Monday, November 19, 2012

Calian Technologies Ltd

On my other blog I have written about people feeling like geniuses when their stocks go up ...continue...

On my book blog I have written about Peter Diamandis's book on abundance. This is a wonderful, optimistic view of our future...continue...

I own this stock of Calian Technologies Ltd (TSX-CTY). I got interested in following this stock after reading about it a G&M Number Cruncher column of April 2011. See column called Where "debt" is a dirty word . (I included this link as I had no trouble accessing this older document on G&M.) Also the Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list of September 2009.

I first bought this stock in May of 2011 and then bought some more in April of 2012. To date I have made 18.18% per year with 17.6% from capital gain and 0.58% from dividends. It is not that dividends are low, as the 5 year median dividend yield is 5.23%, but it is just that this is a fast rising tech company.

The dividend growth on this stock is very, very good. The company just started to pay dividends in 2003 and the dividend growth over the past 5 and 9 years is 20% and 23% per year. However, the most recent yearly increase is just 12%. The Dividend Payout Ratios are good with the one for earnings having a 5 year median ratio of 45% and the one for cash flow having a 5 year median ratio of 40%.

Total returns over the past 5 and 10 years is at 15.16% and 24.45%, with 8.83% and 17.98% coming from capital gains and 6.32% and 6.47% coming from dividends. Over this period of time dividends represented 41.72% and 26.47% of the total return. These figures are to September 2012 as the financial year for this company ends in September each year.

The outstanding shares have declined by 1.67% and 0.47% over the past 5 and 10 years. Shares grow because of stock options and shares issued under the employee purchases plan and shrink because the company is buying back shares.

Revenues have grown at 4.4% and 6% over the past 5 and 10 years. Revenues per share have grown at the rate of 6.2% and 6.5% per year over these periods. Earnings per Share are up by 10.8% and 16.2% over the past 5 and 10 years. Cash Flow per Share is up by 15.5% and 11.6% per year over the past 5 and 10 years. Book Value per Share is up 8% and 10.6% over the past 5 and 10 years.

Most of the growth under this stock in the past has been quite good. Analysts however expect growth to slow in 2013 with EPS down slightly and revenue up slightly.

The return on equity for the financial year ending in September 2012 is very good at 20.7%. The same goes for the 5 year median ROE at 20.9%. The ROE based on comprehensive income is similar with the ROE for September 2012 at 22.1% and the 5 year median at 19.8%.

The last thing to talk about is the debt ratios. They are very good for this company and will provide the company with a good cushion in the bad times. The Liquidity Ratio is 2.44, plus the company has a strong cash flow. The Debt Ratio is 2.91. What I am looking for is these ratios to be at 1.50 or higher. However, this is a small tech company and it will be a more risky investment than average investment.

The current Leverage and Debt/Equity Ratios are also quite good at 1.52 and 0.52. The 5 year median ratios are also good with Liquidity ratio at 2.28, the Debt Ratio at 2.81 and the Leverage and Debt/Equity Ratios at 1.62 and 0.62, respectively.

This has been a great little company. I expect to continue to do well with it. However, you should only consider the company if you can take on the risk. One other thing it has going to for it is the dividends. Dividends tend to give stability to companies.

I have read a number of times that historically companies with dividends have done better than companies without. An article in Business Week in the early part of this year states that dividend paying stocks show that they are less volatile. I think you would do better in the long haul if you loss less in the bear markets even though you do less well in bull markets. The higher the hit you take in the bear markets, the harder it is to recover in the bull markets. This is just a thought.

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 or StockTwits.

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