Thursday, February 11, 2010

Lassonde Industries 2

I am today reviewing Lassonde Industries (TSX-LAS.A), because I read a favorable report on this company. My spreadsheet covers the financial year ending in 2008 and the 3rd quarter of 2009. I have not invested in this stock, but it is a Canadian Dividend Paying stock. It is not on the dividend lists that I follow, as the company is small, but it does consistently increase their dividends, especially of late.

The first thing I like to look at is Insider Buying and Insider Selling. For this stock there is a bit of both, with more selling than buying. Amounts are too small to worry about and the selling is by one officer. People can sell stock for lots of reasons unconnected to how they expect the stock to perform. The other ownership item to talk about is that this is a management owned business, with management owning over 57% of the outstanding shares.

The next thing to look at is the current stock price. Is the price good or reasonable? First, let’s look at the P/E Ratio. The 5 year average low is 11.4 and the 5 year average high is 14.8. I get a current P/E of 12 based on expected earnings. Sites that show P/E based on last 12 months earnings get a P/E around 12.4. So these P/E ratios are fairly close and fairly low, but a good price would be below the 5 year average. The Price/Book Value Ratio of 1.97 is higher than the 10 year average of 1.57 by some 20%, so this shows a rather high current stock price.

The next thing to talk about is the Dividend Yield. The current Dividend Yield is 1.5% and the 5 year average is 1.7%. What is preferred is the current yield to be above the 5 year average. This shows the stock price also to be high. The last thing to look at is the Graham Price. The current Graham Price is $50.89 and this is some 3% below the stock price of 52.20. So, the current stock price is not far off the Graham Price.

What most of these indicators show is that the current stock price is rather high, although the P/E and Graham Price show that the price is reasonable rather than low. When I look at what analysts say, they think that there is not much room for stock price expansion in the near term. This stock has grown some 60% since the end of last year and some 60% since the lows of March 2009. This is very good performance so, I can see why they might think it has not much room for further growth.

There are not many analysts following this stock. The only recommendations I can find are Buy, Hold and Underperform. The consensus would be Hold. (See my site for information on analyst ratings.) Comments I see are that there is not much room for price expansion, that it is a good stock for the long term as in the long term both the price and dividends will rise and some see a problem with the amount of stock held by management.

I will continue to follow this stock. I think that the company has shown that they can make money and will provide a decent dividend for the shareholders. It is certainly a stock I might be interested in, in the future.

Lassonde Industries Inc. is a leading manufacturer of pure fruit juices and fruit drinks in Canada, and the largest manufacturer and distributor of apple juice in Eastern Canada. Through its subsidiaries, Lassonde is active in the processing, packaging and marketing of food products such as pure fruit juices, fruit and citrus drinks, the canning of corn on the cob for foreign markets as well as dipping sauces, fondue bouillon, meat marinades, barbecue sauces and baked beans. The Company also markets its know-how in Canada and abroad. 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 Follow me on twitter.

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