Monday, October 1, 2012

Organic Resource Management

On my other blog I am today writing about Save Withdrawal Rates. If you are planning on using your investments in retirement, you need to consider what is being written on this subject continue...

I own this stock of Organic Resource Management (TSXV-ORI). I read about buying small caps in 1997 and this is one I picked because I liked the it was a "green" company. I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 16.2 per year or a 93% capital loss.

I bought this stock as part of basket of small caps. This was bought for capital gain, not for dividends, as it has never had any dividends. I did not sell when the stock declined as it was worth so little and so not worthwhile selling. Now I am holding on to it to see what happens to it in the long run.

The stock price peaked on this stock in 1999. It initially fell some 87% in 2000, and ultimately fell over 99%. In 2008 this stock went through a 20 to 1 consolidation. This is never a good sign. The stock hit a peak of $2.99 in February 2011, but by the end of the year it was only worth $0.89. Price has been climbing lately, 56% in September alone. The current price is $1.95.

The financial year for this company ends on June 30 each year. In 2009 it turned a profit, the first one for a very long time. It had two years of profit, then earnings losses in 2011 and 2012. However, the loss of 2012 is minimal coming in at $0.01. I cannot get a growth in EPS as the EPS is negative for the financial year ending in June 2012.

There was a big increase in outstanding shares in 2007 as the remaining preferred shares were converted into common shares. Over the past 10 years, the number of shares is up 10%. Over the past 5 years there has been no increase in shares.

Revenue has had several peaks in 1997, 2003 and 2006. Revenue is down 1.8% per year over the past 5 years and up 7.8% over the past 10 years. Revenue per share is down 1.8% over the past 5 years and down 2.4% over the past 10 years. The difference between revenue growth or decline and revenue per share decline is due to growth in shares.

Cash Flow has not done badly over the past 5 and 10 years with growth at 14% and 7.3% per year, respectively. Book Value per Share has not gone anywhere with BV per Share down 3.5% and 12% per year over the past 5 and 10 years.

There is, of course, no Return on Equity because there are no earnings. Comprehensive income is the same as net income. (The ROE for both net income and comprehensive income is a negative 1%.)

The debt ratios are ok for this stock. The current Liquidity Ratio is low at 0.96. This means that the current assets cannot cover current liabilities. However, the strong cash flow increases this ratio to a health 1.73. The current Debt Ratio is good at 1.95. The current Leverage and Debt/Equity Ratios are fine at 2.06 and 1.06.

At the moment I plan to hold on to my shares and continue to review this company. However, it would appear that the company is considering selling itself, so I might in the end have sell my shares.

The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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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