Wednesday, June 17, 2009

Stella-Jones Inc 2

I am continuing my review this company (TSX-SJ) from yesterday. I did a spreadsheet on this company as I had just read a favorable analysts report on it. This is a dividend paying small cap stock. It is not on any the dividend paying stock lists that I look at.

I, of course, first looked at the Insider Buying and Selling. There is a bit of both going on with more Insider Selling than Buying. I do not think that this tells us anything.

The next thing I looked at was the ratios from the spreadsheet. The Yield at 1.57% is higher than the 5 year average of 1.02%. However, the yield on this stock has fluctuated a great deal and it has been around 2% quite a few times. The P/E at just until 9 is not a bad figure. However, the 5 year low P/E is 8, although the average 5 year P/E on the close is 13. The current P/Book Value of 1.7 is quite low and it is lower than the 5 year average of 2.6, but it is not lower than the 10 year average of 1.6. When looking at the Graham Price, the current Graham Price of $22.88 is lower than the 2008 Graham Price of $25.50. It is also lower than the current estimate Graham Price of $27.50. So this stock is at a discount to the Graham price.

In reviewing all the estimates, it would seem that the current price of this stock is good, but not great. You would think that it would be a better deal at this point in the business cycle. Combine the current price with my concerns about the high Accrual Ratio and lack of Cash Flow and I can see why there are Hold ratings on this stock.

When I went to look at the analysts ratings on this stock, I found that there were ratings of Strong Buys, Buys and Holds on this stock. The mean consensus would be a Buy or Hold. It is a toss up on this. (See my site for information on analyst ratings.) I think that I would personally rate it as a Hold. The positive thing I can say about this stock is the strong growth in revenue. It is, of course, revenue growth that will push other growth.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is See my spreadsheet at

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 for a list of the stocks for which I have put up spreadsheets.

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