Canam Group Inc 2

I do not currently own this stock (TSX-CAM). It is not on the dividend lists that I follow. The closes companies that I do own (and follow) are SNC-Lavalin and Stantec. Both these companies are in infrastructure, internationally. However, what you invest in can a lot to do with where you are in your life cycle. I do not find this attractive, because I live off my dividends. However, if you are young and far from quitting work you might think differently.

When I look at the Insider Trading under this company, I find over the past year that there has been very little of either, so that we learn nothing here. Of note is that Marcel Dutil, the CEO and founder of this company has 35% of the outstanding shares. However, only 12% seems to be common (voting shares) and the rest in Class A, subordinate voting shares. In the annual report for 2009, it says he owns 17% of the company shares. The company is in the process of buying back shares, and plan to buy back about 10% of the common shares outstanding.

The first ratio I should talk about today is the Price/Book Value Ratio. This is because the P/BV is probably the best and most solid indicator that the current stock price is a good one. Another plus is that it is not built on any estimates. I get a 10 year average of 1.08 and a current one of .84, which is only 77% of the 10 year average. The other thing to note is that the P/B is below 1.00. That is the stock is selling below the book value.

Because the company is expected to earn little this year, the current P/E is too high to even consider in the analysis of this stock. The forward P/E is 14. The 5 year median high P/E is 14 and the 5 year median how P/E is 8. However, the P/E on this stock has been increasing steadily over the past 5 years. For example, the low has gone from 5 to 10.7. The high P/E has gone from 8 to 18. On an absolute basis, a P/E of 10 is low and one of 14 is not bad.

You run into the same problem in looking at the Graham Price. I get only $2.43 for the 2010 Graham Price because of the low earnings expected this year. However, the Graham Price was $9.42 in 2009 and I have one of $10.12 for 2011. I get a current dividend yield of 2.2%. The 5 year average is lower at 1.5%. However, the 10 year average low is 3%. So, this year is good in average terms, but the yield has been higher in the past.

When I look at analysts recommendations, I find lots of Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) According to Google Finance, this stock has a Beta Ratio of 1.26. (TSX would be a beta of 1.00, so this stock is expected to do better than the TSX.)

When I look for analysts comments, I find nothing bad said about this company. Many think it is well managed and like the fact that it has low debt. In periods of financial problems, like the current one we are in, a good company to invest in would be one with low debt as they are less likely to get into financial difficulties. They are also better positioned to ride out recessions.

As I said yesterday, I am currently not interested in this stock because of the uneven dividend payment history. I live off my dividends, so I want companies that pay consistently. However, if you are in a different part of your life cycle, you might want to consider this company.

ABC funds sometime put out full reports on stocks they hold or have held. See their report on this stock. On the 2009 report, it says that I. A. Michael Investment Counsel Ltd owns 11% of the outstanding shares. This is ABC funds. Also, see a report by Portsmouth Equity Research at eResearch. However, I find it interesting that this second report just mentions dividends being paid from 2006. They do not mention that dividends had been paid previously and then discontinued in 2004.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Marcel Dutil owns 35% of this company. Its web site is here Canam. See my spreadsheet at cam.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.