Friday, September 18, 2009

Canam Group Inc 2

I am reviewing this stock (TSX-CAM) as I read a favorable review on it. I am interested in small cap companies that pay dividends, so this company fits into what I want to investigate. Being a small cap, it is also much higher risk that such companies as Great-West Lifeco Inc that I recently reviewed. If you cannot afford extra risk, you should stay away from small cap stocks.

When I look at the Insider Buying and Insider Selling I see two things. There is some Insider Buying by individuals and there is buying by the company. There is not a lot of Insider Buying, but it would seem that Insiders do have faith in this company.

In looking at the P/E, I find the average low P/E very low at just under 7. The average P/E is close to 10 based on the closing price at year ends. The P/E at the end of 2008 was just under 7. Because this stock is not expected to have good earning for 2009, I get a current P/E of 12.8. However, others find a current P/E at 7 or 7.5. It all depends on what your earnings expectations for 2009 is and if you use this or last 12 month earnings to get a P/E. The forward P/E I get is again quite low at 9.6.

If you look at the Graham Price, it is 35% higher than the current price. The Graham Price for 2009 is depressed because of expected lower earnings. If you look at the Graham Price at the end of 2008, it is over 50% higher than the current price and if you look at the expected Graham Price for 2010, it is over 40% higher than the current price. Any price of a stock at or below the Graham Price is a good price.

The last ratio I want to look at is the Price/Book Value ratio. The current P/BV ratio is less than 70% of the long term P/BV ratio. This also points to a good price. One of the things that some analysts have commented on about this stock is that the Book Value at $9.19 is higher than the stock price of $7.01. This basically means that the break up value of the company is higher than the stock price. This is all very good and I can see why there are buys out on this stock.

Personally, what I do not like is the inconsistency in dividend payments. They tend to stop and start and go up and down. I like to buy stock for a future stream of increasing dividend payments. This stock will not provide this. The management has said very plainly they will only pay dividends when they feel the company can afford to. Although it would appear, on a long term basis, you could make money from this stock, with dividends plus stock price increases, it is probably not the sort of stock I want.

When I look at analysts’ recommendations, the consensus is a Buy. There are a surprising number of analysts that follow this stock. The only ratings I can find are Buys and Holds. (See my site for information on analyst ratings.)

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, India and Romania. Marcel Dutil owns 16% of this company. 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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