Tuesday, August 19, 2014

Newfoundland Capital Corp.

I do not own this stock of Newfoundland Capital Corp. (TSX-NCC.A). I started to follow this stock as it was suggested as a decent dividend paying stock for investment purposes in the latter part of 2009. It is not on any dividend lists that I follow so I took a look at it.

For this stock, dividends have varied over time. They started to pay dividends in 1997 and then stopped them in 1999. Dividends were restarted in 2004 and for most years since they have paid dividends. The exception is 2009 when no dividends were paid. However, they did pay 3 dividends, rather than the usual 2 in 2008. Over the past 5 and 9 years, dividends are up by 0% and 18.2%. Analysts do not see any dividend increases over the next few years.

The Dividend Payout Ratios are good. The 5 year median DPR for EPS is 17% and for CFPS is 21%. The corresponding ones for 2013 are 17% and 21%. I guess the problem is that for 2014 they are expected to be 28% and 18% respectively.

The total returns over the past 5 and 10 years to date are at 5.30% and 9.09% per year. The portion of this return attributable to dividends is at 1.96% and 2.02% per year over the past 5 and 10 years. The portion of this return attributable to capital gains is at 3.34% and 7.07% per year over the past 5 and 10 years. The return over the past 5 years is not great, but not disastrous either.

The outstanding shares have declined by 4.4% and 2.4% per year over the past 5 and 10 years. This makes growth in revenues, earnings and cash flow more important than revenue per share, EPS and CFPS. Generally growth has been good over the past 5 and 10 years.

Revenues have grown at 3.6% and 8% per year over the past 5 and 10 years. Revenue per Share has grown at 11.3% and 10.6% per year over these periods.

Since exactly 5 year ago, the company had an earnings loss I can only look at 4 year and 10 year growth. Earnings have grown at 15% and 16% per year over the past 4 and 10 years. EPS has grown at 19% and 18% over these periods.

Cash Flow has grown at 9.5% and 7% per year over the past 5 and 10 years. CFPS has grown at 14.5% and 9.6% per year over the past 5 and 10 years.

The Return on Equity has been below 10% 4 times in the last 10 years and only once in the past 5 years. The ROE for 2013 is at 20.2% and the 5 year median ROE is at 14.8%. The ROE on comprehensive income is 21.5% for 2013 and the 5 yea median is at 17.6%. Basically the ROE on comprehensive income suggests that the earnings are of good quality.

The Liquidity Ratios has been lower than what I would like with the one for 2013 at 1.37 and the 5 year median at 0.96. However, for 2013 if you add in cash flow after dividend the Ratio is 2.16. The Debt Ratio is good at 2.31 as is the Leverage and Debt/Equity Ratios at 1.76 and 0.76.

There is lots of insider ownership by the Steele family, with the CEO (Robert George Steele) owning shares worth 7.6M and the chairman (Harry R. Steele) owning shares worth just over $175M.

The 5 year median Price/EPS Ratios are 12.56, 15.81 and 19.07. These are a bit higher than the corresponding 10 year Ratios. The current P/E Ratio is 15.13 based on 2014 earnings estimate of $.55 and a stock price of $8.25. This would suggest that the current stock price is reasonable.

I get a Graham price of $7.76. The 10 year low, median and high Price/Graham Price Ratios are 1.07, 1.24 and 1.41. The current P/GP Ratio is 1.06 based on a stock price of $8.25. This stock price test suggests that the stock price is relatively cheap. However, on this sort of stock I would prefer a P/GP Ratio of 1.00 or lower to point to a cheap price. I think that a P/GP Ratio for this stock at 1.06 shows a reasonable price.

The 10 year median Price/Book Value Per Share Ratio is 2.09 and the current P/B Ratio at 1.68 is some 20% lower. This stock price test suggests that the stock price is cheap.

The 5 year median dividend yield is 1.59% and the current dividend yield at 1.82% is some 14% higher. The historical dividend yield is at 1.11% and the current dividend yield of 1.82% is some 64% higher. This testing suggests that the stock price is reasonable to cheap.

Sound bit for Twitter and StockTwits is: Not Dividend Growth Stock, but price is reasonable. I think that the dividend yield is rather low at 1.82% for a stock with no dividend increases over the past 5 years. Both the 5 year median dividend yield at 1.59% and the 10 year median dividend yield at 1.65% are lower.

Why buy? Not a great dividend, no dividend increases and it is not even cheap. The growth in revenue, earnings and cash flow is quite good as it’s the debt ratios. But, 5 year total return is rather low. See my spreadsheet at ncc.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.

Newfoundland Capital Corporation Limited also owns and operates Newcap Radio. Newcap Radio is one of Canada's leading radio broadcasters with 79 licenses across Canada. The Company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking. The Company has 58 FM and 21 AM licenses spanning the country employing over 800 radio professionals in Canada. Newfoundland Capital Corporation Limited also owns and operates the Glynmill Inn, Corner Brook, Newfoundland and Labrador. Its web site is here Newfoundland Capital Corp.

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, August 18, 2014

Loblaw Companies Ltd. 2

On my other blog I am today writing about Big Risk and Returns continue...

I do not own this stock of Loblaw Companies Ltd. (TSX-L, OTC- LBLCF), but I used to. I have followed this stock for some time. I got the stock from Mike Higgs' list of dividend growth companies. I owned it from 1996 to 2007. It was originally a great stock. I sold it in 2007 because it was having problems with its tech upgrade to its supply system.

The insider trading report shows insider selling at $54.8M and net insider selling at $54.4M. Net insider selling is at 0.25% of market cap and therefore is relatively small. The George Weston Limited owns around 66% of this company. The company is basically controlled by the Weston family. Also, the Loblaw Employee Benefit Plan Trust owns shares worth around $46.8M.

Outstanding shares were increased by 2.131M shares in 2013 for stock options with a book value of $90M. This number of shares was worth $90.3M at the end of 2013 and is 0.75% of the outstanding shares and generally companies with stock options increase outstanding shares by less than 1% for stock options. In 2012, outstanding shares were increased by 0.719M shares for stock options with a book value of $29M. This number of shares was at 0.25% of outstanding shares and was worth $30.5M at the end of 2012.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.71, 15.99 and 18.27. These are just slightly less than the corresponding 10 year P/E Ratios. The current P/E Ratio is 64.28% based on a stock price $52.71 and 2014 EPS estimate of $0.82.

The problem with this test is that EPS for 2014 is expected to be depressed because of write-offs. The P/E Ratio using 2013 earnings is 23.74 a ratio which suggests that the stock price is expensive. The P/E Ratio using 2015 EPS of $2.99 gets you a P/E Ratio of 17.63. This would suggest a stock price that is reasonable, but at the high end of the reasonableness range.

I get a Graham Price of $23.74. This would be depressed because of the very low EPS expected in 2014 and would result in Price/Graham Price Ratio of 2.22 which shows an expensive stock. If we use 2013's Graham price of $35.24 we would get a P/GP Ratio of 1.50 for a stock price of $52.71. This would suggest also that the stock price is high. (The 10 year low, median and high median P/GP Ratios are 1.05, 1.18 and 1.33.)

I get a 10 year Price/Book Value per Share Ratio of 1.81. The current P/B Ratio is 1.73, a value 4.6% lower and that would suggest that the stock price is reasonable. This P/B Ratio of 1.73 is based on a BVPS of $30.53 and a stock price of $52.71.

Looking at the 5 year median dividend yield of 2.19% and comparing it to the current dividend yield of 1.86%, the current stock price of $52.71 seems reasonable, although at the high end of the reasonableness range. The current dividend yield is some 15% higher than the 5 year median dividend yield.

However, the historical average dividend yield is 1.63% a value that is some 14.4% lower than the current dividend yield of 1.86%. The historical median dividend yield is 1.18% a value some 58% lower than the current dividend yield. This historical testing suggests that the stock price is reasonable to cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The majority of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price is $57.80. This implies a total return of $11.52% with 9.66% from capital gains and 1.86% from dividends.

There is an interesting article about Loblaw selling13 stores and pharmacies to Metro, Jean Coutu Group and Remedy's. There is an interesting article about supply chains at Loblaws and Shoppers in the Canadian Grocer. There is an article dated 2012 where Loblaws says that it has fixed it supply chain problems in the Materials Management and Distribution magazine. You could have fooled me. I still shop at Loblaws because my store has great fresh produce, but if the ginger marmalade I like goes missing from the store, it is not there for months. I go to Metro for this product. If Metro is out of it, it will be back in the store in a couple of days.

Sound bit for Twitter and StockTwits is: Price could be reasonable. By the P/B Ratio test and the dividend yield tests the stock seems reasonable. These tests are sometimes preferable because they are not based on estimates. See my spreadsheet at lob.htm.

This is the second of two parts. The first part was posted on Friday, August 15, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Loblaw Companies Limited, a subsidiary of George Weston Limited, is Canada's largest food retailer and a leading provider of drugstore, general merchandise and financial products and services. Loblaw offers Canada's strongest control (private) label program, including the unique President's Choice, no name and Joe Fresh brands. In addition, the Company makes available to consumers President's Choice financial services and offers the PC point loyalty program. Its web site is here Loblaw.

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, August 15, 2014

Loblaw Companies Ltd.

I do not own this stock of Loblaw Companies Ltd. (TSX-L, OTC- LBLCF), but I used to. I have followed this stock for some time. I got the stock from Mike Higgs' list of dividend growth companies. I owned it from 1996 to 2007. It was originally a great stock. I sold it in 2007 because it was having problems with its tech upgrade to its supply system.

After a very long time of no dividend increases, from 2006 to 2011 inclusive, this company has again become a dividend growth company. In 2012 the dividend increase was 4.8%, in 2013 the increase was 9.1%, but for 2014 the increase has been only at 2.1%.

The low rise in 2014 probably has to do with the low expected EPS for 2014. However, the low EPS for 2014 has mostly to do with right-offs than with actual earnings. EPS for 2014 is expected to be only at $0.82. EPS for 2013 was $2.22 and for 2015 is expected to be $2.99.

The recent change to the dividend policy is probably why investors have made money over the past 5 years, but not the past 10 years. The total returns to date over the past 5 and 10 years is 11.45% gain per year and 1.69% loss per year. The portion of this total return attributable to dividends is at 2.20% and 1.38% per year over the past 5 and 10 years. The portion of this total return attributable to capital gains and losses is at 9.24% per year gain over the past 5 years and 3.07% per year loss over the past 10 years.

There has been no growth in outstanding shares over the past 5 and 10 years. Shares have increased due to Shares Issues, Stock Options and DRIP. Shares have decreased due to Buy Backs. However, note that for 2014 has have increased by 46% due to the takeover of Shoppers.

The growth in last 5 and 10 years has not been great for revenue, earnings or cash flow however, analysts expect better this year and next year. For example revenue per share is up by 0.4% and 2.3% per year over the past 5 and 10 years. Analysts do not expect much in 2014, but expect a growth of over 7% in 2015.

The growth in EPS over the past 5 and 10 years is at 2.2% per year and a negative 3.1%per year. EPS is expected to be low in 2014 mainly because of write-offs and integration of Shoppers. However, in 2014 EPS is expected to be up by 35% over 2012.

The growth in Cash Flow per Share over the past 5 and 10 years is at 2.6% and 2.8% per year. Not much growth is expected in 2014, but CFPS is expected to grow by 26% in 2015.

The Return on Equity has been below 10% 5 of the last 10 years and twice over the past 5 years. The ROE for 2013 is at 9% and the 5 year median ROE is at 10%. The ROE on comprehensive income for 2013 was at 12.2%, but the 5 year median ROE was at 9.8%

Debt ratios are ok. The Liquidity Ratio is a bit low at 1.43, but if you add in cash flow after dividends the ratio is 1.65. The Debt Ratio is good at 1.51 and Leverage and Debt/Equity Ratios are acceptable at 2.96 and 1.96.

I made money on this stock at 10% per year when I held it between 1996 and 2007. Perhaps it is again in a position to make money for its shareholders. The Weston family has a lot invested in this company and so they are probably motivated to have it earn a decent return for shareholders including themselves.

Sound bit for Twitter and StockTwits is: Probably dividend growth company again. See my spreadsheet at lob.htm.

This is the first of two parts. The second part will be posted on Monday, August 18, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Loblaw Companies Limited, a subsidiary of George Weston Limited, is Canada's largest food retailer and a leading provider of drugstore, general merchandise and financial products and services. Loblaw offers Canada's strongest control (private) label program, including the unique President's Choice, no name and Joe Fresh brands. In addition, the Company makes available to consumers President's Choice financial services and offers the PC point loyalty program. Its web site is here Loblaw.

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, August 14, 2014

Jean Coutu Group Inc. 2

I do not own this stock of Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF), but I used to. I made money on this stock, but sold in 2007 when I thought that the stock was not doing so well.

When I look at insider trading, I find $9.5M of insider selling and $0.2M of insider buying. The net insider selling is at $9.3M and at 0.23% of market cap. Although 9M sounds like a lot it is a small percentage of the market cap. This company is mostly owned by Jean Coutu who owns all the Class B shares worth around $2.2B and some Class A shares worth around 61M.

The outstanding shares were increased by 1M in the 2014 financial year for stock options. These shares have a book value of $14.4M and this number of shares was worth $20.9M at the end of March 2014. The increase in shares is at 0.53% of the outstanding shares and this is rather normal for most companies with stock options.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.80, 11.42 and 13.05. The 10 year values are similar. The current P/E Ratio is 17.68 based on a stock price of $21.57 and financial year 2015 EPS estimate of $1.22. This stock price test suggests that the stock price is relatively expensive.

I get a Graham Price of $11.63. The 10 year low, median and high median Price/Graham Price Ratios are 1.23, 1.46 and 1.74. The current P/GP Ratio is 1.85 based on a stock price of $21.57. This stock price test suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 3.20. The current P/B Ratio is 4.38 based on a stock price of $21.57 and current BVPS of $4.93. The current P/B Ratio is some 40% higher than the 10 year median ratio. This stock price test suggests that the stock price is relatively expensive.

The 5 year dividend yield is 2.29% and the current dividend yield at 1.85% is 19% lower and this suggests that the stock price maybe reasonable, but it is at the top of the reasonableness scale.

There is one place that suggests that the stock price is reasonable. The historical average dividend yield is 1.52% and the current dividend yield at 1.85% is 22% higher and this suggests that on an historical basis the stock price is reasonable. The historical median dividend yield is even lower at 0.73% and 154% lower than the current dividend yield and is this test says that this stock is cheap.

The historical dividend yield is much lower than the more recent dividend yields. This is because the dividend yield has been climbing since 2008. The thing is dividends have been increasing at the expense of the Dividend Payout Ratios. However, the DPRs are still not particularly high with 5 year median values of 30.5% for EPS and 25.9% for CFPS.

However, they are higher than generally than comparable stocks. For a comparison of DPRs, Metro (TSX.MRU) has 5 year median values of 16.9% for EPS and 13% for CFPS and Loblaws (TSX-L) 5 year median values of 35% for EPS and 15% for CFPS.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations with the consensus recommendation being a Hold. The 12 month stock price consensus is $21.7 0. This implies a total return of just 2.46% with 0.60% from capital gains and 2.85% from dividends.

There is an interesting remark in this G&M item saying that this company will have to uncover more acquisition opportunities if it is to maintain a high rate of growth. This news item fromNational talks about Andrew Molson joining the Jean Coutu Group's Board of Directors. The article in the Canadian Grocer talks about this company's higher profits in the fourth quarter. This article in the Winnipeg Free Press talks about Jean Coutu eagerly waiting a deal expanding the role of Quebec pharmacists.

Sound bit for Twitter and StockTwits is: Stock could be expensive. See my spreadsheet at pjc.htm.

This is the second of two parts. The first part was posted on Wednesday, August 13, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Corporation operates a network of 413 franchised stores located in the provinces of Québec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté. Furthermore, the Jean Coutu Group owns Pro Doc Ltd ("Pro Doc"), a Québec-based subsidiary and manufacturer of generic drugs. Controlling shareholder is Jean Coutu. Its web site is here Jean Coutu.

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, August 13, 2014

Jean Coutu Group Inc.

On my other blog I am today writing about pension woes continue...

I do not own this stock of Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF), but I used to. I bought this stock first in 2000 for my RRSP account. In 2007, I sold this stock in my RRSP account because I wanted money to invest in Saputo which I liked better at that time. In 2004, I bought some for my trading account. It had increasing dividends, a good P/E Ratio and it was a stock I already owned. In 2007, I was looking to buy a condo and so had to raise some money for a mortgage. This was not doing that well at the moment, so I sold the stock in my Trading Account.

This is a dividend growth stock. It dividend is low, but the increases are good. The current dividend yield is 1.85%. The 5 year median dividend yield is 2.29%. This historical high and low dividend yields are 2.59% and 0.47%. The 5 and 10 years dividend growth is 16.3% and 11% per year.

They do not raise the dividend every year, but dividends have grown well. There was no dividend increase in 2013, but latest increase for 2014 was for 17.65%. For the first time in 2013 the company paid a special dividend.

The Dividend Payout Ratios are good. The 5 year median DPR for EPS was at 30.5% and for CFPS was at 25.9%. The DPR for the financial year ending first of March 2014 was at 36.6% for EPS and 53% for CFPS.

The total return to date over the past 5 and 10 years is at 20.25% and 3.78% per year. The portion of this total return attributable to dividends is at 2.94% and 1.43%. The portion of this total return attributable to capital gains is at 17.31% and 2.35%. This is a consumer stock and therefore is bound to have its ups and downs. It was hit hard by the 2008 recession and that is why the 5 year returns look so good.

The outstanding shares have decreased by 4.3% and 1.8% per year over the past 5 and 10 years. Shares have increased due to Stock Options and Stock Issues and decreased due to Buy Backs. Earnings and cash flow are up over the past 5 and 10 years, but revenue is only up over the past 5 years

The Revenue is up by 2.9% and down by 4% per year over the past 5 and 10 years. Revenue per Share is up by 7.6% and down by 2.2% per year over the past 5 and 10 years.

Earnings per Share is up by 44% per year over the past 4 years and up by 10.5% per year over the past 10 years. The company had a massive loss year 5 years ago, so there is no 5 year value for growth or 5 year running averages growth.

Cash Flow is up by 11% and 3.3% per year over the past 5 and 10 years. Cash Flow per Share is up by 16.38% and 5.23% per year over the past 5 and 10 years.

The Return on Equity is below 10% in 5 of the last 10 years. In two of those years there were earnings losses. The ROE has been above 10% each year of the last 5 years. The ROE for the financial year ending March 2014 was at 46.9% and the 5 year median is 35.4%. The ROE on comprehensive income was a bit lower at 42.6% and with a 5 year median of 35.2%.

The Liquidity Ratios has generally been good and the one for March 2014 financial year is 2.23 it has a 5 year median value of 1.50. The Debt Ratio has also been good and the one for March 2014 financial year is 5.01 and it has a 5 year median of 2.53. Leverage and Debt/Equity Ratios are also good with the ones for March 2014 financial year at1.25 and 0.25 and the 5 year median values at 1.65 and 0.65.

Mostly the dividend yield on this stock has been below 1%, so it has taken a while for past shareholders to get a really nice dividend yield on their original purchase. For the stock I bought in 2000 I would today have a dividend yield on my original investment at 5.41%. This is because the original dividend yield I got was 0.95%. I would have gotten a dividend growth rate of 12.47% per year.

However, with the dividend around 1.85% today, current investors could get a dividend yield of 6.01% in 5 years and 10.81% in 10 years with the same 12.47% dividend growth rate. The point of investing in dividend growth companies is to have a portfolio producing an increasing income.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock in retail. See my spreadsheet at pjc.htm.

This is the first of two parts. The second part will be posted on Thursday, August 14, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Corporation operates a network of 413 franchised stores located in the provinces of Québec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté. Furthermore, the Jean Coutu Group owns Pro Doc Ltd ("Pro Doc"), a Québec-based subsidiary and manufacturer of generic drugs. Controlling shareholder is Jean Coutu. Its web site is here Jean Coutu.

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, August 12, 2014

EnerCare Inc.

I do not own this stock of EnerCare Inc. (TSX-ECI, OTC-CSUWF). I started to follow this stock in 2009 when it was an income trust. This was one of a few income trusts that I followed because it was recommended by MPL communications.

This was an old income trust that reduced their dividends or distributions when changing to a corporation. The dividends were reduced by 49.8% in 2009. They obviously did not lower them enough. In 2012 they began raising their dividends again. The most recent increase was for 4.1% in 2014. They pay a good dividend which is currently at 5.31%.

A number of analysts think that the dividend is safe as it is supported by cash flow. The Dividend Payout Ratios for CFPS is at 37% for 2013 and the 5 year median DPR for CFPS is at 36%. The problem that I see is that the dividend is not supported by profits. The DPR for EPS for 2013 was 546%. It is expected to move to 153% in 2014, but not to a value lower than 100% in the next few years. This increase could be due to the fact that someone wants to buy out this company.

Shareholders have done well lately as this stock is up by almost 37% this year. The 5 and 10 year total return to date is at 37.45% and 5.56% over the past 5 and 10 years. The portion of this total return attributable to dividends is at 10.73% and 6.67% per year over these periods. The portion of this total return attributable to capital gains or loss is at 26.63% per year gain and 1.11% per year loss over these periods. Note that in future dividend returns will be much lower.

The outstanding shares have increased by 3.4% and 1.7% per year over the past 5 and 10 years. Shares have increased due to Share Issues and Debenture Conversions. Generally revenues are up, Earnings are going not where and cash flow is falling.

Revenue is up by 10.6% and 8.1% per year over the past 5 and 10 years. Revenue per Share is up by 7% and 6.3% per year over the past 5 and 10 years. EPS is down by 17.6% over the past 5 years. There is no fix on 10 years' EPS growth as 10 years ago was an earnings loss year. Last year had an earnings loss. However Analysts do expect EPS to start to rise over the next few years. CFPS is down by 7.4% and 1.2% per year over the past 5 and 10 years. Here also, analysts expect CFPS to start rising again.

The Return on Equity was just above 10% 4 times in the past 10 years and only twice in the past 5 years. The ROE for 2013 is 12.4% and the 5 year median is just 3.2%. The ROE on Comprehensive Income is higher with the 2013 ROE at 18.2% and the 5 year median at 6.2%. This is a positive sign.

I do not like the debt ratios. The Liquidity Ratio for 2013 is 1.30 and then rises to 2.79 when cash flow less dividends is taken into account. The Debt Ratio is also low at 1.10. The Leverage and Debt/Equity Ratios are very high at 10.92 and 9.92.

The 5 and 10 year median Price/Earnings per Share Ratios are 60.37 and 38.31. These are why too high for this sort of company. The current P/E Ratio is 29.02 and this is still very high for this sort of company. I get a Graham Price of $3.52 and the current P/GP is 3.88 and value much too high for this sort of company.

The 10 year Price/Book Value per Share at 2.70 is also high, but the current P/B Ratio at 11.67 is some 332% higher. The 10 year Price/CFPS is 4.82 is fine, but the current one of 6.40 is some 32.8% higher and suggests that the current price is way too high.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $14.30. This implies a total return of $10.15% with 5.31% from dividends and 4.84% from capital gains.

There is an interest Financial Post article about this company and a New York Hedge fund investor. The New York Hedge fund invested in this stock want to buy the EnerCare Inc. outright. In this article another large shareholder questions if the board is looking after the interest of its shareholders.

Sound bit for Twitter and StockTwits is: Dividend growth company, but price too high. I would not buy this company. I do not like the Dividend Payout Ratios for EPS, the low ROEs and debt ratios. See my spreadsheet at eci.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.

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 Inc.

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, August 11, 2014

Savaria Corporation

On my other blog I am today writing about Canadian Equities in the Long Term continue...

I do not own this stock of Savaria Corporation (TSX-SIS, OTC- SISXF). I got this stock off the dividend blogger site. I am always interested in dividend growth small cap stock. The first few years of accounting were rather confusing, but I think I figured them out in the end.

This is a dividend growth stock with a good yield and some very good dividend growth. The current yield is 4.31% and the 5 year median dividend yield is 6.91%. The 5 and 8 year dividend growth is at 4.9% and 15.6% per year.

The reason for the recent low growth is that this company has changed from an annual dividend to a quarterly dividend. This has resulted in a decline in annual dividends paid, but the company has paid special dividends in 2013 and 2014. They have also increased the dividend by 75% in 2014.

The 5 year median Dividend Payout Ratio for EPS is at 76% and the 5 year median DPR for CFPS is at 35%. The DPR for EPS for 2013 was at 61% and for CFPS was at 34%. It is expected that the DPR for EPS for 2014 will be around 107% for 2014 and for CFPS around 31%. The DPR for EPS is expected to be lower for 2015.

The shareholders have done well over the past 5 years and 10 years. The 5 and 10 year total return to date is at 39.62% and 10.21% per year over these periods. The portion of this total return attributable to dividends is at 8.85% and 3.46% per year. The portion of this total return attributable to capital gain is at 30.77% and 6.76% per year.

The outstanding shares are down by 3% per year over the past 5 years and up by 4% over the past 10 years. The outstanding shares have increased due to Share Issues, Stock Options and Share Conversions. The outstanding shares have decreased due to Buy Backs. The company has had good growth in Revenue, Earnings and Cash Flow.

The Revenue has grown at 6.7% and 15.7% per year over the past 5 and 10 years. The Revenue per Share has grown at 10% and 11% over the past 5 and 10 years. EPS has grown at 32% and 10.4% per year over the past 5 and 10 years. Cash Flow per Share has grown at 30% and 11% per year over the past 5 and 10 years.

The Return on Equity was lower than 10% 6 times in the last 10 years and 2 times in the past 5 years. The ROE for 2013 was at 26.2% and the 5 year ROE is at 10.9%. The ROE on Comprehensive Income was lower for 2013 at 18.2%. The 5 year ROE for comprehensive income is a little higher at 11.2%. You have to wonder about the quality of the earnings for 2013 when the ROE comprehensive income is so much lower than the ROE on net income.

The balance sheet is quite sound with the Liquidity Ratio for 2013 at 2.04 and the Debt Ratio at 1.70. The Leverage and Debt/Equity Ratios are a little high at 2.42 and 1.42.

The 5 year low, median and high median Price/Earnings per Share Ratios are 7.09, 10.82 and 14.55. These are lower than the 10 year values of 11.24, 16.00 and 20.13. The current P/E Ratio is 14.77 based on a stock price of $3.25 and 2014 EPS $0.22. This stock price test suggests that the stock price is within a relatively reasonable range.

I get a Graham Price of $2.51. The 10 year low, median and high median Price/Graham Price Ratios are 0.93, 1.17 and 1.42. This stock price test suggests that the stock price is within a relatively reasonable range.

The 10 year Price/Book Value per Share Ratio is 1.85 and the current P/B Ratio is 2.56 a value some 38% higher. The current P/B Ratio is based on a BVPS of $1.27 and a stock price of $3.25. This stock price test suggests that the stock price is within a relatively expensive.

Sometimes it all depends on how you view things. The current dividend of 4.31% is lower than the 5 year average of 6.91% by some 38%. This shows that the stock price is relatively expensive. However, if you look at this year's dividend, including the special dividend, the yield is 6.91%. This shows that the stock price is reasonable.

The historical average and the historical median dividend yields are 5.94% and 5.19%. Both these are higher than the current dividend yield but lower than the current dividend and special dividend for 2014.

When I look at analyst’s recommendations, I can only find one analysts following this stock and the recommendation is a Buy. The 12 month stock price is $4.50 and this implies a total return of 42.77% with 38.46% from capital gains and 4.31% from dividends.

Sound bit for Twitter and StockTwits is: Small cap dividend growth stock, reasonable price. I think that the stock price is probably reasonable. See my spreadsheet at sis.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.

Savaria Corporation is North America's leader in the accessibility industry focused on meeting the needs of people with mobility challenges. Savaria designs, manufactures, installs and distributes primarily elevators for home and commercial use, as well as stairlifts and vertical and inclined platform lifts. In addition, it converts and adapts minivans to be wheelchair accessible. Its web site is here Savaria.

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, August 8, 2014

Dorel Industries Inc. 2

I do not own this stock of Dorel Industries Inc. (TSX-DII.B, OTC- DIIBF). I am following this stock because I used to own it. I am always curious about what happens to stocks after I no longer hold them. This was a stock recommended by Investment Reporter as a conservative investment. I sold the stock because I had it for 5 years from 1999 and it was going nowhere. I sold in 2006. I bought it in 1999 before I stopped working and at that time I did not mind buying stocks with no dividends.

When I look at insider trading, I find insider selling of $0.6M and no insider buying. There is insider ownership by the Schwartz family. There are two levels of stock Class A with multiple voting rights (10) and Class B with subordinate voting rights (1). Most of the Class A shares is owned by insiders.

There is insider ownership with the CEO having shares with some $52M, the CFO having shares worth also around $52M and an officer owning shares worth around $48M. These are combinations of Class A and B shares and are members of the Schwartz family.

Outstanding shares were increase by around 282,000 shares in 2013 with a book value of $7.6M and this number of shares was 0.9% of outstanding shares and worth around $11.4M at the end of 2013. Outstanding shares were increase around 354,000 in 2014 with a book value of $8.5M and this number of shares was 1.12% of outstanding shares and worth $14.3M at the end of 2012. For most companies, the increase in outstanding shares for stock options is less than 1% and generally less than one half of 1%. I find increases in outstanding shares for stock options relatively high for this company.

The 5 year low, median and high Price/Earnings per Share Ratios are 7.35, 8.91 and 10.60. These are slightly lower than the corresponding 10 year ratios. The current P/E Ratio is 10.61 based on a stock price of $36.70 and 2014 EPS of $3.46 CDN$ (or $3.17 US$). This stock price test would suggest that the stock price is relatively high. These P/E Ratios are rather low ratios.

I get a Graham Price of $60.49. The 10 year low, median and high median Price/Graham Price Ratios are 0.54, 0.63 and 0.72. The current P/GP Ratio is 0.61. This stock price test would suggest that the stock price is relatively reasonable. Any P/BP Ratio below 1.00 suggests that the stock price is cheap.

I get a 10 year median Price/Book Value per Share Ratio of 0.91. The current P/B Ratio is 0.78 based on a stock price of $36.70 and BVPS of $47.03. This stock price test would suggest that the stock price is relatively reasonable. Also, a stock is considered to be on the cheap side when the P/B Ratio is 1.50 and lower.

The 5 year median dividend yield is 2.44% and the current dividend yield of 3.57% is some 46% higher. The historical average dividend yield is 2.50% and the current dividend yield of 3.57% is some 42% higher. On this basis, the stock price is cheap. However, the stock price has been cheaper since dividends started in 2007 as the historical high dividend yield is 3.72%.

According to the G&M Dorel reports a good second quarter in 2014. Another G&M report talks about profits rising by nearly 15% in Dorel's Recreation Division. The WKRB News Analysis site talks about 9 analysts giving this stock a Hold recommendation.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 months stock price consensus is $40.80. This implies total returns of 14.72% with 3.57% from dividends and 11.17% from capital gains.

Sound bit for Twitter and StockTwits is: Stock price is reasonable to cheap. If you look at the P/E Ratios, P/GP Ratios and P/B Ratios, this stock has consistently been on the cheap side as all these ratios have been mostly quite low. It is obvious that investors have seldom put a high rating on this stock. See my spreadsheet at dii.htm.

This is the second of two parts. The first part was posted on Thursday, August 7, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is here Dorel.

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, August 7, 2014

Dorel Industries Inc.

I do not own this stock of Dorel Industries Inc. (TSX-DII.B, OTC- DIIBF). I am following this stock because I used to own it. I am always curious about what happens to stocks after I no longer hold them. This was a stock recommended by Investment Reporter as a conservative investment. I sold the stock because I had it for 5 years from 1999 and it was going nowhere. I sold in 2006. I bought it in 1999 before I stopped working and at that time I did not mind buying stocks with no dividends.

This stock started to pay dividends in 2007. They are paid in US$ so for a Canadian, the dividends will change with the currency exchange rate when they are paid. This has become a dividend growth stock with dividends growing at the rate of 24.5% and 21.4% per year in US$ terms and at the rate of 25% and 22.9% per year in CDN$ terms.

The dividend yield is moderate with the current dividend yield at 3.38% and the 5 year median dividend yield at 2.44%. So far the dividend growth has been very good as shown above. However, dividend increases have been inconsistent with the last increase being at 100% in 2012. There was no dividend increase in 2013 or so far in 2014. Some years do not have dividend increases. The board has stated that they will declare each dividend and that there is no guarantee that a current dividend payout will be maintained.

The 5 year Dividend Payout Ratios are 18.7% for EPS and 13.7% for CFPS. However, the DPRs have increased over the past 5 years with the ones for 2013 being at 67% for EPS and 28.6% for CFPS. These payouts are in US$ terms and the company's financial statements are in US$ and dividends are paid in US$. Dividends are growing faster than Earnings and Cash Flow and this cannot continue forever.

If you look at total return to the end of last year, the 5 year total return was very healthy, but the 10 year total return not so much. The 5 and 10 year total return to the end of December 2013 was at 12.98% and 4.83% per year. The portion of this total return attributable to dividends was at 2.56% and 1.33% per year. The portion of this total return attributable to capital gain was at 10.42% and 3.50% per year.

However, the total return over the last 5 and 10 years to date is quite lousy. The main problem being that the stock price has declined 11% this year. The 5 and 10 year total return to date was at 4.28% and 1.48% per year. The portion of this total return attributable to dividends was at 2.72% and 1.66% per year. The portion of this total return attributable to capital gain was at 1.56% and a negative 0.18% per year.

The outstanding shares have not changed over the past 5 and 10 years. Shares have increased due to Stock Options and decreased due to Buy Backs. There have also been conversions of Class A Multiple Voting shares to Class B Sub Voting shares. Revenue has grown, but earnings and cash flow have not and this is mainly because 2013 was not a good year for earnings and cash flow for this company.

The Revenue per share is up by 3.25 and 7.9% per year over the past 5 and 10 years. Earnings per share are up by 0.3% and 5.73% per year over the past 5 and 10 years. Cash Flow is down by 2.4% and up by 1.9% per year over the past 5 and 10 years. These figures are all in US$ terms in which the company uses for its annual statements. The company has not done as well in CDN$ terms.

The Return on Equity has not been above 10% for 5 years in the last 10 years and 4 of these years are in the last 5 years. The ROE for 2013 was at 4.3% and has a 5 year median of 8.5%. The ROE on comprehensive income was better for 2013 at 5.1% and it has a slightly less 5 year median at 8.2%.

Debt Ratios are generally quite good. The current Liquidity Ratio at 2.17 is good. The current Debt Ratio at 2.17 is good as is the Leverage and Debt/Equity Ratios at 1.86 and 0.86.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. The Dividends are moderate in the 2.5% to 3.5% range and increases have been healthy in the 20% per year increases. I do not see that the dividend increases can continue at the past rate. They also currently do not have the growth in revenue, earnings and cash flow to support 20% growth in dividends into the future.

Also, this is a consumer discretionary stock. On such stocks dividends can fluctuate. Some dividend growth stocks are better than others. I can see the dividend yield continue in the 2.5% and 3.5% range, but I would think that dividend growth will slow to a 4 to 5% range. See my spreadsheet at dii.htm.

This is the first of two parts. The second part will be posted on Friday, August 8, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is here Dorel.

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, August 6, 2014

DirectCash Payments Inc.

On my other blog I am today writing about possible cheap dividend stocks to buy continue...

I do not own this stock of DirectCash Payments Inc. (TSX-DCI, OTC-DCTFF). I wanted to review stocks touted in the 2009 Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one stock that was recommended.

This company started as an income trust in 2004. After the income trust tax change announcement was made in October 2006, the company did not raise their dividends. They had some increases in 2005 and 2006. The problem is that they cannot afford to raise the dividends as they do not have earnings to cover the current dividends. I like companies that raise their dividends, so I would not current favor this company.

There are not many analysts that follow this stock, but none expect any positive earnings for 2014. For 2015 the consensus earnings is only $0.08 of earnings with a dividend of $1.38. There will not be any increase in dividends anytime soon. However this stock might be worthwhile following for a while.

The stock price hit a peak in 2010 and it has been falling ever since. The 5 and 10 year total return to date is 7% and 9.75% per year. The portion of this total return attributable to capital gain is a capital loss of 2.13% per year over the past 5 years and 0.33% per year capital gain over the past 10 years. The portion of the total return attributable to dividends over the past 5 and 10 years is at 9.12% per year and 9.42% per year respectively.

The current dividend at 9.6% is high but that is only because the stock price is falling. Eventually dividend yields will probably go to the 4 to 5% range as most old income trusts have.

The outstanding shares have increased by 7.1% and 6.5% over the past 5 and 9 years. Increases in outstanding shares seem to be because of share issues. The company has done well in increasing revenue and cash flow. It just is that it is having trouble in earning money.

Revenue per share is up by 14% and 16% per year over the past 5 and 10 years. Cash Flow per Share is up 14% and 12% per year over the past 5 and 10 years. EPS peaked in 2010 and has been falling since.

To test the current stock price, I cannot use the P/E Ratios as they are negative with a negative EPS. The current Graham Price is probably at $3.61 and this will give us a current P/GP Ratio of 3.98, which is high and suggests the stock is expensive.

The 10 year Price/Book Value per Share Ratio is 2.32 and the current P/B Ratio is 1.98, a value 14% lower and this suggests that the price is reasonable. However, the 10 year Price/CF Ratio is 7.69 and the current P/CF Ratio is 3.40, a value some 56% lower. This suggests that the stock price is cheap. A P/CF Ratio below 5.00 also suggests a cheap price.

The 10 year median Price/Sales Ratio is 2.11 and the current P/S Ratio of 0.93 is some 56% lower. This stock price test suggests that the stock price is cheap. Also, a P/S Ratio under 1.00 also suggests a good stock price.

A recent entry by Ticker Report say that Acumen Capital is giving this stock a Buy recommendation and a 12 month stock target price of $24.00.

There is net insider buying at just under $1M over the past year. Insiders have stock, especially the CEO who owns shares worth around $47.4M. A Director owns shares worth around $0.7M. There seems to be no stock options.

Sound bit for Twitter and StockTwits is: Cheap, but risky. See my spreadsheet at dci.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.

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. Its web site is here DirectCash Payments Inc.

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.