I first bought this stock (TSX-SNC) in December 1989 and I sold some in July 2008. I have made a total return on my investment of 30% per year. According my spreadsheet, only 2% of the total yearly return is in dividends. The reason I sold some stock in 2008 is that the value of this stock was too high a percentage of my portfolio.
If you look at my yield on my original investment, I am getting a return each year currently of almost 20%. If you want to live off your dividends, this is the sort of stock you want to buy. Also, if you look at the growth in dividends for the last 5 and 10 years, they have been growing at the rate of 27% and 22% per year, respectively. The growth for dividends for 2010 has been just at 13%, but we are just coming out of a recession.
For this stock, you have great growth in everything. I have mentioned above the great growth in dividends. Other growth that is good is revenue and the 5 and 10 year growth is 12% and 16% per year, respectively. The cash flow growth is also very good, where the 5 and 10 year growth is 32% and 20% per year, respectively. With Operational Cash Flow, I have excluded from my calculations the changes in working capital that is shown on their annual report. For this company, the changes in working capital distort the Operational Cash Flow so that it does not properly reflect how this company is doing.
When I look at the Liquidity and the Asset/Liability Ratios, I find them a little low at 1.18 and 1.27, but assets do cover liabilities. The Leverage Ratio is also a bit high at 5.02, but not unreasonably so. The Return on Equity ratio is also usually quite good on this stock with a ROE of 25% for 2009 and a 5 year average of 22%. The only ratio that is a bit too high is the Accrual Ratio, which is currently at 10.8%, but this is usually high.
I am very pleased with my investment in this stock. However, since I already have enough of it in my portfolio I will not be buying any more. I do not like any one stock to dominate my portfolio, no matter how good the stock is. Tomorrow, I will look at spreadsheet ratios for the current stock price and also look to see what analysts say about this stock.
SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC. See my spreadsheet at snc.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.
What is your definition of 'dominate'. Just curious on your thoughts is 10%, 25%, or more dominating?ReplyDelete
Personally unless its still super attractive i would keep it under 20%.