Stella-Jones Inc

I wish everyone a Merry Christmas. I will post next on Thursday, December 27th 2012.

On my other blog I am today writing about Dividend Growth companies and I am comparing Chesswood Group (TSX-CHW) to Stella Jones Inc.(TSX-SJ)...continue...

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.

Dividends are certainly low as the 5 year median is 1.31% and the current one is just 0.84%. Dividend growth is very good at 29% per year over the past 5 year and 24.4% per year over the past 10 years. If you bought this stock today, you could expect to have a yield on your original purchase price of 21% in 15 years with dividend increases at 24% per year. ). (See my site for information on buying Dividend Growth Stocks.)

The Dividend Payout Ratios are very good. The DPR for earnings is 15% and for cash flow is 11%. Growing companies do not like to pay out much of their earnings as they need their earnings for growth.

Total return over the past 5 years is not great and this is not surprising. This is an industrial company and would have been hit in the last recession. The total return over the past 5 years is 4.3% per year with capital gain of 3.32% per year and dividends at 0.98% per year. However, total return over the past 10 years is very good at 37.9% per year, with capital gain at 35.1% per year and dividends at 2.4% per year.

The outstanding shares have increased by 5.3% and 5.8% per year over the past 5 and 10 years. Most of the increase is due to acquisitions, but there are small increases due to stock options also.

Revenues are up 23.4% per year and 22% per year over the past 5 and 10 years. Revenues per Share are up by 17% and 15% per year over the past 5 and 10 years. Both rates of growth are quite good.

Earnings per Share are up by 14.6% and 53% per year over the past 5 and 10 years. Cash Flow per Share is up by 15% and 29% per year over the past 5 and 10 years. Book Value per Share is up 19.3% and 19.5% per year over the past 5 and 10 years. All these growth rates are also quite good.

The Return on Equity is also good with the one for the financial year of 2011 at 16.8% and with a 5 year median ROE of 16.8%. The ROE on comprehensive income is similar with the one for the financial year of 2011 at 17.7% and the 5 year median ROE at 17.4%.

All the debt ratios are very good with the current Liquidity Ratio at 5.96 and the current Debt Ratio at 2.16. The current Leverage and Debt/Equity Ratios are 1.77 and 0.77.

There is lots of insider ownership and this is probably the reason for the high debt ratios. It is an industrial stock and having high debt ratios will see it through the bad times. It is an excellent idea to my mind.

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.