Canam Group Inc 2

I have looked at my portfolio to the end of October and find I have a 3% gain, year to date. This is better than the 8.86% loss for the TSX. My portfolio tends to do better in bear markets, but not as good in bull markets. Also, I am into basically good dividend paying stock. Almost all that 3% gain is in income. Without income, my portfolio is only up .17%, so basically I am made no capital gains so far this year.

Now, on the Canam Group Inc. (TSX-CAM), which is the stock I want to continue to talk about today. I do not own this stock. This stock really took it on the chin when it stopped dividend payments. The stock fell some 50%.

As far as insider trading goes, there was some minor insider buying and insider selling earlier in the year before the stock fell. There has been none since. Some 22 institutions own shares in this company, with current ownership at 49%. Over the past 3 months they have increased their shares in this company by 12%.

It is obvious at a share price of $3.77 this stock is cheap. The stock has not been at this price for more than 10 years. Most of my usual test would not show this. Looking at the Price/Earnings Ratio for this year and last will not help any as they had no earnings. They are to have earnings in 2012 and that P/E will be around 22, not a low P/E ratio.

Because they have no or little earnings, the Graham Price would not help. Although if you look back a few years to reasonable earnings the Graham Price was between $9 and $12, which is higher than the current price. They have also suspended dividend payments so there is no yield.

The only test that shows that the price is low is the Price/Book Value. The 10 year P/B Ratio is just 1.06. Even at that the current P/B Ratio at 0.46 is only some 43% of this 10 year median value. Also, the current stock price is below the Book Value of $8.28. Now this shows a cheap stock.

Generally, when you run into a stock that is so cheap, relatively to past price, it is cheap for a good reason. The reason for this stock is that that have run into problems. Part of their problem is that they took a loss on BC Place construction. Another problem is their exposure to the US construction market. However, a lot of analysts point to the generally excellent management and the fact that they have a strong balance sheet.

Analysts’ recommendations on this stock are all over the place. Recommendations include Strong Buy, Buy, Hold, Underperform and Sell, and there are not that many analysts that follow this stock. (See my site for information on analyst ratings.)

The Strong Buy and Buy look at the fact that the stock is cheap and it has a good balance sheet. Even a recommendation of Hold, comes with a comment on the fact that this company has no financial problems. Problem is that the stock may take a while to recover. So, has this stock been oversold? It might just be.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets.
This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.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.