these time periods. EPS has grown at 15.9% and 20.4% per year over the past 5 and 10 years.

Return on Equity has been over 10% each year of the last 10 years. The ROE for 2013 was 15.9% and the 5 year median was 14.6%. The ROE on comprehensive income was 16.2% in 2013 and the 5 year median is also 16.2%.

The company changed from a Trust company to a Schedule 1 bank in 2013. The current Debt Ratio of 1.05 is generally acceptable for a Schedule 1 bank.

When I look at insider trading I find $8.2M of insider selling and $8.0M of net insider selling. There is insider selling by all classes of insider but most is by directors or $7.7M of insider selling. Although the amount in insider selling at $8M sounds like a lot, it is only 0.84% of market cap.

There is some insider ownership with the CEO owing shares worth $4M and a director with shares worth $101.8M and 13% of outstanding shares.

Since 2008, the Price/Earnings Ratios on this stock have been quite low. The 5 year low median and high median P/E Ratios are 5.49, 7.57 and 6.82. The 10 year corresponding P/E Ratios are similar. The current P/E Ratio at 9.71 based on a stock price of $63.50 and 2014 EPS estimate of $6.54. The stock test suggests that the stock might be relatively expensive. However, a P/E of 9.71 is rather low.

The 5 year median dividend yield is 1.72% and the current dividend yield at 1.07 is some 37% lower. The historical average dividend yield is 2.42 and the historical median dividend yield is 1.52%. All these yields are quite a bit higher than the current yield and this suggests that the stock price might be relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is at $73.30. This suggests a total return of 15.50% with 15.43% from capital gains and 1.07% from dividends.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. The dividend yield is getting a little low for my liking. I do not buy any stock with a dividend yield less than 1%. Compared to what investors were willing to buy over the last few years, this stock looks expensive. However, the P/E Ratio is quite low at 9.71 and the P/B Ratio is not very high at 1.66 although it is some 45% higher than at 10 year median P/B Ratio of just 1.14. See my spreadsheet at eqb.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Equitable Group Inc. is a niche mortgage lender. The company's primary business is first charge mortgage financing, which offer through company's wholly owned subsidiary, Equitable Bank (formerly The Equitable Trust Company). Equitable Bank is a Schedule I bank pursuant to the Bank Act; it actively originates mortgages across Canada and serves single family, small & large commercial borrowers. Its web site is here Equitable Group[.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, October 21, 2014

Gluskin Sheff + Associates Inc. 2

On my other blog I am today writing about the presentations at the World Money Show in Toronto by Kim Githler and by Jim Jubak.

I do not own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

When I look at insider trading, I find $4.7M of insider selling with $4.2M of net insider selling. Net insider selling is not a lot as it is only 0.44% of market cap. There is some insider ownership with the CEO owing shares worth $58.4M and a couple of officers owning shares worth $24.9 and $57.7M. Also, the two founders of this company have retired from the board.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.47, 13.73 and 11.60. The 10 year corresponding ratios are 9.47, 14.46 and 17.58. The current P/E Ratio is 12.56 based on a stock price of $29.02 and 2014 EPS estimates of $2.31. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $12.68. The 10 year low, median and high median Price/Graham Price Ratios are 1.41, 2.01 and 2.44. The current P/GP Ratio is 2.29. This stock price test suggests that the stock price is relatively reasonable. However, these P/GP Ratios are rather high for this ratio.

The 10 year Price/Book Value per Share ratio is 6.29. The current P/B Ratio is 9.39 a value some 49% higher. This stock price test suggests that the stock price is relatively expensive.

The 5 year median Dividend Yield is 2.93 and the current Dividend yield of 3.10 is some 5.7% higher. The historical average Dividend yield is 3.51%, but the historical median dividend yield is lower at 2.84. This stock price test suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The most recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $35.50. This implies a total return of $25.43% with 3.10% from dividends and 22.33% from capital gains.

There is an article about this company on newswire which announces the first fiscal quarter of 2014 and the fact that the two founders are retiring from the board of this company.

Sound bit for Twitter and StockTwits is: Price reasonable, but founders have left. See my spreadsheet at gs.htm.

This is the second of two parts. The first part was posted on Monday, October 20, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin Sheff.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, October 20, 2014

Gluskin Sheff + Associates Inc.

On my other blog I am today writing about going to World Money Show Toronto. continue...

I do not own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

I did a spreadsheet on this stock in February 2010 and was not impressed with the stock. I chose this stock because I recognized the names of Gluskin and Sheff. I reviewed problems with list in February 2010. This stock peaked in 2006 and had not recovered by August 2011. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007.

It has taken a while, but this stock has now fully recovered from problems it was having in 2006 and 2007. In the meantime shareholders have not only gotten a good dividend yield but special dividends were paid in all of the past 6 years.

I had been a bit negative on this stock since I started to review it. However, perhaps that was uncalled for. The gains that this company has made in the last couple of years have been impressive. On the other hand, analysts seem to think that revenue, earnings and cash flow are going to drop significantly for the financial year ending in June 2015. They expect revenue to drop 24%, earnings to drop 36% and cash flow to drop 65%.

So let's first talk about dividends. Dividends are moderate with a moderate increase. The current dividend yield is 3.1% and the 5 year median dividend yield is 2.84%. The dividends have increased over the past 5 and 7 years at 10.5% and 14% per year. The last dividend increase was for 12.5% and occurred in 2014.

Another thing with dividends to discuss is special dividends. Each year over the past 6 years there has been median special dividend of $0.80 a share. This has delivered a median extra yield of 4.3% for these 6 years.

The last thing to discuss is Dividend Payout Ratios. The 5 year median DPR for EPS is 79% and the CFPS is 72%. The DPR for the financial year ending in June 2014 are 99.3% and 85.8%. These figures include special dividends. For financial year of 2012 the company paid out more in dividends than their EPS and CFPS.

The total returns over the past 5 and 9 years are at 14.61% and 10.83% per year. The portion of this return attributable to capital gains is at 7.15% and 5.13% per year. The portion of this return attributable to dividends is at 7.46% and 5.70% per year.

The outstanding shares have not increased over the past 5 years, but have increased by 16.4% per year over the past 9 years. There has been good to excellent growth in revenue, earnings and cash flow over the past 5 and 9 years. The last 5 years growth is generally better than the 9 year growth.

Revenue is up by 29% and 17.9% per year over the past 5 and 9 years. Revenue per Share is up by 28.6% and 2.9% over the past 5 and 9 years. In connection with this, because it is an investment management company, we should also look at Assets under Management (AUM). AUM has growth at 10.9% and 9.2% per year over the past 5 and 8 years.

EPS has grown at 37.6% and 56.5% per year over the past 5 and 9 years. Cash Flow has grown at 34.9% and 23.5% per year over the past 5 and 9 years. CFPS has grown at 34.4% and 34.9% over the past 5 and 9 years.

Return on Equity has been very high with the 5 year median ROE for 2014 at 50.7% and the ROE for the financial year ending June 2014 at 116.2%. The ROE on comprehensive income is about the same with the 5 year median at 50.7% and the ROE for the current financial year at 114.5%.

There is a problem here with ROE. The desirable ROE is between 12% and 15%. Anything higher than 15% and analysts begin to worry about leverage. However, the leverage on this stock is not than high at 2.11. A very high ROE does not necessarily mean better financial performance of a company. There is some discussion of ROE at Ready Ratios and Investopedia.

Debt Ratios are fine with the current Liquidity Ratio at 1.81, the Debt Ratio at 1.90 and the Leverage and Debt/Equity Ratios at 2.11 and 1.11.

Sound bit for Twitter and StockTwits is: Dividend growth stock, special dividends. See my spreadsheet at gs.htm.

This is the first of two parts. The second part will be posted on Tuesday, October 21, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin Sheff.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, October 17, 2014

Canadian Pacific Railway 2

I do not own this stock of Canadian Pacific Railway (TSX-CP, NYSE-CP), but I used to. It is a stock I held from 1987 to 1999. I also held it 2006 to 2011. I decided in 2011 to have only one railway stock and choice CN as my railway stock. I am following this stock because it is a dividend growth stock.

When I look at insider trading, I find some $0.8M of insider buying and $532.3M of insider selling. The net insider selling is some 1.5% of the outstanding stocks. I notice that William Ackerman seems to be selling off shares. Last year when I looked he held 13.5% of outstanding shares and now he holds some 8% of the outstanding shares.

The increase in outstanding share due to stock options was 1.5M for 2013 and this is some 0.86% of the outstanding shares as is fine. However, last year shares were increased by 3.9M shares and 2.2% of the outstanding shares and this is a lot. (Anything over 1% is a lot for an increase in outstanding shares for stock options.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.84, 17.25 and 20.66. These are moving up as the corresponding P/E Ratios for the past 10 years is at 16.67, 13.79 and 16.67. The current P/E Ratio is 25.03 based on a stock price of $210.49 and 2014 earnings estimates of $8.41. This stock price test suggests that the stock is relatively expensive.

The current Dividend Yield is 0.67% and the 5 year median dividend yield at 1.77% is some 62% higher. The historical average and median Dividend Yield are 1.83% and 1.53%. These are both a lot higher than the current dividend yield. This stock price test suggests that the stock is relatively expensive. Even the historical high at 1.08% is higher than the current yield.

I get a Graham Price of $87.74. The 10 year low, median and high median Price/Graham Price Ratios are 0.85, 1.03 and 1.27. The current P/GP Ratio is 2.40 based on a stock price of $210.49. This stock price test suggests that the stock is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 1.88 and the current P/B Ratio at 5.17 is some 175% higher. This is based on a stock price of $210.49 and BVPS of $40.68. This stock price test suggests that the stock is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $230.00. This implies a total return of 9.93% with 9.27% from capital gains and 0.67% from dividends.

This article in the Financial Post talks about the implications of a CP takeover of CSX Corp. The Motley Fool looks at both CP and CN (TSX-CNR).

Sound bit for Twitter and StockTwits is: Stock is relatively expensive. I would not buy this stock at this price because of the low dividend yield. When the dividend yield is below 1% it takes a very long time to earn a descent dividend yield on your original purchase of a stock.

Of course the stock market is still falling and we are at least in a market correction period. Who knows, the stock price might just become a reasonable or even a cheap one if this market correction continues. See my spreadsheet at cp.htm.

This is the second of two parts. The first part was posted on Thursday, October 16, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company is a transcontinental railway operating in Canada and the U.S. Its rail network serves the principal centers of Canada, from Montreal to Vancouver and the U.S. Northeast and Midwest regions. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico. Canadian Pacific Solutions provides logistics and supply chain expertise. Its web site is here Canadian Pacific.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, October 16, 2014

Canadian Pacific Railway

I do not own this stock of Canadian Pacific Railway (TSX-CP, NYSE-CP), but I used to. It is a stock I held from 1987 to 1999. I also held it 2006 to 2011. I decided in 2011 to have only one railway stock and choice CN as my railway stock. I am following this stock because it is a dividend growth stock.

I am just looking at dividends since 2002 which is what this company has paid after Canadian Pacific Limited split itself into 5 separate companies. The dividend yield on this stock is on the low side with moderate dividend increases. The current dividend is just 0.67% and the 5 year median dividend yield is 1.77. This historical median dividend yield is 1.53%. The 5 and 10 year growth in dividend is at 7.2% and 10.6% per year.

The company is paying out a moderate amount of their EPS and CFPS. The 5 year median Dividend Payout Ratio for EPS is 28% and for CFPS is at 34%. The corresponding DPR for 2013 is at 28% for EPS and 13% for CFPS.

This stock has done well for its shareholders recently with 5 and 10 years with total returns at 48.05% and 19.06% per year. The dividend portion of this return is at 2.02% and 1.23% per year over these periods. The capital gains portion of this return is at 46.03% and 17.83% per year over these periods.

Outstanding shares have increased by 2.7% and 1% per year over the past 5 and 10 years. Outstanding Shares have increased due to Stock Options and Share Issues and decreased due to Buy Backs. The growth in cash flow has been the best with moderate to very good increases over the past 5 and 10 years. EPS has increased moderately over the past 5 and 10 years. Revenue per Share has low to moderate growth over the past 5 and 10 years.

Growth in revenue per share was at 1.8% and 4.3% per year over the past 5 and 10 years. Growth in EPS is at 4.5% and 7% per year over the past 5 and 10 years. Cash Flow per Share has grown at 7.2% and 17.3% per year over the past 5 and 10 years.

Analyst feel that Revenue per Share will growth faster over the next two years, but they also expect better growth for EPS and Cash Flow. At some point, revenue will have to pick up the pace to match earnings and cash flow growth or earnings and cash flow growth will have to slow.

Over the past 10 years the Return on Equity has been below 10% and both these years were in the last 5 years. The ROE for 2013 was good at 12.3% and it has a 5 year median of 11.3%. The ROE on comprehensive income was better for 2013 at 30.2%, but the 5 year median was lower at 8.7%.

The Liquidity Ratio was ok at 147 in 2013 however this ratio has varied a lot and the 5 year median is just 1.03. When you add in cash flow after dividends the Liquidity Ratio is 2.71, but the 5 year median is quite a bit lower at 1.31. The Debt Ratios are good with a 2013 ratio of 1.71 and a 5 year median ratio of 1.55.

The Leverage and Debt/Equity Ratios are fine, but I would like to see them lower. The 2013 ratios were at 2.40 and 1.40 respectively. The 5 year median values are at 2.53 and 1.53.

Sound bit for Twitter and StockTwits is: dividend growth stock. I have Canadian Nation Railway (TSX-CNR) in my portfolio so I will not be buying this stock at this point in time. However, I can see the value of having a big railway stock in your portfolio. They are both dividend growth stocks. See my spreadsheet at cp.htm.

This is the first of two parts. The second part will be posted on Friday, October 17, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is a transcontinental railway operating in Canada and the U.S. Its rail network serves the principal centers of Canada, from Montreal to Vancouver and the U.S. Northeast and Midwest regions. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico. Canadian Pacific Solutions provides logistics and supply chain expertise. Its web site is here Canadian Pacific.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, October 15, 2014

Kombat Copper Inc.

On my other blog I am today writing about going to World Money Show Toronto continue...

I own this stock of Kombat Copper Inc. (TSXV-KBT, OTC-PNTZF). I originally brought this stock in 2000 as Tathacus Resources Ltd. because it was doing interesting things. It was part of a basket of small caps that I was buying at that time.

There was a reverse takeover (RTO) of this company on Apr 28, 2011 by Pan Terra Industries Inc. Symbol PNT. On May 2, 2012 there was a name change from Pan Terra Industries (PNT) to Kombat Copper Inc. (KBT). The last time I looked my investment in this stock was worth $6.00. It is not worth selling and I am curious what will happen to this stock.

This is the fifth year in a row that this company has had no revenue. Needless to say they have had no profit or cash flow over this period. The company has only had a profit in 2004 and 2007 over the past 10 years. These years were before the reverse takeover. The last two times the company had a positive cash flow was in 2001 and 2007.

The only other thing I should remark on is that they have cash on hand that is equal to $.01 per share. There is not much else to say. I am still tracking this as I am curious about where the company will go.

They are distributing annual financial statements to shareholders, but the latest one on their site is the quarterly reports for 2012. However, they seem to have recent press releases on their side or at least ones dated in 2014. On their site they also have a presentation for investors dated September 2014.

Sound bit for Twitter and StockTwits is: Interesting diversion. See my spreadsheet at kbt.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Kombat Copper Inc. is a publicly traded Canadian exploration and development company. Its core operations are focused on copper resources in Namibia, one of the world's most prospective copper regions, where they have substantial assets in place Its web site is here Kombat.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, October 14, 2014

Teck Resources Ltd.

On my other blog I am today writing why the stock market might be treading lower. continue...

I do not own this stock of Teck Resources Ltd. (TSX-TCK.B, NYSE-TCK). I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.

This stock is currently paying a dividend and has a yield of 5% and a 5 year median dividend yield of 2.29%. It is probably needless for me to say that the stock price has been dropping lately. The 5 and 10 year dividends have fallen 2.1% per year over the past 5 years and have grown at 24.6% per year over the past 10 years.

This company has had different dividend policies over its life, so it is hard to say what they will do in the future. For example, dividends were flat for a long time before they started to increase in 2004. They paid no dividends in 2009 and then restarted them in 2010.

This stock is down some 72% from its high in 2011. For 2014 it is down some 35% so far this year. Their problem really stems from their buying of Fording Coal in 2008. I had bought this stock at the end of 2008 when they last cut their dividend. I held it until mid-2009 and sold for a 240% profit. Of course it went much higher over the next few years, but I had made a profit so that was nice.

The last 2 years have not been very good for this company. Revenue, earnings and cash flow have very little growth over the past 5 years because of this and analysts expect the same for 2014. The 5 year growth for Revenue per Share is 2.8% per year, for EPS is 2.8% per year. For Cash Flow per Share there is a decrease of 9.6% per year.

The Total Return over the past 5 and 10 years is low because of what has happened recently to the stock price. The Total return over the past 5 years is a loss of 10.70% per year and over the past 10 years is an increase at 3.46% per year. The capital losses over the 5 and 10 years are at 13.33% per year and 0.25% per year. The Dividend portion of the total return over the past 5 and 10 years is at 2.62% and 3.71% per year.

The debt ratios are good for this company. However, the Return on Equity has been quite low for the past two years and is expected to be quite low for 2014. The ROE for 2013 was at 5.2%. The ROE on comprehensive income for 2013 was better at 7.1%.

When I look at analysts' recommendations I find Strong Buy, Buy, Hold and Underperform recommendations. The consensus recommendation is a Hold as are most of the recommendations. The 12 month stock price is $27.30. This suggests that analysts expect a strong recovery in this stock as the 12 month stock price would give a total return of 56.58% from today's price of 18.01. The dividend portion of this return would be 5% and the capital gains would be 51.58%.

If you look just at Price/Earnings per Share Ratio, the current ratio is rather high for this stock at 20.94 as the company is not expected to earn much this year. The 2014 EPS estimate is just $0.86 a decrease of 48% from 2013's earnings. The second quarterly financials shows EPS declining.

However, other measures say a very different thing. Take the Graham price, which is at $24.94. The 10 year Price/Graham price Ratios are 0.64, 0.88 and 1.15. The current P/GP Ratio is 0.72. This stock price test suggests that the stock price is reasonable.

The historical high dividend yield is 3.10% and the current dividend yield at 5% is some 61% higher. This stock price test suggests that the stock price is cheap. The Price/Book Value per Share suggests the same thing as the 10 year P/B Ratio is 1.62 and the current P/B Ratio is 0.56 a value some 65% lower.

There is a recent MPL Communications Daily Advice email on this company. It talks about Teck's coal mines being cash-flow positive despite world-wide glut of coal. The Motley Fool thinks it is not worthwhile betting on Teck at this point.

Sound bit for Twitter and StockTwits is: Stock is relatively cheap. This is a volatile resource stock and I believe money can be made in the ups and down of the stock price. However, I do not see this stock as a long term buy. See my spreadsheet at tck.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, October 10, 2014

Linamar Corporation 2

I do not own this stock of Linamar Corporation (TSX-LNR, OTC-LIMAF). I looked at this stock back in 2000 and it was not a stock I thought fit my investment philosophy. In 2008 I read an article that recommended this company as a dividend stock with good value and so I started to follow this stock.

When I look at insider trading for the past year, I find $1.5M of insider buying and $0.8M of insider selling with $0.7M of net insider buying. These are very small amounts. There is some insider ownership with the CEO having shares worth around $169M and 5.9% of outstanding shares and the Chairman owning shares worth around $675.6M and 23.6% of outstanding shares.

In 2013 outstanding shares were increased by 56,000 or 0.09% for stock options. The book value of these options was at $1.2M and this number of shares was worth around 2.5M at the end of 2013. These are a very low numbers for stock options.

The 5 year low, median and high median Price/Earnings per Share Ratios were 6.45, 9.50 and 12.55. These are close to the 10 year corresponding values of 7.99, 9.95 and 12.31. The current P/E Ratio is 12.10 based on a stock price of $53.50 and 2014 EPS estimate of $4.42. This stock price test suggests that the stock price is relatively reasonable, but towards to high end of that range.

I get a Graham Price of $48.06. The 10 year low, median and high median Price/Graham Price Ratios are 0.59, 0.76 and 0.95. The current P/GP Ratio is 1.11. This stock price test suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.29 and the current P/B Ratio at 2.30 is some 79% higher. This is based on a BVPS of $23.22 and a stock price of $53.50. This stock price test suggests that the stock price is relatively expensive.

I get 5 year median dividend yield of 1.42% and this is some 47% higher than the current dividend yield of 0.75%. Also, the historical average and median dividend yields are 1.47% and 1.25% which are 49% and 40% higher than the current dividend yield of 0.75%. All this suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I get Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a buy. The 12 month consensus stock price is $71.30. This implies a total return of 34.02% with 33.27% from capital gains and 0.75% from dividends.

Sound bit for Twitter and StockTwits is: Buy when it crashes, relatively expensive now. This is an industrial stock and it has its ups and downs. If you want to make a decent dividend yield on your purchase price, buy this stock when it is at a low. Also, I would not buy any dividend growth stock with a dividend yield less than 1% as it would take too long to get to a decent dividend yield on your original purchase. See my spreadsheet at lnr.htm.

This is the second of two parts. The first part was posted on Thursday, October 09, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.