Tuesday, May 12, 2009

Canada Bread 2

I am continuing my review on this stock (TSX-CBY) today from yesterday. I have held this stock in the past and I decided to review it now as I read a favorable review of this stock as a good dividend paying stock to invest in. I have continued to follow the stock, but have no current plans to invest in it.

I first looked at Insider Buying and Selling. There is no activity at all. I took at look at the volume of stocks that are traded and it would appear that there is a few hundred traded each day. Some days, the volume has spiked to over 500 and occasionally to over 1,000. So volume is small. Do not forget that this stock is almost 90% owned by Maple Leaf. Also, few analysts follow this stock.

If you look at the spreadsheet, this stock is trading at a higher yield (at .63%) and the 5 year average of .55%. However, I do not find this yield very attractive as it is so low. The P/E ratio is currently low on this stock at 10. This is lower than the 5 year average of 20 and also lower than the 5 year low average of 15. Also, this stock is trading at 20% below its Graham Price. If you look at P/BV, you will see that the current ratio is about .88% of the 10 year average. All the above ratios point to this stock being at a very good buy price.

The next thing to mention is that Globe Investor gives this stock a 3 star rating out of a possible 5 stars. As I said above there are few analyst following this stock. There seems to be a couple of Buy Rating on this stock and a Hold Rating, for a consensus of Buy. (See my site for information on analyst ratings.)

It would appear that you could make some money on this stock if you buy it for growth. It will not appeal to me unless they start to raise their dividends. We are in uncertain times. What if we are in a secular bear market and this bear market still has time to run? I personally would prefer to wait this out with dividend paying stocks that increase their dividends regularly. If we are in a secular bear market, strong dividends will be the only thing that counts in a buy and hold strategy.

Canada Bread is a leading manufacturer and marketer of value-added flour based products, including fresh bread, rolls, bagels and sweet goods, frozen partially baked or par-baked breads and bagels, and specialty pasta and sauces. The Company markets products under a number of leading brand names, including Dempster’s, Olafson’s, POM, Ben’s and Olivieri. Canada Bread has operations in Canada, the United States and the United Kingdom. Its web site is www.canadabread.ca. See my spreadsheet at www.spbrunner.com/stocks/cby.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.

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