Wednesday, June 6, 2012

Automodular Corp 2

And the Dividends Roll In. See comments blog.

I own this stock (TSX-AM). This stock was recommended by Keystone as a good Small Cap stock with dividends in 2011. I bought a couple of hundred shares with the dividends in my TFSA account because of the current lower price. I have lost some 25% on my original purchase. However, markets are down.

When I look at insider trading, I find a bit of insider buying and a bit of insider selling with a net of insider selling. The Bank of Nova Scotia is still their principal banker but no longer an insider. They have been selling off their holdings which are down some 46% since January 2012. Also, the ex-CEO Michael Blair has been selling shares and they are down some 19% since January 2012.

However, large insider holders of Richard Peter McLaughlin, a Director and Bissett Investment Management of Franklin Templeton Investments Corp. have maintained their share holdings. According to institutional holding information, there were 4 institutions holding 49% of the outstanding shares in May 2012 and now there are 6 institutions holding 75% of the shares.

The institutional information says that there were 3 sellers of some 14% of their shares over the past 3 months. We know that the Bank of Nova Scotia has been heavily selling as they are no longer considered an insider. The thing we do know is that an awful lot of the shares are owned by institutions and insiders. Still there seems to be thousands of these shares traded daily. I think there is enough volume for small retail buyers.

The Price/Earnings Ratios on this stock are currently very low. The 5 year median low and high P/E ratios are 1.18 and 3.52. The current P/E ratio is 2.77 which is just above the median P/E Ratio. So, stock price is probably relatively reasonable at $1.69. However, these are very low P/E Ratios.

I get a Graham Price of $4.93. The current Price/Graham Price Ratio is very low at 0.34. However, all the P/GP Ratios are below 1.00 and the even the high P/GP does not reach 1.00 as it is 0.94. (All stock prices are below Graham price if ratio is below 1.00.) The low, median and high P/GPs are 0.28, 0.59 and 0.94. By this measure, the stock price is low.

The 10 year median Price/Book Value ratio is 0.97 and the current ratio is 0.96 or 98% of the 10 year median. This shows a good stock price. However, the stock price is also below the book value, which also denotes very good value.

It is hard to get a fix on the dividend yield as dividends have been erratic to say the least. However, most of the time when the dividends were paid, the median range was around 6 and 7%. The current dividend yield of 14% is very high and would suggest a good stock price.

There are no analysts really following this stock. However, technical analysis shows a support line at $.90 and a resistance line at $2.20. Analysts that talk about this stock say it is speculative and has little volume. There is a video on this company at Investment Pitch dated June 2011. There is a later e-research report dated November 2011.

The eResearch “Stock Potential Reports” are written on companies that eResearch believes have interesting prospects, are smaller in size and, therefore, have little or no following on the Street, and which would benefit from the exposure that eResearch can provide through the dissemination of the reports via our extensive electronic distribution network.

I personally expect long term capital gains and good dividends from this stock. However, it is a speculative buy. I am using it to soak up extra bits of money in my TFSA account.

Automodular Corporation is a supplier of sub-assembly, sequencing and transportation services to the automotive industry - Ford's Oakville Assembly Plant and the renewable energy industry with Vestas Nacelles A/S. Its web site is here Automodular. See my spreadsheet at am.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. They've had some pretty serious bad news since this post, but the stock might be good value at it's new level due to their cash resources. I wrote about it at: