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 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. Also, look at other investing notes on my website at

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