McCoy Corp

This is a stock (TSX-MCB) I have been tracking, but until yesterday, I had not owned. I came across and started to track this stock when I was looking for a filler stock for left over money in my TFSA after I bought the main stock I wanted. You can only move in $5,000 a year, so you can not do much with that. After I bought Shoppers for this account, I had just over $500 left and I was looking for a small cap dividend paying stock.

This was one of the stocks that came up. There were other stocks that I like better at that time. Also, at that time, McCoy Corp seemed to be struggling a bit. But now I think that things are looking up for the company. Also, the two other filler small cap dividend paying stocks that I liked better have both been bought out. I just hate it when I find a great stock and it gets bought out.

2008 and 2009 were not great years for this stock. The financials are not yet in for 2010, but the stock is expected to do much better. It is expected to have positive earnings for 2010. For both 2008 and 2009, the company had negative earnings or a loss.

As far as dividends go, they started in 2004 and then when up substantially until they were cut and then discontinued in 2009. McCoy has announced that dividends are being restarted for 2011, because they again have sufficient cash flow. Cash Flow has increased over the past 5 and 10 years by 15% per year and 5.5% per year, respectively.

However, if you exclude working capital from the cash flow, which many analysts now feel you should, there is no growth in cash flow and in fact, cash flow has declined over the past 5 years. I cannot get a 10 year figure, because 10 years ago, cash flow excluding working capital was negative. Cash Flow excluding working capital is positive today. So this is progress.

Revenue growth over the past 5 years has been good, as it has been growing at around 13% per year. However, revenue per share growth is not as good. It has been growing at the rate 4.5% per year. There was a big increase in shares in 2007 due to an acquisition and the pay down of debt.

The best 5 year growth has been in book value and this has grown at the rate of 25% per year. The 10 year growth is not as good and the growth here is only at a moderate 5% per year. This company is expected to do much better in 2010 and 2011 than for 2008 and 2009 in revenues, cash flows and earnings.

One very good thing about this company is the debt ratios. Around 60% is owned by insiders and investment companies and this is probably why these ratios are so good. The Liquidity Ratio is currently at 2.62 and it has a 5 year average of 2.12. The Asset/Liability Ratio is currently at 3.00 and it has a 5 year average of 2.56. Any of these ratios over 1.50 is very good. The Leverage Ratio is at 1.91 and this is also good.

There is not much to say about the Return on Equity, because frankly there has not been any lately. You can only get a ROE if the company is making money. This is expected to change with the financial report for 2010.

Tomorrow, I will talk about what my spreadsheet says about the current stock price and also what analysts have to say.

McCoy provides innovative products and services to the global energy industry. McCoy's two segments, Energy Products & Services and Mobile Solutions, operate internationally through direct sales and distributors with its operations based out of the Western Canadian Sedimentary Basin and the US Gulf Coast. McCoy's corporate office is located in Edmonton, Alberta, Canada with offices in Alberta, British Columbia, Louisiana, and Texas. Its web site is here McCoy. See my spreadsheet at mcb.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.