Tuesday, May 8, 2012

Ag Growth International 2

I own this stock (TSX-AFN). I first bought this stock in October 2011 and then some more in December 2011. The stock has gone up 17% since I bought it. Some 8.8% of my total return is in dividends. This stock used to be an Income Trust company.

When I look at insider selling, I find some $5.9M of insider selling. There is a bit of insider buying, with a net selling of $5.4M. However, some $4.7M of the selling is from the estate of an officer. This leaves only some $0.7M selling from current insiders with some $0.5M of insider buying. This isn’t much action and so tells us little.

There are 36 institutions that own almost 40% of this company. Over the past 3 months they have increased their shares by 11.7%. This shows a vote of confidence in this stock. However, over the past 3 months sellers outnumbered buyers by 1, with 6 sellers and 5 buyers.

I get 5 year median low and high Price/Earnings Ratios of 11.69 and 22.90. The current P/E Ratio of 16.11 is almost to the median P/E Ratio. This shows a reasonable price.

I get a current Graham Price of $41.09. The 10 year low median difference between the Graham price and stock price is the stock price being some 25% lower than the Graham price. The median and high difference between the Graham price and stock price is the stock price being 10% and 48% higher, respectively. The current difference between the Graham price and stock price is the stock price being 36% higher than the Graham price. This shows a rather high stock price.

The stock price has been increasing faster than the Graham price. This is because the stock price has been increasing faster than both the earnings and book value.

The 10 year median Price/Book Value Ratio is 2.07. The current P/B Ratio is 2.95. So the current P/B Ratio is some 25% higher than the 10 year median and would suggest a rather high stock price.

The 5 year median dividend yield is 6.79% and the current dividend yield is 5.84%. The current dividend yield is some 14% above the 5 year median and would suggest a rather high stock price. The 10 year low dividend yield is 5.48%, which is 6% lower than the current dividend yield. So the stock price has been relatively higher before.

The testing results for the current stock price are mixed. The test results generally suggest a rather high stock price, but not as relatively high as it has been in the past.

When I look at analysts’ recommendations I find Strong Buy, Buy, Hold, Underperform and Sell. Most the recommendations are a Hold and the consensus recommendation would be a Hold. One analyst says that high yield stocks, such as Ag Growth tend to perform better in regards to capital gain than lower yield dividend stocks. They still rated this stock as a Hold as they do not expect the stock price to go up in the next 12 months.

A Buy recommendation came with the comment that the dividend yield is very good on this stock. Buy recommendations seem to suggest that stock price will be higher in 12 months times. BMO recently rated this stock a” market perform”, which is another term for Hold. See afn.htm. (See my site for information on analyst ratings.)

The median Price Target in 12 months is $40.60. Yesterday, when I started this review, the 12 month price and the current price were basically the same. However, this stock has being falling in the latest downturn of stock market today and now the stock price is below the 12 month stock price. Still, most Hold recommendations seem to be because no one expects the stock price to do much within the next 12 months.

Part of an interesting article from the G&M on AG Growth. There is also a Proactive Investors article about AG returning to profitability in the four quarter of 2011.

I am holding on to the shares I currently have. I have done well so far and expect to get a decent long term gain on this stock, both in terms of dividends and capital gain.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.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 comment:

  1. Once again the stocks are down and hence investment time, where you can earn more money in the upcoming time for short term.