Mullen Group Ltd

What I want to do today is review a new small cap dividend paying stock (TSX-MT). I have not invested in this stock, but I like to look at recommended small cap dividend paying stock to see if they would be a possibly good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. Since the current yield is 3.5%, it is a very acceptable dividend.

What I like to mention next is that 2009 was not a great year for this company. What I should say next is that the first quarter of 2010 was not great either. However, the analysis I read expected this company to recover as the oil and gas industries do. The thing is that having mentioned the above, this stock’s 10 year growth figures are generally quite good. It is the 5 year growth figures that are not great.

The thing is, if you had this stock for 5 years, buying at an average price, you would have make some 6.3% return per year and this is not bad considering we are in a recession that is especially affecting the oil and gas industry. If you had bought this stock at the year end price, you would have made a slightly higher return of 7.5% per year. I should also point out that past results can not be to used as a guarantee of future results.

This company has issued shares to do acquisitions, so the number of shares has increased over time. This especially true of 2006, when they last did major acquisitions. This can affect the per share valuations. The worse 10 growth is in revenues and this has only grown some 6.7% per year. The problem is the low revenue of in 2009. The Cash Flow growth for the last 10 year is also low at just 8%. However, this is also due to the low cash flow for 2009.

One very good thing about this stock is the strong balance sheet. The Liquidity and the Asset/Liability Ratios are very good. These ratios are 3.35 and 2.54 respectively. For these ratios, anything over 1.50 is good. And the last thing to talk about today is the Return on Equity. The ROE was fairly good until 2009 and then the ROE came in at 7.8%. The 5 year average looks low at 7.6% because of the earnings loss of 2007. However, without this loss, the ROE would be a much healthier 12%. So this is nothing to worry about at the present.

Tomorrow, I will look to see what various analysts are saying about this stock.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in Western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen. See my spreadsheet at mtl.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 for stocks followed and investment notes. Follow me on twitter.