Monday, December 13, 2010

Reitmans (Canada) Ltd

Reitmans (TSX-RET.A) is a stock I follow but do not own. I was looking at this stock to buy after selling RIM. However, I decided to go with other purchases. There is nothing wrong with this stock, it is just I rather buy some stock I already own, rather than get into new stock, unless I cannot help it. This stock has a financial year ending at the end of January of each year. I have updated my spreadsheet for January 31, 2010 financial year. I have also updated it for the 2nd quarterly reported dated July 31, 2010.

This stock is on one of the dividend lists that I follow of Dividend Achievers . The dividend increases have been inconsistent over the past 10 years; however, there were some years of very good increases. This is why the 5 and 10 year growth in dividends is 29% per year and 25% per year respectively. The last few years the dividend increases have been lower. For the 2011 financial year, dividends were increased after one had been paid, so the total increase for the 2010 financial year was just over 8%, however, the actual increase was 11%.

If you had held this stock for the last 5 years, you would have probably made a total return of around 8% per year, with 5.5% of this return being in dividends. If you had held this stock for the last 10 years, your return would have been around 23% per year, with again about 5.5% in dividend income. The dividend growth potential is probably around 10% after 10 years. That is you could be earnings a 10% return in 10 years time from an investment in this stock today.

For the last few years, this stock has not done well in regards to revenue and earnings. However, it is expected to recover over the next two years with higher revenue and higher earnings. In the 2nd quarterly report, you can see that both revenues and earning are up over one year ago and this, of course, is a good sign.

The strong points of this stock are the great Liquidity Ratio and the Asset/Liability Ratios. The Liquidity Ratio is currently at 4.94 and the A/L Ratio is even higher at 5.79. The 5 year average for these ratios is 3.39 and 4.69 respectively. This company is prepared to weather any recession. The increase in Book Value is also very good. This has increased over the past 5 and 10 years at 9.6% and 10.4% per year, respectively.

The last thing to look at is the Return on Equity. The ROE average for the last 5 year is 18.5% with the January 2010 ROE at 13.2% and the one for the 2nd quarter of 2011 at 21.9%.

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

Reitmans (Canada) Limited operates a network of clothing stores specializing in women's & men's fashions and accessories. The company operates stores under the names Reitmans, Smart Set, Pennington Superstores, R. W. & Co., Thyme Maternity, Addition-Elle, and Cassis. Sherlex Investments Inc (Reitmans family) owns 50% of this company. Its web site is here Reitmans. See my spreadsheet at ret.htm.

I bought some Husky Energy with the remaining money from RIM. I first looked to purchase some more stock that I already had in the account RIM was in. I found three stocks I already owned that we at good price. I am reluctant to continually buy new stocks, as I like to keep some control over how many stocks I own.

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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