Monday, May 30, 2011

McCoy Corp

I recently updated my spreadsheet on this stock (TSX-MCB) as I bought some more of this stock for my TFSA. I had recently sold some Shoppers Drug Mart (TSX-SC) stock to buy some Calian Tech (TSX-CTY) stock and had some money left over. I spent part of this left over money on 100 shares of McCoy Corp (TSX-MCB). I recently paid $4.03 per share for this stock.

The problem with a thinly traded small cap such as McCoy is that there can be a big difference between the Bid and Ask prices (or Buy and Sell prices). That is what people are willing to sell that stock at and what others are willing to buy this stock at. Today, I note that there is a bid price of $4.07 and an ask price of $4.14, a 1.7% difference.

When buying such stock, you need to have an idea of what you are willing to pay for a share and then be patient. On small caps, I often put in a price I am willing to pay (good to the end of the day); and just walk away and only check back the next morning to see what has happen. In doing this, you must be willing to walk away if you do not get the deal you want and try another day. I often get what I want, but not always. You do have to put in a reasonable amount.

I have updated my spreadsheet fully for the financial year ending in December 2010. I have also updated it for the first quarter in 2011. The company paid a special dividend $.04 in March of this year. Note that all dividends were cut in 2010 because the company felt it could not afford to pay any. Dividends have been restored, but at $.04 per year and therefore lower than for 2008, which were at the rate of $.12 per year.

The company has not yet recovered from the last recession. However, revenues, earnings and cash flow were positive for 2010 and were higher than for 2009, even though they showed no gains over the past 5 years. When looking at Insider Trading, although there was not much of either there is net insider buying over insider selling. Also, insiders have been retaining stock options recently issued.

Looking at institutional buyers of this stock, there are 5 holding just under 5% of the company. There has been a small net increase in institutional ownership over the past 3 months with no sales. The company’s management is positive about the future earnings and cash flow by their reinstatement of dividends in 2011.

When looking at the 5 year median Price/Earnings Ratio, I get a low of 6.8 and a high of 17.6. The current P/E ratio, based on $4.14 price is 10.6 and is lower than the 5 year median of 13.0. I get a Graham Price of $4.45 and the current price is 7% lower. The 10 year median difference is a stock price 15% above the Graham Price, so this stock price is relatively good.

I get a 10 year median Price/Book Value ratio of 1.72 and a current one of 1.84. This puts the current P/B Ratio at 30% higher than the 10 year median and therefore shows a rather pricey stock price. The last thing is the Dividend yield. The current dividend yield is 1% and the 5 year median dividend yield is 1.9%. I must admit that both the dividend yield and the P/B Ratio have bounced around quite a bit on this stock. (This makes you wonder how valid the median comparison is.)

When I look at analysts’ recommendations, there appears to be only 3 and all 3 given a Buy recommendation. The consensus recommendation would therefore be a Buy. This Buy recommendation comes with a 12 month stock price of $5.38. This gives a potential 30% return on this stock over the next 12 months. The thing that analysts seem to mention about this company is that it is debt free. Certainly, the Debt/Equity Ratio of 0.50 is very good as are all debt ratios on this stock.

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.


  1. I find it very interesting that a company this small, can have a sustainable (?) dividend. I mean, the market cap of this guy in only just over $100 million. A pretty small company in the grand scheme of things to be paying out to shareholders with any consistency long-term. What is your take on this Susan?

  2. There is no intrinsic reason why a small company cannot pay dividends. I find small cap companies with dividends quite interesting and I follow a couple of them. See also TECSYS (TSX-TCS) that I currently follow.

    A problem is that recessions tend to hit small caps harder than they do larger companies. This company has shown that they will cut their dividends when they cannot afford them. This is something I like in a company. I rather like a company that will cut their dividends when necessary.