Tuesday, December 8, 2009

Goodfellow Inc 2

Today, I want to continue my review of this small cap stock (TSX-GDL) that I recently saw written-up. This stock is not well followed, and it looked interesting. I have been interested in small cap dividend paying stocks. After this, I want to go back and review some good conservative dividend paying stocks.

When I look at Insider Selling and Insider Buying report, I see two interesting things. All the buying was done below $7.00 a share and all the selling at over $7.00. The other thing to note is that insiders own or control about 60% of the shares of this company. However, there are such small amounts of both selling and buying on this stock that this really tells us nothing.

When you look at spreadsheet ratios, I find both the 5 year P/E low and P/E high figures quite low. The P/E high is only just above 12 and the P/E low is just above 6.4. I do not have a current P/E as I cannot find any earnings estimates for this stock. However, the sites that look at the last 12 months earnings, give a range between 12.4 and 8.6. There is a range because some included in the latest earnings those from extraordinary items and some did not include these extraordinary items. We should probably not include extraordinary items in this calculation, but a P/E of 12.4, although relatively high for this stock, is not particularly high.

When you look at the yield, the story is slightly different. The 5 year average is 4.7% and the current yield is 5.6%. This gives higher current yield that usual. This can point to a good current price. However, the problem with this stock is that just because the last dividend declared can be annualized to $.60 a share, there is no certainty that this company will declared the next dividend to be the same amount. This company tends to change the dividends declared a fair bit. Usually companies are consistent in their dividend declarations, as they usually declare dividends the same or higher than the last one. This company tends to vary each dividend declared, so you cannot be sure that the next one with be even at the same value as the last one.

When you look at the Price/Book Value ratio, I find that the current Price/Book Value is some 80% of the 5 year average. The lower current Price/Book Value Ratio shows a good current price. The other thing to note about the Book Value is that this stock is trading below Book Value. This means that the current stock price is less than the break up value of this company. This certainly points to a cheap stock price.

The Graham Price also points to a good current stock price as the Graham Price is at $19.17 and the stock price is only $10.80. This is a difference of just over 43%. The thing to note on this is that the Graham Price has been consistently below the stock price on average of about 40%.

Globe investor gives this stock a 3 star rating. When I look at analysts recommendations, I find only one Buy recommendation. (See my site for information on analyst ratings.) This is a small cap stock with heavy insider ownership, so few people follow it. I did find another blogger who likes this stock. See canadianbengraham.blogspot.com.

The last thing to point out on this stock is the negative and very low Accrual Ratio. This Ratio at -6 is certainly a buy signal. I have finished buying what stock I wanted for this year, but I intend to continue to track this stock as I find it both interesting and something I might want to buy in the future.

Goodfellow is a wholesaler and distributor of wood and wood by-products with headquarters located in Delson, Qu├ębec. We have wood treating facilities and offer a full inventory of exterior siding, flooring,
plywood, treated wood and prefabricated products as well as a broad range of hardwood, softwood and exotic woods. It has distributions centers in Canada and US. Its web site is www.goodfellowinc.com. See my spreadsheet at www.spbrunner.com/stocks/gdl.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.

1 comment:

  1. Wow, great site Ms. Brunner. Can't wait to look over all your posts. Especially love the spreadsheets, thank you for posting them. One comment regarding Goodfellow and their dividends: over the past 5 years the company has generated tremendous cashflow but the bulk of it has been used to pay down debt. Since 2005, debt has declined steadily from $44 million to just $5 million. If (and that's a big if I'll admit) cashflows continue at recent historical levels, with no more debt to pay down, there may be more cash available for dividends, share repurchases or strategic acquisitions, all of which could enhance shareholder value.