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.