Wednesday, January 4, 2012

Calian Technologies Ltd 2

I own this stock (TSX-CTY). This is the stock I am buying for my TFSA purchase this year. This is a small tech stock, so it is riskier than a lot of dividend paying stocks that I own. This stock has very good dividends. The 5 year median dividend yield is 4.42%. The current dividend yield is 5.96%.

When I look at insider trading, I find that over the past year there has been $3M of insider selling, mainly by officers of the company. For this company, it is only the directors that have more stock options than shares. (This is the reverse of most companies giving out stock options.)

There are 9 institutions that own 40% of the shares of this company. Over the past 3 months 1 of these institutions sold a very minor amount of these shares. (What was sold was less than 1% of outstanding shares owned by these institutions.)

I get 5 year median low Price/Earnings Ratio of 8.82 and 5 year median high P/E of 11.82. These are rather low P/E ratios. On a relative basis, the current P/E Ratio of 9.93 shows that the $17.57 stock price is reasonable.

I get a Graham Price of $18.07. The current stock price of $17.57 is 2.9% lower. The median difference between the Graham Price and the stock price is the stock price being 14% higher. The low difference between the Graham Price and the stock price is the stock price being 9.5% lower. So, here again, we have a test that shows that the stock price is reasonable.

The 10 year median Price/Book Value Ratio is 2.23 and the current P/B Ratio is 2.14. The current ratio is 95% of the 10 year median and shows a relatively reasonable stock price. The current dividend yield is 5.96%. This is 34% above the 5 year median dividend yield of 4.42. Ever since they are started to pay dividends, the dividend have been increasing faster than the stock price. This means that the yield has been steadily going up.

The dividend increases have been increasing faster than any other growth including EPS and CF per share growth. At some point this will have to change. It may be doing that now as the first increase of the 2012 financial year was just 4% and the lowest increase this stock has had.

When I look at analysts’ recommendations, there appears to be only one analyst following this stock. The recommendation is a Buy. This makes senses as the price is a reasonable, but not great one. A point to make is that the company gets a lot of business from the government. A number of analysts remarked on the fact that they thought the company was well run. Another point is that this is a small cap stock and it might be a bit illiquid. That is there are not a lot of buyers and sellers and the bit and ask can vary a lot.

I still like this stock and have purchased more for my TFSA account. However, I do not have much invested in this company.

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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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