Tuesday, September 14, 2010

Canam Group Inc

I do not currently own this stock (TSX-CAM). It is not on the dividend lists that I follow. I started to follow it when I was looking for a company that was into infrastructure and supporting industries. This company is in the later sector. It is also an international company. I do not follow a comparable company. The closes companies that I do follow are SNC-Lavalin and Stantec. Both these companies are in infrastructure, internationally.

Probably the main reason I would not buy this company is that the dividend payments are all over the place. The dividends go up and they go down, and they are sometimes not even paid. Over the last 10 years, there were 2 years in which dividends were not paid, in 2004 and 2005. However, over the past 5 and 10 years, dividends have added some 2 to 3% to the total return of this company. The company is responsible in that they only pay dividends when they can afford to. If I did not live off my dividends, I might look differently on this company.

This recent recession seems to have hit this company hard. When you look at the growth figures, however, what is most noticeable is that, in most cases, they are worse over than last 10 years than over the last 5 years. If you had held this stock over the past 5 years, the total return would have been just over 8% per year. This is a good return. However, if you had held this stock for the past 10 years, the total return would be 2 or 3% per year. One of the things to note is that the price of the stock has been close to or below the stock’s book value over the past few years.

A good thing about this stock is that it has a very strong balance sheet. The Liquidity Ratio is currently at 2.12. It has a 5 year average of 2.38. The Asset/Liability Ratio is also currently good at 2.21 and a 5 year average of 2.61. For these ratios, anything over 1.50 is good. This stock has not always made a profit, but the 5 year running average for Return on Equity to 2009 is 10.8% and this is good. For the first two quarters of 2010, the company has been running a small loss, but it is expected to make some sort of profit by the end of this year.

Tomorrow I will look at what the analysts are saying about this stock.

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 16% 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.

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