Thursday, March 31, 2011

Toromont Industries Ltd 2

This is a stock (TSX-TIH) I own. I bought this stock first in 2007 and some more in 2008. I have made a return on 6.6% per year with probably 2% per year being from dividends. The company has been raising their dividend each year for sometime and there is no reason to suspect that they will not do so this year also. Their Payout Ratios are reasonable.

When I look at the insider trading I find that there has been some $3.6M Insider Selling over the past year, mainly at the end of 2010 and this seems mostly to be selling of stock options. There has been no Insider Buying. Except for the CFO, insiders have more shares than stock options. The CEO owns some 2.4% of this company. Also, an investment firm owns 9.5% of this company. So, most of this information is positive or nothing to be worried about.

When I look at the Price/Earnings Ratios, I find the 5 year median low to be 11.9 and the 5 year median high to be 16. The current P/E Ratio of 16 is therefore on the high side. The P/E ratios for 2010 ranged from 17.8 to 24.6, with a trailing P/E Ratios of from 12.3 to 17. I get a current Graham Price of $26.19 and the current stock price of $30.52 is 16.6% higher. The 10 year median difference between the Graham Price and the stock price is 27.5%. So this stock price by this measure is better than average.

I get a 10 year median Price/Book Value Ratio of 2.45. The current one at 1.95 is only 80% of this P/B Ratio, so this points to a good current stock price. I get a 5 year median dividend yield of 2.1% and a current year of 2.1%, so this shows a very average type price.

When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. There are just as many Strong Buy as Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Buy recommendations come with a 12 month stock price of $35 and those with a Strong Buy recommendation with a 12 month stock price of $40.

A couple of analysts said that this company did very well during the last 3 months to December 2010. One analyst thought that because of the turmoil in the Middle East our oil patch will do very well, with Toromont profiting from increase in business. See an interesting article about Enerflex and Toromont at Buy Sell Adviser. Toromont has decided, again, to spin off Enerflex. See Marketwire.

I am pleased with my investment in this company and will hold on to the share I have, but I will not be buying more as I have enough of this stock.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricate and install compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here TransCanada. See my spreadsheet at tih.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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