Just Energy Group

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

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

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

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

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

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

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

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

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

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.