Wednesday, November 14, 2012

Exco Technologies Ltd 2

On my other blog I have written about beating the market...continue...

I do not own this stock of Exco Technologies (TSX-XTC). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past.

When I look at insider trading I find $0.5M of insider buying and $1.5M of insider selling with $1M of net insider selling. The insider buying was for every category and insider selling was by CEO and officers. The company was also buying back shares for cancellation. Insiders do have options (with directors also having Deferred Share Units), but in all categories, most insiders have more common shares than options. There is a fair amount insider ownership. Looking at insider with big positions, they have 35% of the outstanding shares.

There seems to be 6 institutions that own some 15% of the outstanding shares. Over the past 3 months they have sold 3.7% of their shares. (It would appear that one institution closed its position in these shares.)

The 5 year low, median and high median Price/Earnings Ratios (excluding negative P/Es of 2008 and 2009) are 7.00, 7.63 and 9.46. The current P/E ratio using current stock price of $4.97 and September 2013 earnings of 0.61 is 8.15. This would suggest the stock price is a bit high, but reasonable. However, a P/E of 8.15 is a low one on an absolute basis.

I get a Graham Price of $6.85 and the 10 year low, median and high median Price/Graham Price is 0.82, 1.20 and 1.47. The current P/GP Ratio is 0.73 and this would suggest a cheap current stock price.

I get a 10 year Price/Book Value Ratio of 1.14 and a current P/B Ratio of 1.45. The current one is some 27% higher than the 10 year ratio and this suggests that the stock price is a bit high. (The problem with this test is that Book Value will drop if there are negative earning years.)

The 5 year dividend yield is 2.8% and the current dividend yield is 3%, a value almost some 8% higher. This also suggests that the stock price reasonable to low. If you get mixed signals, you probably should go with the dividend yield unless there is a reason not to.

When I look at analysts' recommendations, I find Strong Buy and Buy. The consensus recommendations would be a Strong Buy. The 12 month stock price is 6.25. This implies a total return of 28.17%, with 25.75% from capital gains and 2.41% from dividends.

There is an interesting article about small cap dividend paying Canadian Stocks at Seeking Alpha that includes this stock.

It is obvious that some analysts are treating this stock as a hot one. The stock is up some 47% over the past year, although most of that gain was in the first part of 2012 and it has been quite flat since. Maybe it will take off at the end of this year if the economy stays fine. I feel certain that the US will not go over the fiscal cliff, although I think that any deal will probably be at the 11th hour.

It would seem that the stock price is low to reasonable. (The big thing is not to overbuy for a stock.)

Exco is a global designer, developer and manufacturer of dies, moulds, equipment, components and assemblies to the die-cast, extrusion and automotive industries. The Die Casting and Extrusion Technology groups operations are based in Canada, U.S., Mexico and Colombia and primarily serve automotive and industrial markets throughout the world. The Automotive Solutions Group has facilities are located in Canada, U.S., Mexico and Morocco and supply the North American, European and Asian markets. Its web site is here Exco. See my spreadsheet at xtc.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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