Thursday, September 17, 2009

Canam Group Inc

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.

The first thing I looked at was the growth figures for this company. If you look at the spreadsheet, you will see some of these figures in light purple. This is because I feel that the growth figures for a period do not fairly represent how this company is doing. For example, if you look at the growth of dividends it shows a 5 year growth of over 50%. However, this is because the dividend was unusually low 5 years ago. The other thing about dividends on this company, the 5 year period covers two years of no dividends at all. The dividends on this stock have varied a lot.

This same problem occurs with the Cash Flow growth figures. The 5 year growth figure is really meaningless, as the Cash Flow has varied greatly over the past 5 and 10 years. The Earnings per Share growth is not great either. This has varied over time and the high accrual ratio over the past few years could point to problems with the recent EPS figures.

There are some bright spots. For example, the Book Value has steadily increased over time. The 10 year growth is not bad at just below 6.5% per year and the 5 year growth figure is very good at just over 12% per year. The other good think is the Liquidity Ratio at 2.38 at the end of 2008 is very good, with the current on at 1.66 still good, but not quite as high. The Asset/Liability ratios are also very good with this ratio being above 2.50 for the last few years. Of course, the real question is, can this company make any money. The answer appears to be yes, as the 5 year growth in stock price and dividends is 12.45% per year. The 10 year growth figure is also not bad at just over 6% per year. This company has done better over the last 5 years than over the last 10 years.

The Return on Equity (ROE) for this company varied a lot also. However, for the last few years, it has been above 11% and this is good. The 5 year average is 10.6% and this is very respectable. I am not interested in this company at the moment, but I intend to keep an eye on. I might be more interest when they start again to raise their dividends.

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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