Monday, November 30, 2009

AG Growth International 2

I want to continue my review today of the AG Growth International company (TSX-AFN). This is an Income Trust stock touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock has already converted to a corporation.

When I look at Insider Selling and Insider Buying reports, what I see is some bit of selling by an officer of the company. This is minor. Perhaps a better indication is that recent stock options granted to CEO, CFO, some officers and some directors have been kept rather than sold.

When you look at spreadsheet ratios, I find that the P/E is low. I get a P/E of 9.5 and sites that use the last 12 months earnings get about the same. The P/E 5 year low for this stock is 9.4. Any P/E of 10 or less is low. When I look at the dividend yield, it is currently just over 6% where the 5 year average is just over 8%. At the Money Show analysts thought that income trust when they converted to corporations would have lower dividend rates and they rates would be in the 4% to 6% range. This is currently at the top of this range.

When I look at the Price/Book Value Ratio, I find that the current ratio is 2.51, which is higher than the 5 year average of 1.79. The lower this ratio is the better the relative stock price, of course. A P/BV ratio of 2.51 is not particularly high, nor is that low. The last thing to look at is the Graham Price. The stock price is only about 3% higher than the Graham Price. All the above items point to a reasonable, but not a great current stock price.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find that there are Strong Buy recommendations and Buy recommendations. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.) There are more Strong Buy recommendations than Buy recommendations. I cannot find any other rating. It is obvious that a lot of analysts like this stock.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is www.aggrowth.com. See my spreadsheet at www.spbrunner.com/stocks/afn.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Friday, November 27, 2009

AG Growth International

I want to review all the income trust stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- AFN). This stock has already converted to a corporation.

This company has only financials since 2004 when it went public as an Income Trust. Not all the growth figures look good at the end of 2008. For example, the Cash Flow growth was a 23% negative growth per year. The Cash Flow hit an all time low in 2008 and it is expected to be much better this year. Also, the earnings growth has been not bad, but not great either at 7.8% growth per year. The earnings are expected to be better this year also. However, they are then expected to drop slightly in 2010.

You get the same story with the Book Value. It was down in 2008 due to losses and therefore shows a growth of only 1.8% per year over the last 4 years. However, the Book Value at the end of September 2009 was back up higher by almost 30% and therefore higher than 2007. The real negative note I see is that the Accrual Ratio was very high at 11% at the end of 2008 and at the end of September 2009, has come down a bit to 8.5%, but this is still very high. Anything above 5% is very high.

You get a much better story when you look at the Liquidity Ratio and the Asset/Liability Ratio. The Liquidity Ratio has been very good and has been above 1.50 in all years. It dipped a bit in 2008 to 1.99, but it is back up to 2.77. You get the same story with the Asset/Liability Ratio. It has a 5 year average of 3.31 and a current ratio of 2.23. For these ratios, anything over 1.50 is good.

This stock has done very well for its shareholders since it went public in 2004. It is still producing a good dividend yield of over 6% at the current time. On Monday, I will talk about what the analysts say.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is www.aggrowth.com. See my spreadsheet at www.spbrunner.com/stocks/afn.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Thursday, November 26, 2009

Dorel Industries Inc 2

I am continuing my review this stock (TSX-DII.B) today as I have updated my spreadsheet with the December 2008 annual report and I have not reviewed it since then. I owned this stock at one time and then sold it because I did not think it was going anywhere, and they paid no dividends. In 2007, they started to pay dividends. I would like to see some consistent annual increases in dividends before I consider this stock for buying again.

When I look at Insider Selling and Insider Buying reports, I find that one director has recently sold some of his stock. This selling does not tell me much. The other thing I notice is that Dorel is buying back Class B shares for cancellation.

When you look at spreadsheet ratios, I find that the P/E is low. Based on the earnings estimates for this year, I get a P/E of just 8. On sites that use the last 12 months of earnings, the P/E is still low at 10. However, the P/E for this stock has been quite low lately. The 5 year average Low P/E is just over 8 and the 5 year High P/E is just 12. P/E ratios of 10 or less are considered low.

The dividend yield on this stock is low at only 1.6%. Dividends were only started in 2007, so we have little to base long term yield. However, even in this short time, dividend yield has been about 1.6%. You would thing that if the earnings and cash flow would be better this year, dividends might have been raised. Although some analysts feel that, the company will be raising the dividends in the future.

The other ratio to look at is the Price/Book Value and this ratio is less than 60% of the 10 year average. Anything less than 80% of the 10 year average is a very good ratio. The other thing pointing to a good price is the Graham Price. The Graham Price is almost 50% higher than the stock price. The reason for this is that the Book Value is quite high and about equal to the stock price. The Book Value has been growing faster than either the Cash Flow or the earnings.

Most of the above ratios and the Graham price point to a very good current stock price. This is especially true where the book value and the stock price are equal. The problem with this stock is that both the earnings and cash flow were higher in 2004 than they were in 2008. Both these items are expected to improve in 2009.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find that there are Buy recommendations and Hold recommendations. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.) There are more buy recommendations that hold recommendations. It seems to me that the difference between the buy and hold recommendations is how much the stock price is expected to rise this year. Some do not expect the stock price to rise much this year and others expect an 8 to 9% rise in stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. There concentrated ownership of this company by the Schwartz family (66%) and Segel family (17%). There are two classes of shares, Class A with multiple voting (10) and Class B, with subordinate voting rates (1). Its web site is www.dorel.com. See my spreadsheet at www.spbrunner.com/stocks/dii.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Wednesday, November 25, 2009

Dorel Industries Inc

I am reviewing this stock (TSX-DII.B) today as I have updated my spreadsheet with the December 2008 annual report and I have not reviewed it since then. Today, I also updated the spreadsheet with the 3rd quarterly report for September 2009. I owned this stock at one time and then sold it because I did not think it was going anywhere, and they paid no dividends. In 2007, they started to pay dividends. I would like to see some consistent annual increases in dividends before I consider this stock for buying again.

In looking at growth figures, this stock shows mixed results. One problem is that it reports in US dollars, but it is a Canadian stock sold in Canadian Dollars. The increases in revenue and book value are good. The cash flow growth is not great. The cash flow was low in 2008, but it is expected to recover in 2009 and 2010. Stock price growth is not good and the stock price is still only just above that of 2001. The dividend growth is uncertain and it would appear to be paid in US$, so even if they do not change the dividends payable, these could fluctuate in Canadian dollars.

Until the most recent report, the Liquidity Ratio was good. In the most recent report, this ratio fell to 1.18, which is rather low, but at least it is still over 1.00. The Asset/Liability Ratio is still very good at 2.19. What I like to see is both these ratios being at 1.50 or higher.

One good thing when I reviewed this stock today is that the Accrual Ratio has turned negative. This is much better than the very high Accrual Ratio this stock had at the end of 2008. Tomorrow, I will see what the analysts are saying. One thing I did notice when I updated my spreadsheet today is that the expected earnings and cash flow has increased since I last looked at this stock.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. Ownership: Schwartz family 66%, Segel family 17%. Its web site is www.dorel.com. See my spreadsheet at www.spbrunner.com/stocks/dii.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Tuesday, November 24, 2009

North West Company 2

I want to review all the income trust stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- NWF.UN) that was mentioned. This stock currently has a yield just over 7%.

When I look at Insider Selling and Insider Buying reports, what I notice is sales equal to $1.2M over the past year. All this selling seems to have been done by one director. This director still has $16.8M invested in this company, directly and indirectly at current prices. This is a widely held company.

When you look at spreadsheet ratios, I find that the P/E is reasonably low. Anything at 10 or lower is low. The current P/E is just over 11 and the forward P/E just over 10.5. The 5 year low is just under 10. If you look at sites that use the last 12 months earnings the P/E is still just over 11. (I use earnings estimates.)

The yield on this stock is 7.7% based on new distribution of $.34 per quarter or $1.36 per year. This is higher than the 5 year average of 6.6%, but under the 5 year high of 8.2%. When you look at the Price/Book Value, the current ratio of 3.02 is higher than both the 5 and 10 year average, however, it is not far off the 5 year average of 2.81. When you look at the Graham Price, I find that the current stock price is some 27% above the Graham Price.

None of the above ratios shows that the current price is low, but they do show that it might be a reasonable price. One thing to like is the Return on Equity, which has been very good lately. For example, the ROC for the financial year ending January 2009 was over 27% and it will probably be over 25% this financial year. This is something to like about this stock. The other thing to like is the good dividend yield and the fact that they give out special dividends when they can. People who invested in this stock over the last 5 and 10 years have made a good return on this stock.

What I do not like is the recent increase in the Accrual Ratio, which can point to the earnings not being as solid as they seem. This might be supported by the decrease in Cash Flow for Financial year of January 2009. For that financial year end, the earnings went up. A high Accrual Ratio is a sign to be cautious. The other thing I do not like is the lack of decent growth in Book Value.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find only Buy and Hold recommendations. The consensus recommendation will be a Hold. (See my site for information on analyst ratings.) There are more Hold recommendations than Buy recommendations. Analysts seem to like to this company for being a stable earner. However, there is a feeling that times might be tough for this company over the next little while.
The company plans to change to a corporation after 2011 and they expect that the distributions, which will be in the form of dividends rather than interest will decrease at that time. However, the distributions were increased this year and it is expected they will be increased next year. It is also expected that more special distribution payments will made this year and next.

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 225 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center, and Cost-U-Less. Its web site is www.northwest.ca. See my spreadsheet at www.spbrunner.com/stocks/nwf.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html

Monday, November 23, 2009

North West Company

I want to review all the income trust stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- NWF.UN). This stock currently has a yield just over 7%.

Most of the growth figures I track are good for this stock. As in most income trust stocks, the Book Value growth is not great, but at least it has some Book Value growth. The growth in dividends for stock has been quite good in the past with a 5 year average growth per year of almost 20%. However, since this is an Income Trust, the company will convert to a corporation after 2011 and then the distributions, which will then be dividends, will be reduced. The reduction will probably in the 20% to 25% range.

For this stock, things like revenue, cash flow, earnings and stock price are growing nicely. When you look at cash flow, it does not at appear at first that they are growing nice because the 5 and 10 year comparisons are to unusually high cash flow years. You can better see the nice growth looking at the 5 year running averages in cash flow per share. The other nice thing about this stock is that, whenever than can, the company distributes extra dividend payments.

When you look at the Liquidity Ratio and the Asset/Liability Ratio, you will find that both of these are very good. What you would like to see is both these ratios at 1.50 or better and in this case, they are both much better than this. For this stock, these ratios are often around 2.00 or better.

This stock has done very well by its shareholders over the last 5 and 10 years. Although, you cannot use past results to determine future results, it would seem that this is a good stock for income and growth. The negative I see on this is that recently the Accrual Ratio has been high. Prior to the financial year ending January 2008, it had been relatively low. Tomorrow, I will look at what the analysts say about this stock. This is one of the Income Trust talked about at the Money Show I could get excited about.

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 225 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center, and Cost-U-Less. Its web site is www.northwest.ca. See my spreadsheet at www.spbrunner.com/stocks/nwf.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Friday, November 20, 2009

Canadian Utilities 2

I am continuing my review this stock (TSX- CU) today as I received the December 2008 annual report and I have not reviewed it since I received this report. I do not own this stock, but I follow it. They are on the dividend lists that I follow. For links to these dividend lists, see yesterday’s blog.

When I look at Insider Selling and Insider Buying reports, the thing I notice is that the CFO and CEO have more options that stock. For the Officers and Directors, the number of options and shares are close. Over the past year, there has been almost 4M of Insider Selling. Most of this occurred in the first part of this year, and most of this selling was done by Directors. However, there was not just one person selling, but a number of people selling.

When you look at Insider Selling, it is hard to know whether or not it is pointing to a lack of confidence in the company or not. We were in a recession in the first part of this year. The thing that points to the company having confidence is that they increased their dividends this year by 6%.

When I look at the P/E, I find that the 5 year low was 12.6 and the 5 year high was 17.5. The P/E for the expected earnings this year is 14.3. The P/E on sites that look at it from a last 12 months earning’s point of view is just over 11. So the P/E for this stock is relatively low. When looking at the yield, I find that the current one is 3.3% and the 5 year average is 3%. So this yield is slightly better than the 5 year average. The Price/Book Value at 1.79 is just less than 90% of the 10 year average of 2.05. The last thing to look at is the Graham Price. The current price is just 6% higher than the Graham Price. All these items point to a good, but not great, current stock price.

Globe investor gives this stock a 3 star rating. When I look at analysts’ recommendations, I find a Strong Buy and Buy and Hold recommendations. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.)

This is a good utilities stock and it should provide good solid returns over the long term. I follow this stock, as it is on the dividend list that I follow. I have no intentions of buying it, as I am happy with the utilities stocks I currently own.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO owns 74% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is www.canadian-utilities.com. See my spreadsheet at www.spbrunner.com/stocks/cu.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Thursday, November 19, 2009

Canadian Utilities

I am reviewing this stock (TSX- CU) today as I received the December 2008 annual report and I have not reviewed it since I received this report. I do not own this stock, but I follow it. They are on the dividend lists that I follow of Dividend Achievers at www.indxis.com/DividendAchievers.html and Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices).

In looking at growth figures, this stock is still falling behind in revenue growth. I looked at and updated my spreadsheet for the third quarter of 2009 and revenue is lower on a 3 month and 9 month basis from one year ago. When you look at earnings and cash flow, the growth figures are better. The earnings have slipped in this recession, but the cash flow is not expected to. The Book Value goes up by modest amounts.

The one good growth is in dividends, which grow faster than inflation. The dividends have grown at just over and just under 5% for the last 5 and 10 years. They were increased this year by 6%. I know some growth dividend paying stock do better, but this is still very solid growth in dividends.

When you look at the Liquidity Ratio, this is very good. The current balance sheet has a Liquidity Ratio of over 3.00. Anything at or over 1.50 is good. The Asset/Liability Ratio however, is not quite as good. This ratio is current ratio at 1.49. The five year average is better at 1.51. You would like to see this ratio at 1.50 or better. So the current one is a little low, but it is not seriously low.

When I look at this company, what I do not like is lack of revenue growth and a high Accrual Ratio. The Accrual Ratio for the end of 2008 was 5.5% and now it is even higher at just over 6%. However, this company has provided its shareholders with solid stock growth and solid dividend growth. The 5 and 10 year total growth for this company is 8.8% and 10.5%. This is solid growth for a utilities company.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO owns 74% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is www.canadian-utilities.com. See my spreadsheet at www.spbrunner.com/stocks/cu.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Wednesday, November 18, 2009

DirectCash Income Fund 2

I want to review stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- DCI.UN). This stock currently has a yield of 9.3%. I am continuing my review of this stock from yesterday.

When I look at Insider Selling and Insider Buying reports, the first thing I notice is that the Gallacher family owns more than 40% of the shares of this company. A Jeffery Smith owns some 20%, but most of his shares are listed as special voting. The other thing I notice is that the CFO, some officers and some directors are buying shares in this company. A lot of this buying occurred in the early part of this year when the stock price was below $10.

When you look at spreadsheet ratios, I find that the P/E in the past has been so high as to be meaningless for a comparison with the current one. For example, the 4 year low average is 116. The estimated P/E for 2009 is 17. This is rather high. The reason it has come so low is because of the increase in earnings. In the last 12 months, this company has earnings of $.87. This is more than a 400% increase from last year’s of $16.

The yield on this stock is 9.2% compared to a 4 year average of 9.9%. The Graham Price on this stock, considering the last 12 month earnings and book value at June 2009, is $9.69. The current stock price is more than 55% above this. Also, the Price/Book Value at 3.14 is 160% above the 4 year average of 1.88. None of these ratios point to a good current price.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find a Strong Buy recommendation and a Buy recommendation. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.) I gather that this stock is liked because of its strong and recurring revenue stream.

This is an income trust that must change to a corporation by 2011. I have found nothing to say what they will do. However, the distribution is expected to remain at $1.38 for 2009 and 2010. The price on this stock has risen sharply lately and I wonder if it is now too high. The other thing I do not like is the lack of growth in the Book Value. In fact, Book Value has been declining at a rate of 9% per year. It has already declined almost 5% this year, so this erosion of Book Value does not appear to be coming to an end. I will track this stock for a few years and see where it goes.

DirectCash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. DirectCash operates in Canada, the United States and Mexico. Its web site is www.directcash.net. See my spreadsheet at www.spbrunner.com/stocks/dci.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Tuesday, November 17, 2009

DirectCash Income Fund

I want to review stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- DCI.UN). This stock currently has a yield of 9.3%. I have not bought this stock.

Most of the growth figures I track are good for this stock. However, one I thing that I believe is important is a growing Book Value and this stock Book Value has not grown. The Book Value per share has gone down just under 10% per year over the last 4 years. When you look at the growth in stock price to November 2009, I find it has grown only just under 2% per year. The growth in Total Returns, however, has grown to November 2009 by almost 10% per year. This is because the distributions are good, but there has been little growth in the stock price. If you look at the growth in stock price and Total Returns to the end of 2008, both these figures are negative.

For this stock, things like revenue, cash flow and earnings are growing nicely. The distributions are also growing at rate of just over 8% per year. However, the last time the distributions were increase was in 2007. The thing to remark on distributions is that for 2009, a special dividend of $.12 per share has been declared.

When you look at the Liquidity Ratio, it is low. This ratio has a 4 year average of only 0.69 and a current ratio of only 0.65. I like this ratio to be at least 1.50. When the ratio is less than 1.00, it means that current assets cannot cover current liabilities. The Asset/Liability Ratio however, is quite good and the current ratio is at 2.02. The 4 year average is 2.63.

I had taken a look at this stock, as it was one of the income trusts recommended at the money show. The good thing about this stock is that the Accrual Ratio has always been negative. It is also currently below a negative 5%” and this is also good. However, I do not like stocks that cannot grow their Book Value. Personally, I have no plans to buy this stock, but I will track it for a while.

DirectCash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. DirectCash operates in Canada, the United States and Mexico. Its web site is www.directcash.net. See my spreadsheet at www.spbrunner.com/stocks/dci.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Monday, November 16, 2009

K-Bro Linen Income Fund 2

I want to review stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- KBL.UN). I have not bought this stock. I am continuing my review of this stock from Friday.

When I look at Insider Selling and Insider Buying reports, I find that there has been a bit of Insider Buying by company officers. But this occurred in the early part of this year. There has been no activity since. So, this reporting tells us little.

When you look at spreadsheet ratios, I find that I have a P/E of 13.6, which is just below the 5 year average low of 14.6. The yield of 8.3% is a good one; however, the 5 year average is 8.8%. They have not raised their distributions over the last 4 years. If you look at the Price/Book Value ratio, the current one is higher than the last 4 years. (We do not have a long term one, as there are only financial records available for 4 years. However, the current Price/Book Value of 1.45 is not bad.) The Price/Cash Flow at 6 is low than the 4 year average of 9.

The last thing to look at is the Graham Price. Currently, the stock price is some 6% lower than the Graham price. The Graham Price is $14.10 and the current stock price is $13.19. Generally speaking, any stock price at or below the Graham price is a good one.

Globe investor gives this stock a 5 star rating. When I look at analysts recommendations, I find a Strong Buy recommendation, a couple of Buy recommendations and a couple of Hold recommendations. There are few of analysts following this stock. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.)

This is an income trust that must change to a corporation by 2011. They seem to say that there will be no effective on their distribution policies, but they do not state this categorically. They also seem to say that a change to a corporation by December 2010 may be a suitable structure for them. Bottom line is that they really have not stated their intentions. I would feel more comfortable about this fund if they had been more clear on what they intend to do. December 2010 is not that far off.

The reason for the buy type recommendations is that this company gets 75% of its revenue from large publicly funded health-care facilities. The currently recession should have little effect on the company and the company has a strong balance sheet. With an 8% return, and perhaps modest rise in stock price, you could do well by this stock. Personally, I prefer stocks that raise their dividends and this stock seems to have no current intentions of doing so. However, it does seem to be reasonably priced.

K-Bro Linen Systems Inc., the Fund’s 100% owned operating subsidiary ("K-Bro"), is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to large healthcare institutions, hotels and other commercial accounts. Its web site is www.k-brolinen.com. See my spreadsheet at www.spbrunner.com/stocks/kbl.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Friday, November 13, 2009

K-Bro Linen Income Fund

I want to review stocks touted in the Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This is one of the stocks (TSX- KBL.UN). This stock currently has a yield of 8.3%. I have not bought this stock.

One of the problems I see with this stock is the increase in units or shares. In the annual reports, the company talks about their increase in distributions, but except for the increase in distributions between the annualized distribution of the first year and the distribution of the second year, there has been no increase in distributions per share. This is because of the increase in units.

There had been a nice increase in revenue over the last 4 years, at about 21% per year. However, if you look at revenue growth per share, this comes in rather low at 3.7% per year. The growth in book value at 2% per year is nothing to write home about either. The good growth is in Total Return and this comes in at just over 10% per year per share. The other good growth figure is the growth in Cash Flow. This comes in at just over 10% per year per shares also.

When you look at the Liquidity Ratio, it is ok, but not great, at 1.29 at the end of 2008. I would prefer it to be at 1.50. At the end of September 2009, it was much better at 1.79. However, the Asset/Liability is very good at an average of 3.02 and at September 2009 at 4.21. The next thing to talk about is the Return on Equity or ROE. The ROE has a 4 year average of 8% to the end of 2008. For September 2009, the ROE it was 9.2% and this is not bad.

This stock was hit by the recent recession, but is now back up to what it was in 2007. I will talk about what the analyst recommend tomorrow. For me, I will continue to track this stock, but I would like to see the stock perform better per share before I would buy any.

K-Bro Linen Systems Inc., the Fund’s 100% owned operating subsidiary ("K-Bro"), is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to large healthcare institutions, hotels and other commercial accounts. Its web site is www.k-brolinen.com. See my spreadsheet at www.spbrunner.com/stocks/kbl.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Thursday, November 12, 2009

Research in Motion 2

I am continuing my review of this stock (TSX- RIM, NYSE-RIMM) today as I received the November 2008 annual report and I have not reviewed it since I received this report. This is a stock I bought for fun. It is not a dividend paying stock, which is what I usually buy. However, there is not much excitement in buying stolid dividend paying stock.

It is hard to know what to think about all the insider selling. The insider selling is because those doing it have most of their wealth tied up in this company and they want to diversify and also give to charity. James Balsillie wants to buy a sports team. A sports team must be a lot riskier than owning RIM. There seems to be divided opinions on whether or not all this selling is a negative or not. Most of this selling is set up to occur automatically, no matter what the condition of the market or the stock price is.

When you look at spreadsheet ratios, I find that I have a P/E of 15, which is not far from sites that use last 12 months earnings and they have a P/E of around 17. The 5 year low average is 25. This is a growth company, so the P/E’s tend to be on the high side. A P/E of 25 is not bad for a growth company. When looking at the Price/Book Value Ratio, I find the current Ratio is about 90% of the 10 year average. This is not bad either, but a buy signal is usually at 80% of the 10 year average.

When you look at the Price/Cash Flow Ratio, the ratio for 2010 is just under 15, and the 5 year average is 41. However, the P/CF for 2007 and 2008 was 15 and 17.7 respectively. The last thing to look at is the Graham Price. Currently, the stock price is some 92% greater than the Graham price. However, if you look at the past record, the stock price is usually 3 to 4 times the Graham price. This often happens with growth stocks.

Globe investor gives this stock a 3 star rating. When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. There are lots of analysts following this stock. The consensus recommendation will be a Buy. There are more Strong Buy and Buy recommendations than there are Hold recommendations. (See my site for information on analyst ratings.) Most of the analysts are unconcerned about all the Insider Selling.

At the moment, I am holding on to my stock, but I will sell them in the future, as I do not keep non-dividend paying stock for the long term.

Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. Its web site is www.rim.com. See my spreadsheet at www.spbrunner.com/stocks/rim.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Wednesday, November 11, 2009

Research in Motion

I am reviewing this stock (TSX- RIM, NYSE-RIMM) today as I received the November 2008 annual report and I have not reviewed it since I received this report. This is a stock I bought for fun. It is not a dividend paying stock, which is what I usually buy. However, there is not much excitement in buying stolid dividend paying stock.

I first bought this stock in December 1999. I sold some in September 2006 and November 2007. The stock I have left is still worth twice my original buy cost. According to quicken I have made a return of some 21% per year on this stock. I do not expect to hold this stock for the long term. I will sell at some point in the future. However, buying such stock can be fun, and as long as you only invest a small amount of your portfolio in such things, you will be fine. Do not invest in such stocks money you cannot afford to lose.

When you look at the growth figures on this stock, they are, of course, all great. Even the stock price growth for the last 5 years is great. The thing to point out is that this stock does a lot of its business in the US and reports in US currency. The Canadian currency is getting stronger while the US is getting weaker. The expected earnings for this company has gone up in US currency, but down in Canadian currency.

When you look at the Liquidity Ratio and the Asset/Liability Ratio, you find that both of these are high. The Liquidity at February 2009 was 2.29 and the Asset Liability Ratio at the same time was 3.64. Any ratio above 1.50 is good, so these ratios are very good.

The next thing to talk about is the Return on Equity or ROE. The ROE has been getting better and better on this stock. The 5 year average at the end of February 2009 was 27% and the current 5 year average to August 2009 is 26.2%. (The 5 year average at February 2006 was only 5%.)

Looking at revenues, earnings and cash flow, you can see that this company is making money. The one negative thing that I see is the Accrual Ratio and this is very high at 12%. Although, I must admit, this ratio has always been high. Tomorrow I will look at what the analysts say about this stock.

Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. Its web site is www.rim.com. See my spreadsheet at www.spbrunner.com/stocks/rim.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Tuesday, November 10, 2009

Leon’s Furniture

I am reviewing this stock (TSX- LNF) today as I am looking at purchasing some more of this stock. This is the fall, and I like to buy stock in the fall. Usually, you can get some of the best deals on stock in the fall, as often there is a drop in the market at this time of the year. This will be a short entry as I just reviewed this stock in July of this year. I have updated my spreadsheet with the data from the June 2009 financial statements.

Looking at the growth figures on this stock and they are all good. What I want to talk about is the Graham Price. This is a price developed by Benjamin Graham. He is the author of one of the most famous investment books called “The Intelligent Investor”. Graham wrote the book in 1973 and it is considered to be a classic. The Graham Price is a formula that uses the earnings per share and the book value per share to determine a proper price to pay for a stock.
If you look at the spreadsheet, this stock’s price has seldom got near to the Graham Price. On average, over the last 10 years, this stock’s price has been over 20% higher than the Graham Price. Currently, it is under 2% over the Graham Price.

The other ratios of P/E and Price/Book Value are also good. The current P/E at around 12 is the same as the 5 year low P/E ratio. The Price/Book Value ratio is less than 80% of the 10 year average for this ratio. The yield at 2.9 is also above the 5 year average of 2.4%. The only think that I do not like is the Accrual Ratio is rather high at 5.6%.

Globe investor gives this stock a 3 star rating. It is a small cap stock and it is a consumer’s stock, so it is not a safe, but they often reward their shareholders with extra dividends when they can afford to. When I look at analysts recommendations, I find only a Hold recommendation. (See my site for information on analyst ratings.) However, I think this is a mistake. I know that earnings are down, but we are in a recession. I am a long term investor, so I am willing to buy and wait for this stock to recover.

When you look at Insider Buying and Insider Selling on this stock, I only find Insider Buying. There is not a lot of Insider Buying, but there has been some by the CEO and also by Directors. Leon’s is also buying back company shares to reduce the share outstanding.

This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is www.leons.ca. See my spreadsheet at www.spbrunner.com/stocks/lnf.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Monday, November 9, 2009

Kathleen Gabriel, Artist


I am doing a blog on my friend Kathleen Gabriel, as I have really enjoyed her art over the years. I have a couple of her pieces in my house. She is a wonderful artist and she also has a show coming up soon. I have started this blog with one of the pieces she will be showing at her upcoming art show. This show is called Four Elements and she is sharing it with 5 other artists at the Women’s Art Association Gallery at 23 Prince Arthur Avenue.

This gallery is just steps away from the Bedford exit of the St. George Subway station. There is also some parking on Prince Arthur. This show has an opening reception on Friday, November 20 at 5:30 pm. The show goes from 5:30 pm to 9 pm. It continues on Saturday, November 21st, from 12 pm to 5 pm and Sunday, November 22nd, from 12 pm to 4 pm. If you take in this show, you might also want to dine at Fieramosca at 36A Prince Arthur Avenue. Fieramosca is one of the finest Restaurants in Toronto. You will need reservations and number is 416 323-0636.

At the reception on Friday night, there will be Stephanie Ledger doing some improv dance and Rebecca Bruton on the violin. The other artists doing this show are Ethel Christensen, Deniz Ergun-Seker, Stephanie Ledger, Malgorzata Pienkowski and Cathy McPherson.

Kathleen’s art has evolved over the years. She keeps changing her style and with each change in style, her work is fresh, colorful and innovative. I love her abstract art because it is always interesting. This is not my usual style of investment, but with her paintings, you can invest in yourself. That is having a work of art that will give you great pleasure in the years to come.

Kathleen, an award winning artist was born in Hungary. After graduating from OCAD, Drawing and Painting in 1967, she successfully pursued a career in children’s posters and text book illustrations as well as editorial illustrations for such magazines as Chatelaine. She has worked as a graphic designer for 24 years at the Toronto Reference Library.

Kathleen works from her home studio/gallery and enjoys opening her home twice a year for group shows. Kathleen is a member of the Women’s Art Association of Canada, Visual Arts Ontario and the Textile Museum of Canada. She has exhibited at the Toronto Reference Library (Group of Nine art shows), Ontario College of Art (Annual Whodunit mystery fundraising event), Women’s Art Association of Canada (members group and solo shows), Textile Museum of Canada (Annual Shadow Box fundraising event), and AWOL Gallery.

Kathleen also has an item on YouTube at Kathleen Gabriel on YouTube. See a blog on Kathleen at blogspot.

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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Friday, November 6, 2009

AltaGas Income Trust 2

I am continuing my review this stock (TSX-ALA.UN) today as I own this stock and I was reviewing it for a possible purchase. There is a definite seasonality to the stock market and the fall is the time to do any purchases you might want to make.

I first looked at the Insider Buying and Insider Selling reports. What I found is that over the past year insiders have bought over 2.5M of this stock. They have also bought over 1.4M over the past 2 months. This is a very positive signal.

The next thing to look at is spreadsheet ratios. The 5 year average low for P/E is 10.7. Sites that show a P/E using last 12 months earnings have a P/E of 8. I get a P/E of just over 11 using expected 2009 earnings. Both these P/E ratios are on the low side. The 5 year average yield is just under 8%. The current yield is 11.8%. The current Price/Book Value is about 75% of the 10 year average. All these ratios points to a relatively good price.

And the last thing to point to a relatively good current price is the Graham Price. The Graham Price I calculated using the values at September 30, 2009 for the Book Value and the expected earnings for 2009 is $21.89. The stock price today is $18.20. This means that the current price is more than 16% lower than the Graham Price. Any price at or below the Graham Price is good.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find only Buy and Hold recommendations. There are more Buy recommendations than there are Hold recommendations. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.)

The last thing to mention is that in the 3rd quarterly report, the company has stated that they plan to convert to a corporation in the 2nd half of 2010. At that time they expect to declare dividends at a lower than the current distribution rate. They expect dividends will be set at an annual rate from $1.10 to $1.40. The yield at the current stock price for a $1.10 dividend is just over 6% and for a $1.40 dividend is at 7.6%. If you buy the stock, you can get a current high yield of over 11% and then enjoy a long term yield that is quite good.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is www.altagas.ca. See my spreadsheet at www.spbrunner.com/stocks/ala.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Thursday, November 5, 2009

AltaGas Income Trust

I am reviewing this stock (TSX- ALA.UN) today as I own this stock and I was reviewing it for a possible purchase. I am looking for some stock to buy this fall. I like doing purchases in the fall because the stock market often goes lower at this time of the year. It is also a good time to reposition your portfolio. That is sell off stock you no longer want to buy something to like better. I will talk about my repositioning later this week.

Mostly this stock has good growth figures. There are a couple of things I would like to point out on this stock. One is that they keep increasing the number of units outstanding. The new units come from a number of places, including the exercise of options and conversion of exchangeable units. However, the biggest increases come from their DRIP option. That is, if you own shares in this company, you can use your distributions, plus put in extra money to buy more units. If you do not know what DRIPs are, see investopedia for a definition.

Because of the increase in units, the revenue growth is good, but the revenue growth per shares is not. For example, the 5 and 10 year growth figures for revenue are 21% per year and 31% per year. When you look at revenue growth per share the 5 and 10 year figures are -7% per year and -2% per year. This is quite a different picture. The other growth figure I want to talk about is that for Cash Flow. The 5 and 10 year figures per share are 6% per year and 19% per year. The 5 year figures are acceptable, but not great. The thing is that the cash value grew between 2007 and 2008, but not as fast as the increase in units.

The next thing to talk about is the Liquidity Ratio and the Asset/Liability Ratio. The Liquidity ratios are low but at least they are over 1.00 and are at 1.01. I prefer this ratio to be 1.50, but at least the current assets cover the current liabilities. This Asset/Liability Ratio is 1.86. This is much better where anything at or above 1.50 is good.

The one item I do not like is that the Accrual Ratio is quite high. It was 18% at the end of 2008. It has now come down quite a bit to a current 11%. However, anything over 5% is high and I prefer this to be a negative figure. A high Accrual Ratio can call into question the quality of the earnings. However, I must admit, this ratio has been high before.

As I said before, I do own this stock and I have just bought some more. This good thing about this income trust is that the company has stated that they will become a corporation before 2011 and they intend to keep the current level of distributions after the conversion. I have updated the spreadsheet to include the, just issued, 3rd quarterly report.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is www.altagas.ca. See my spreadsheet at www.spbrunner.com/stocks/ala.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Wednesday, November 4, 2009

PFB Corp 2

I am continuing my review this stock (TSX- PFB) today as I just read an article on this stock and thought I would do a spreadsheet on it. The article thought it was a good time to buy this stock. This company just announced their third quarterly results today. Earnings are up and sales were down. They declared the last dividend for the year at the current dividend rate of $.06. Detailed financial statements were not posted, so I cannot updated my spreadsheet for this third quarter.

When I looked at the report on Insider Buying and Insider Selling, I find that there is much more selling. One Director has sold has sold just over $363,000 of this stock. However, he still controls over $3.6M of these shares. It is not much a concern when only one insider sells. They could be selling for lots of reasons.

I next want to look at the spreadsheet ratios. This price of this stock has gone up over 1% since yesterday. Yesterday it was $6.33 and today it is $6.40. The P/E is still under 12 and this is not bad. The 5 year low P/E for this stock is 13.5. The Price/Book value is just only 80% of the 10 year average, so this points to a relatively good price. The current yield at 3.8% is higher than the 5 year average of 2.8%. This also point to a relatively good price.

The last thing to look at concerning current price is the Graham Price. The currently stock price of $6.40 is some 28% lower than the 2009 Graham price estimate of $8.95. The thing is that this is based on the estimated earnings for this stock in 2009. The Graham Price was unusually low at the end of 2008 because of the low earnings of 2008. Earnings for 2009 is expected to be substantially higher than 2008. The last good thing to mention is that for the 2nd quarterly report the accrual ratio has turn negative. It is now -3%.

I can only find one analyst that follows this stock. The recommendation on this stock was recently changed from a Hold rating to a Buy rating. . (See my site for information on analyst ratings.) This is a small cap stock, so it is not surprising that few analysts follow it.

If you look at the charts, this stock has recently shot up in price from $3.81 in September 2009 to $6.40 today. Because of this, PFB stock has done better than the TSX and Industrials Indexes over the short term and as well as these indexes over the long term. It is interesting that the price of this stock has so recently done well. It was in the $3.00 and $4.00 range from November 2008 to this September.

As I said yesterday, I will continue to track this stock, but I do not intend to purchase it at this time.

PFB Corporation, through its wholly-owned subsidiaries, is a vertically-integrated manufacturer of proprietary insulating building products that are based on expanded polystyrene (EPS) technology. This expanded polystyrene (EPS) rigid insulation is used in a wide variety of residential and commercial construction projects across North America. It was founded in 1968 as Plasti-Fab Ltd, now a subsidiary of PFB. Directors and officers own 57% of the issued and outstanding common shares as of December 31, 2008. Its web site is www.pfbcorp.com. See my spreadsheet at www.spbrunner.com/stocks/pfb.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Tuesday, November 3, 2009

PFB Corp

I am reviewing this stock (TSX- PFB) today as I just read an article on this stock and thought I would do a spreadsheet on it. This stock is a dividend paying small cap stock. The article said that this stock would be good for long-term gains and rising dividends. This is the thing with small cap stock; you can get a blend of capital gains and rising dividends in the long term if the company is successful. However, such stock is not for everyone. Small cap stock can be risky and this stock is no exception. You should not invest in this stock unless you are willing to accept the risk.

The good growth figures are in Revenue and dividends. The regular dividends have grown over 9% per year for the last 5 and 10 years. They have also given out a number of special dividend payments over the years since starting dividend payments in 1997. If you look at earnings, they were negative 22% per year growth to 2008. However, 2008 was a particularly bad for this company. The expected earnings for 2009 are $.55. If this comes true then the 5 year earnings growth will be 11% per year. This is a good figure. However, this would also give a 10 year earnings growth of only 2.2% per year. The problem is that recessions hit this company’s earnings very hard.

If you look at cash flow, you will see about the same results as for earnings, so these figures are currently very negative. Here it also, the company is expected to do much better this year. The last growth figures to look at is the book value. Here the growth has been mediocre with 5 and 10 year growth at 6% per year and 4% per year. The other negative is the Return on Equity. Although the 5 year average was over 9%, in 2008 the ROE was under 2%. For the first half of this year, the ROE has improved, but only slightly to just over 4%.

The place where this stock shines is the Liquidity Ratio and the Asset/Liability Ratio. The Liquidity ratio is generally about 2.00 and the Asset/Liability Ratio is generally above 3.00. With either of these ratios, a good one is anyone at 1.50 and above. This stock has a strong balance sheet. This is a good situation to be in if you are a small cap company.

I do not own this stock, but I would be interested in tracking it at the present time, as it maybe something I might be interested in, in the future. They have not raised their dividend since 2005. However, they do have a tendency of keeping the dividend level for a number of years and then do a very large increase.

PFB Corporation, through its wholly-owned subsidiaries, is a vertically-integrated manufacturer of proprietary insulating building products that are based on expanded polystyrene (EPS) technology. This expanded polystyrene (EPS) rigid insulation is used in a wide variety of residential and commercial construction projects across North America. It was founded in 1968 as Plasti-Fab Ltd, now a subsidiary of PFB. Directors and officers own 57% of the issued and outstanding common shares as of December 31, 2008. Its web site is www.pfbcorp.com. See my spreadsheet at www.spbrunner.com/stocks/pfb.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

Monday, November 2, 2009

Setting Up a Portfolio

First, get a Utility stock. There are a number of good ones like Fortis (TSX-FTS), TransCanada Corp (TSX-TRP), TransAlta Corp (TSX-TA), Enbridge (TSX-ENB) or Emera Inc (TSX-EMA). The next thing to buy is a Bank or Financial Company. Examples of good conservative stocks would be Bank of Nova Scotia (TSX-BNS), Royal Bank (TSX-RY), TD Bank (TSX-TD), Power Financial (TSX-PWF), Power Corp (TSX-POW), or IGM Financial (TSX-IGM). The third stock to get, if you were very conservation would be another Utility stock as named above.

If you are less conservative, you might want to make the third stock a Consumer or Industrial Stock. Consumer stock you might consider would be Alimentation Couche Tard (TSX-ATD.B), Canadian Tire Corp (TSX-CTC.A), Saputo (TSX-SAP), Shoppers Drug Mart (TSX-SC), Richelieu Hardware Ltd (TSX-RCH) or Reitmans Ltd (TSX-RET.A). Industrial Stocks you might consider would be Canadian National Railway (TSX-CNR), Canadian Pacific Railway (TSX-CP) or SNC-Lavalin (TSX-SNC).

For the third stock you purchase, you might want to consider a riskier Utility stock in the communications area. Examples of such stock would be BCE (TSX-BCE), Telus Corp (TSX-T) or Rogers Communications (TSX-RCI.B). I do not follow Rogers Communications, but a lot of people have been suggesting this as a good dividend stock lately. Anther good utility stock to buy might be Pembina Pipelines (TSX-PIF.UN).

I do not think that you should move beyond 3 stocks until you have around $10,000 in each or a portfolio of $30,000 to $40,000. Once you have some investment in 3 stocks, you basically repeat the above purchase order. That is getting another Utility stock, another Financial stock and then, if you have gone into Consumer or Industrial stocks, getting one of them.

Once you have a decent size portfolio, you might want to consider getting a Real Estate Stock such as RioCan REIT (TSX-REI.UN). The last sort of stock you might want is a resources stock. The thing with most of the other I have talked about is that you can put them away in a portfolio and not worry too much about them. For resource stock, you have to keep an eye on them. They are much more risky and much more volatile than other stock.

When buying stocks, you want to get a quote first and compare this to values on my spreadsheets. If you do not have this with your trading account, or because they have good information you can use Globe Investor. To pick the stock, look at the quoted P/E ratio and compare it to the 5 year average for the Closing Price and 5 year average low price on my spreadsheet. You want a P/E is at least equal to the 5 year average on the closing price.

Next look at the stock’s dividend yield and compare this to the 5 year average on the average High/Low price. Here you want a yield that is higher than the 5 year average. The last thing to look at is the Graham Price. You want to stock whose price is close to the Graham Price. The Graham Price can be a trickier thing to compare. Look at the stock’s price compared to the Graham Price for the last 5 and 10 years. Some stocks never get at the Graham price level. If this is the case, you do not want a difference that is worse than the 10 year average.

At different points in time, some stock have a better purchase price that other stock. This can depend on what sort of market we are in and where we are in the Business Cycle. Also, the fall is the best time to do your stock purchases. What you want to do is to pick the stock with the best relative price at the time you are doing your purchase.

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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.