Stella-Jones Inc 2

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I do not own this stock Stella-Jones Inc. (TSX-SJ, OTC-STLJF). In 2009 I had read a favorable report on this stock and decided to follow it. This company is considered to be a dividend growth company. The main characteristics are low dividend yield, but high dividend growth.

The insider trading report shows $2.3M of insider selling during the past year and no insider buying. Insider selling seems to be all the exercise of options. Options are often thought of as part of salary. The company is also buying back shares for cancellation.

Insider ownership is a bit complex, but it is at 42% of outstanding shares. As far as holding by CFO, he has $2M in shares and $3.8M in options. The CFO has $50,000 in shares in $0.4M in options. Insiders not only have options, but option like vehicles like Restricted Stock Units. Quite a number of people have these options, but there is not a great deal outstanding.

There seems to be about 32 institutions that hold 36% of the outstanding shares. Over the past 3 months they have, very marginally, decreased their holdings.

The 5 year low, median and high median Price/Earnings Ratios are 9.24, 12 and 14.73. The current P/E Ratio is 17.16 based on stock price of $76.35 and 2012 earnings of $4.45. This rather high ratio suggests that the stock price is relatively high. The P/E has been this high and higher previous when it was hitting peaks (like in 2008).

I get a Graham Price of $48.38. The 10 year low, median and high median Price/Graham Price ratios are 0.54, 0.87 and 1.07. The current P/GP ratio is 1.48 and this rather high ratio suggests that the stock price is relatively high.

The 10 year median Price/Book Value per Share is 1.85 and the current P/BV Ratio is 3.27. This current ratio is 77% higher than the 10 year median ratio and this high ratio suggests that the stock price is relatively high.

The current dividend yield is 0.84% and the 5 year median dividend yield is 1.31%. The current yield is 36% lower than the 5 year median. This low dividend yield suggests that the stock price is relatively high.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. (This is the typical recommendation for a stock.) The 12 months consensus stock price is $84.60. This implies a total return of 11.65%, with 10.84% from capital gains and 0.84% from dividends.

The Financial Post talks about a new acquisition by Stella-Jones. This is the biggest acquisition to date for Stella-Jones. One analyst mentioned that this is an infrastructure play. Daily Political talks about some analysts upgrades for Stella-Jones.

Proactive Investors talked about 2nd quarterly profits for Stella-Jones up 20% and the increase in the quarterly dividend.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella Jones. See my spreadsheet at sj.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.