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.