Monday, September 28, 2009

Consumers Waterheater Fund

I am reviewing this stock (TSX- CWI.UN) today as I have updated my spreadsheet with the December 2008 annual report and I have never blogged on this stock. It is a stock I follow, but I do not own it. In the past, I have followed a number of Income Trust Fund stocks, but I have not invested much in them. It probably matters little in today’s market as they are on their way out.

I try to get at least 11 data on a company. However, this income trust was only set up in 2002. So, for the growth figures, I am only looking at the last 5 years. Most of these growth figures I find mediocre at best and awful at worst. The only decent growth figures had been the increase in dividends. This had a 5 year growth of over 4% per year. However, the company has just announced that the dividends, effective in October 2009, will be cut in half. So there goes that good figure. The one point to make on this is that even with the decrease, this company has a high yield of almost 14%.

The bad growth figures are like the stock price. Except for the initial run up, the stock price has been on the decline since 2003. The other declining figure has been the book value, and this value has declined at the over 13% per year. The mediocre figures are such things as earnings. This has been increasing at just over 5% per year. Here again is another problem. Although people expect this stock to make rather decent earnings this year, most do not expect that there will be positive earnings for 2010.

When I look at liquidity, I find that although it used to be fine, it is currently very low. It is sitting at 0.24 now. This is a bit better than the 0.14 at the end of 2008, but no where can you see the current assets covering the current liabilities. The Asset/Liabilities ratio is also low. It used to be better, but with it currently at 1.21, the only good thing is that it is over 1.00.

The Return on Equity (ROE) is the one very decent figure. It was 10.4% at the end of 2008 and so far this year it is at 13.5%. If others looking at this stock are right, this will also tank in 2010 as the company is not expected to make positive earnings in that year.

I am not saying much good about this stock, so I suppose you will not be surprised that I have no interest in buying this stock. You wonder if it still worthwhile following income trust companies. The only interesting thing is what will have to these companies after 2011.

Consumers' Waterheater Income Fund owns a portfolio of water-heaters and other portfolio assets, which they rent to primarily residential customers. They rent out water-heaters in the GTA and southern Ontario and it is considered a Business Trust. 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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