Tuesday, August 17, 2010

Alliance Grain Traders Inc

I started to follow this company (TSX-AGT) last year, as it was an Income Trust that converted to a corporation. It was one that different people thought would do very well after conversion. The dividends were kept at the rate established when it was an Income Trust. The company used to be called Agtech Income Fund and it converted to a corporation in September 2009.

Since the time this company converted to a corporation, its dividends have remained level, but the stock price has come up significantly. When it first established as an Income trust the dividend yield was over 7%. When it converted to a corporation in 2009, dividend yield was about 2.8%. The current yield is just 1.8%. However, cash flow for the last 3 months is up significantly, so perhaps this company will restart dividend increases. However, I can find no place where the company says what they intend to do with dividends. It would make this a more interesting investment if they restart dividend increases.

This company, since it went public in 2004, has had great growth in revenues, earnings, total return, cash flows and book value. The lowest 5 year growth is in cash flow with a growth of 16% per year. However, as mentioned above this 2nd quarter of 2010 shows a great growth in cash flows, of over 200%. Probably the best growth in the last 5 years was in earnings and this company’s earnings have grown some 95% per year.

When looking at the Liquidity and Asset/Liability Ratios, I see nothing but a strong balance sheet. The liquidity Ratio for 2009 was 1.63 and now stands at 2.44. The Asset/Liability Ratio for 2009 was 2.34 and it is now 3.42. For these ratios, anything over 1.50 is good. The last thing to remark on is that, although the earnings have grown from those of the first 6 months of 2009, they have not grown in line with the cash flow. The Return on Equity for the first 6 months of 2010 is just 8% and the lowest ROE this company has yet shown. The 5 year average ROE is 15.4%.

Tomorrow I will look at what the analysts have to say about this company. I will continue to track this company as it could turn out to be a great company.

Alliance Grain Traders Inc through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain . See my spreadsheet at agt.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.

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