Russel Metals

I am now back reviewing my stock portfolio stocks. I bought this stock (TSX-RUS) in April 2007 and I have lost 4% per year. However, the total return on this stock over the past 5 years is 11.5% and over the last 10 years is 25%. Past performance does not in anyway guarantee future performance, but I have had this stock for only 3 years and we are in a recession. Therefore, the performance does not surprise me.

It is obvious that 2009 was not a good year for this company. There was a sharp turn down in revenues, earnings and cash flow. All these items were in negative territory. These items are expected to start recovering this year, but the recovery will take us to at least 2012.

The dividends on this stock tend to fluctuate depending on what they can pay. However, dividends are up well in both the last 5 years and the last 10 years, by 7% and 19.5% per year respectively. As mentioned already, the total return on this stock over the last 5 and 10 years is very good, and this is largely to do with the dividends paid under this stock. However, the company lowered the dividends in 2009 and they have not changed the dividends paid yet.

The book value on this stock has been growing over the last 5 and 10 years at the rate of 7.7% and 9.5% per year respectively. This is not bad considering that the book value decreased in 2009. The other good thing about this stock is the strong balance sheet. The Liquidity and the Asset/Liability Ratios are very good at 4.32 and 2.28. It is very good when these ratios are at or over 1.50.

When I look at the Return on Equity, the 5 year average ROE in 2009 is good at 13% considering there was a loss in 2009. The current one is at a still respectable one of 8.4%. The last thing to look at is the Accrual Ratio and this is generally good and low. The bad thing about this ratio for the 1st quarter of 2010 is that the earnings are higher than the cash flow from operations. What you really want to see is the reverse.

I am happy with my investment in this stock as I think that it will turn out to be a good long term investment. Tomorrow, I will look at what the analysts say about this stock and some more of the spreadsheet Ratios.

This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors. Its web site is here Russel. See my spreadsheet at rus.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.