Cinram Intl Inc 2

I do not currently own this stock (TSX-CRW.UN). However, I did own stock in this company from February 2000 to Jun 2007 and I made a return of 19% per year. This is a company in manufacturing, and it has a habit of reinventing itself. It has manufactured the different mediums that we have used over the years to record music and films etc (that is home entertainment). It started with 8-track and cassette tapes and has is currently manufacturing CDs and DVDs. It might just reinvent itself again.

One thing that this company strongly points out is the peril of investing in companies that have a few big clients. When Warner Home Video ended their relationship to this company, the shares price took a 60% pounding. See articles in the Canoe, Globe and Mail and Toronto Star, . With severed relationship, Cinram lost about 30% of its revenue. The moral here is to be very careful when investing in a company with a few big clients.

The other interesting thing about this episode is the amount of insider buying was $10M before this happen and no insider buying since. I must admit, there is no insider selling neither, and maybe this could be interpreted as a good sign. A lot of the insider buying took place in November of 2009, when the stock price fell, as most stocks do, in the fall. Almost all the buying was by one director, who now owns 12% of this business. Two other directors own just over 3% each. Also, Clarke Inc, an investment company owns just about 15% of the company. (See their website at Clarke Inc.)

The company has no P/E ratio, as it has made no money over the last few years and it is not expected to make anything over the next 2 years. The dividends have been stopped, so there is no dividend yield. I cannot calculate a Graham Price, as the earnings and book value are negative. There is also no way to calculate the Price/Book Value Ratio as the book value is negative.

So, what do the analysts say? There are few analysts following this stock, and what I get is Hold, Underperform and Sell recommendations. The consensus would be an Underperform. (See my site for information on analyst ratings.) I must admit, I have seen far worse recommendations than this. However, this company still has business in Canada, US and Europe and had $255,000 of revenue in the 2nd quarter.

Perhaps the company will make a recovery. The analyst ratings certainly imply some hope. I think the one most important thing is for it to be able to finance its debts. In any event, I will continue to track this company. Tomorrow, I will be looking at TransCanada Corp. This is a utility and one of my favorites.

Cinram is the world's largest provider of pre-recorded optical discs and related logistics services for leading motion picture studios, music labels, publishers and computer software companies. Cinram also provides distribution and logistics services to the telecommunications industry in North America and Europe through its wireless subsidiaries. Their major customers include New Line Home Entertainment, Twentieth Century Fox Home Entertainment (Fox), Metro-Goldwyn-Mayer Home Entertainment (MGM), Artisan Entertainment/Lions Gate, Alliance Atlantis and EMI Group plc (EMI). Its web site is here Cinram. See my spreadsheet at crw.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.