Tuesday, September 23, 2008

Melcor Dev

This is another stock (TSX-MRD) that I have gotten from Mike Higgs’ list at http://www.dividendgrowth.org/Report.htm. I only bought this stock this year and so far, I have lost some 24% on this stock. Since I have not committed much money, I have not lost much. Usually, when I decide to invest in a brand new stock, I buy 100 or 200 shares. I then see what it is like to own the stock before committing more money.

Over the 5 year period to December 2007, which is the last annual report, this stock has done well. Over this period, the revenues have increase by 13.4%, the Earnings per Share (EPS) by 22%, the dividends by 32% and the closing price by 43%. The Graham Price at 31 December 2007 was $20.33 while the closing price was $19.89. One of the best times to buy a stock is when the Graham Price is higher than the stock price. Also, the Return on Equity (ROE) is at 22% for the year ending December 2007.

The negatives for this stock is that the Cash Flow from Operations over the last 5 years is a -5%, the stock price is growing much faster than the Book Value and the Accrual Ratio is very high at 18.3%, and even including the Financial Cash Flow, the Accrual Ratio is still a high of 9%. Although I have to admit, the Accrual Ratio on this stock is always high and has seldom been negative.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi- family sites and commercial sites. The company also develops, owns and manages commercial income properties, as well as two golf courses. Its web site is www.melcor.ca/. See my spreadsheet at www.spbrunner.com/stocks/mrd.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 at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

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