Monday, September 30, 2013

Medtronic Inc

On my other blog I am today writing about my spammers...continue...

I do not own this stock Medtronic Inc. (NYSE-MDT). In 2009 I was looking for a good US stock for my US$ account. I had heard good things about this stock and also it is in Health Care sector which is a weak sector in Canada.

This is an example of a fast growing company that has become a mature company. In its fast growing stage between approximately 1998 until 1992, the median P/E Ratio was 56.00. Since then the P/E Ratio has steadily been declining to a current 5 year median of 12.77 and the stock price has not really changed much. It could be worse as sometimes the price declines with the declining P/E Ratio.

On my spreadsheet, almost every growth measure shows good growth except for the growth in total return. The current 5 year low, median and high median P/E Ratios of 10.91, 12.77 and 14.64 are in line with those expected of a mature company, so there is hope that investors in the future will have better returns.

If you look at 5 year running growth over the past 5 and 10 years, you get growth of 9% and 12% per year for Revenue per Share, growth of 5.6% and 11% per year for EPS and growth of 7.7% and 11.7% per year for Cash Flow per Share. This is a very good showing.

The 5 year median dividend yield is 2.46%. The growth in dividends over the past 5 and 10 years is at 15.7% and 15.3% per year. The 5 year median Dividend Payout Ratios for earnings is at 31.5% and for cash flow is 23%. This is also a good showing.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The majority of the recommendations are a Hold, but there are lots of Strong Buy recommendations too. The consensus would be a Buy. (See my blog for information on analyst ratings.) The 12 month stock price consensus is $58.30. This implies a total return of 12.02% with 2.11% from dividends and 9.91% from capital gains.

The blogger Insider Monkey says that Hedge funds are keen on this company. You can see more details here. The blogger I Stock Analyst finds the current price good in July 2013 at around $53.52. (The current price is around $53.04.)

For my stock price tests, I find that the P/E Ratio, which is currently at 14.38, shows a still reasonable price, but towards to high end as 5 year low, median and high median P/E Ratios are 10.91, 12.77 and 14.64. The Graham Price is $38.90 and the current P/GP Ratio is 1.36. The 10 year low, median and high median P/GP Ratios are 1.95, 2.28 and 2.58. This test says the stock price is relatively low.

The 10 year P/B Ratio is 4.05. The current one is only 30% of this value at 2.91. On a relatively basis the stock price is low. However, 2.91 is not a particularly low P/B Ratio. (A low P/B Ratio is 1.50.) The 5 year dividend yield is 2.46% and the current dividend yield at 2.11% is 15% lower. To get a good price, you would want the current dividend yield to be higher than the 5 year median dividend yield, but 15% difference is not that far off.

The stock price is probably relatively reasonable on a company with good growth. See my spreadsheet at mdt.htm.

Medtronic is the world's leading medical technology company, pioneering device-based therapies that restore health, extend life and alleviate pain. Primary products include those for bradycardia pacing, tachyarrhythmia management, atrial fibrillation management, among others. Medtronic operates its business in one reportable segment, that of manufacturing and selling device-based medical therapies. The company does business in more than 120 countries. The company's product lines include cardiac rhythm management, neurological and spinal, vascular and cardiac surgery. Its web site is here Medtronic.

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.

Friday, September 27, 2013

Canyon Services Group 2

On my other blog I am today writing about buying the market...continue...

I do not own this stock Canyon Services Group (TSX-FRC, OTC-CYSVF). I get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up this stock on July 19th and I was impressed with it so I did a spreadsheet. You can sign up for this newsletter at their site.

When I look at insider trading, I find that there is insider selling of $3.8M shares over the past year, with net insider selling at $3.6M. There is a bit of insider buying. Insiders seem to be exercising options. This really tells us nothing.

The CEO has shares worth $10M and has options worth $10M. The CFO has shares worth $1M and has options worth 3.4M. An officer has shares worth $0.9M and has options worth $3.4M. A director has shares worth $0.5M and has options worth $0.4M. There is also a director with shares worth $30.9M and has options worth $0.2M. This is just to give you an idea on insider share ownership and option values.

The 5 year low, median and high median Price/Earnings per Share ratios are 7.82, 10.70 and 13.57. The current P/E is 61.42 based on 2013 earnings of $0.20 and current stock price of $11.67. However, it might be best to look at P/E based on 2014 earnings which is 11.22. This is based one earnings of $1.04 and a stock price of $11.67. Another thing to point out is the rather low historical P/E Ratios that this company has.

I get a current Graham price of $4.66 and a Price/Graham Price of 2.51, a very high ratio. However, if we use the Graham price for 2012 of $10.46 the P/GP Ratio is a more reasonable 1.12. The P/GP of 1.12 is within a reasonable range, but for a stock to be cheap the ratio would have to be 1.00 or lower.

The 7 year median Price/Book Value per Share Ratio is 1.14 and the current P/B Ratio is over 100% higher at 2.30. The P/B Ratio of 2.30 is not that high, but I would prefer it to be 1.50 or lower.

The Dividend yield is quite good at 5.14% and this shows a rather low stock price. However, it is hard to say where the company will be going on dividends in the future. Will this turn into a dividend growth company? This is rather hard to say at this point.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The most recommendations are in the Hold category, but the consensus recommendation works out to a Buy. The 12 month consensus stock price is $13.70 and this implies a total return of 22.54% with 5.41% from dividends and 17.4% from capital gains.

It is only the dividend yield that suggests that the stock price might be low. If you look on to 2014, the Dividend Payout Ratios do not look bad at 57% for earnings and 35% for cash flow. However, on other measures, the price does not look cheap. I discussed some of this above with my stock tests.

Also, if you look at Price/Sales Ratio it is estimated to be 2.39 in 2013 and 1.62 in 2014. A cheap price would have this Ratio at around 1.00. If you look at the Price/Cash Flow per Share Ratios, this ratio is estimated to be around 14.41 for 2013 and 6.95 for 2014. A good price is when the P/CF is at 5.00 or lower.

The stock price is not cheap and the stock is rather risky. I find it an interesting stock, but not one I would purchase at this time. See my spreadsheet at frc.htm.

This is the second of two parts. The first part was posted on Thursday, September 26, 2013 and is available here.

Canyon Services Group Inc. is a fast-growing company providing hydraulic fracturing and other well-stimulation services, including coiled tubing, acidizing, cementing, nitrogen and CO², to oil and natural gas producers developing a variety of play types across Western Canada. Its web site is here Canyon Services Group.

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.

Thursday, September 26, 2013

Canyon Services Group

I do not own this stock Canyon Services Group (TSX-FRC, OTC-CYSVF). I get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up this stock on July 19th and I was impressed with it so I did a spreadsheet. You can sign up for this newsletter at their site.

They started off with a low dividend in 2011 of less than 1% and only semi-annually. They increased it by 150% in 2012and also increased payments to quarterly. They then did another increase in 2012 of 140%. Since then the dividend has not changed. The current dividend yield is 5.14%.

The Dividend Payout Ratios for 2012 was fine at 58% for EPS and 43% for CFPS. However, analysts expect both Earnings and Cash Flow to drop this year. This is borne out by the second quarterly report. They had a positive cash flow for the second quarter, but there was an earnings loss. This is probably why the dividend has remained flat in 2013.

So far investors have had a great run with 5 year total return at 39.77% with 1.55% from dividends and 38.66% from capital gains. The 6 year total return is not a good with the return at 15.87% with 1.04% from dividends and 14.83% from capital gains.

The outstanding shares have increased by 22.8% per year over the past 5 years and 20.37% per year over the past 8 years. The shares have increased mostly because of new share issues, but there is some increase from stock options.

Revenues have increased by 49% and 44% per year over the past 5 and 7 years. Revenue per Share has increased by 21% and 20% per year over the past 5 and 7 years. Earnings per Share have been volatile as there are some years with negative earnings. EPS is up by 44% per year over the past 6 years, but a lower 11% per year over the past 7 years.

Cash Flow has been similarly volatile with Cash Flow per Share up by 34% per year over the past 5 years and a lower 9.5% per year over the past 7 years. The financial year 5 years ago was not a good year. This company was started in 2004 and went public in 2006 on the TSX.

The Return on Equity was not very good until 2010. The ROE for 2012 was 16.1%. For this company the net income and the comprehensive income is the same.

The Liquidity Ratio has had some volatility, but it has been good since 2009 and the current Liquidity Ratio is 1.91. The current Debt Ratio is very high at 6.41, although this ratio has had some volatility also. The Leverage and Debt/Equity Ratios have always been quite good and they are currently quite low at 1.00 and 0.16 respectively.

There is not a lot of history to go on for this firm and it is into hydraulic fracturing, so it is rather risky. However, if you can take the risk, you might be able to make decent money here. Another good point is the lack of debt. See my spreadsheet at frc.htm.

This is the first of two parts. Second part will be posted on Friday, September 27, 2013 and will be here.

Canyon Services Group Inc. is a fast-growing company providing hydraulic fracturing and other well-stimulation services, including coiled tubing, acidizing, cementing, nitrogen and CO², to oil and natural gas producers developing a variety of play types across Western Canada. Its web site is here Canyon Services Group.

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.

Wednesday, September 25, 2013

Canadian Utilities Ltd 2

On my other blog I am today writing about my use of analysts' estimates...continue...

I do not own this stock Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). This stock is on the Dividend Achievers list, the Dividend Aristocrats list and was also on Mike Higgs' dividend growth list.

When I look at insider trading, I find $5.6M of insider selling and $5.4M of net insider selling. There is a minimal amount of insider buying. Most of the selling is by the CEO at $4.9M. The CEO has shares worth $14.2M and has options with the potential value of $40.8M. (This is because most options given by this company have an attached stock price.) She also has shares in ATCO. An officer has Class A shares worth 54.6M and Class B shares worth 20.8M and no options. Both these executives are of the Southern family that also controls ATCO. ATCO controls this company

The CFO has shares worth $1.7M and has options worth 3.9M. An officer has shares worth $0.4M and has options worth $0.4M. A director has shares worth $0.2M and has no options. This is just to give you an idea on insider share ownership and option values. (Note that there are two classes of share with Class A (TSX-CU) being non-voting shares and Class B (TSX-CU.X) being voting shares.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.25, 14.02 and 18.83. The current P/E Ratio is 16.07 based on 2013 EPS of $2.19 and stock price of $35.20. This tests shows that the stock price is relatively reasonable, but toward to higher end of reasonable.

I get a Graham Price of $26.47. The 10 year median Price/Graham Price Ratios are 0.99, 1.17 and 1.34. The current P/GP Ratio is 1.33. This stock test puts the current stock price of $35.20 within the reasonable range, but just.

I get a 10 year Price/Book Value per Share Ratio of 2.20 and a current P/B Ratio of 2.48 a value some 13% higher. This put the stock price of $35.20 within the reasonable range. I get a 5 year median dividend yield of 3.12% and a current dividend yield of 2.76% which is 12% lower. This put the stock price of $35.20 within the reasonable range.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $41.00. This implies a total return of 19.23% with 2.76% from dividends and 16.48% from capital gains.

The blogger Dividend Tactics gives this stock a recent good review. The blogger iPolitics gives a positive review of the second quarter for this stock. Also earlier this year, the blogger Pat McKeough gives both this stock and ATCO positive reviews.

Some analysts feel that the stock price is a bit too high and one analyst said that it is not good that the dividend yield is below 3%. However, a number still like this stock as a buy. I think that that the price is a big high, but it is not yet in the overpriced category. I think that the dividend yield is a bit too low. See my spreadsheet at cu.htm.

This is the second of two parts. The first part was posted on Tuesday, September 24, 2013 and is available here.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. Its web site is here Canadian Utilities.

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.

Tuesday, September 24, 2013

Canadian Utilities Ltd

I do not own this stock Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). This stock is on the Dividend Achievers list, the Dividend Aristocrats list and was also on Mike Higgs’ dividend growth list.

The current dividend is 2.76% on a stock price of $35.20. The 5 year median and 10 year median dividend yields are 3.12% and 3.01%. So the dividend is moderate as is the dividend increases. The growth in dividends over the past 5 and 10 years is at 7.2% and 6.1% per year. The most recent increase is 9.5% which occurred in 2013.

One way of looking at dividend stock is to see what you will be earning on your original purchases price in 10, 15 or 20 years. This can be important if you are building a dividend stock portfolio for your future. On this stock, you can probably count on around 7.5% or a 10% return on your original investment after 15 or 20 years.

The total return on this has been quite good over the past 5 and 10 years, with total return to the end of 2012 of 11.92% and 14.13% over these periods. The dividend portion of this return is at 2.75% and 3.25% per year over these periods and the capital gain portion of this year is at 9.17% and 10.88% per year over these periods.

The number of outstanding shares has not grown over the past 5 and 10 years. Shares have increased due to Stock Options and Share Issues and shares have decreased due to Buy Backs. Over the past 5 and 10 years revenue has not done much, but there is decent growth in earnings and better growth in cash flow.

There is no growth in revenue over the past 10 years. Revenue over the past 5 years looks to have growth because 5 years ago was not a good year. However, if you look at 5 year growth using the 5 year running averages, you are back to no growth.

The Liquidity Ratio has varied over time. It has generally been good, but not always. Utilities tend to have a lot of debt. The Liquidity Ratio for 2012 was just 1.20, but if you add in cash flow less dividends it is at 2.48. Utilities do tend to have rather steady cash flow. The Debt Ratio has also varied and the one for the year ending in 2012 was 1.48. The Leverage and Debt/Equity Ratios are fine for a utility at 3.07 and 2.07.

The Earnings per Share growth over the past 5 and 10 years is at 6% and 5.6% per year. The Cash Flow per Share growth over the past 5 and 10 years is 14.8% and 11.33% per year. For both of these per share values the 5 year running averages growth is not quite as good, but not far behind.

The Return on Equity is quite good with the ROE for 2012 at 13.3%. However, the ROE on comprehensive income for 2012 is quite a bit lower at 9.6% a 28% drop. The ROE on net income and comprehensive income does tend to vary with the ROE on comprehensive income usually being lower with a median difference of 5%. This could mean that the net income is not quite as good as it appears. It is just a warning.

This stock is a good utility stock. The one thing that investors may or may not see as a negative is that the stock on the TSX is for non-voting stocks. Most of the voting stock is owned by ATCO. You would not buy both this stock and ATCO for your portfolio. See my spreadsheet at cu.htm.

This is the first of two parts. Second part will be posted on Wednesday, September 25, 2013 and will be here.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. Its web site is here Canadian Utilities.

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.

Monday, September 23, 2013

Linamar Corporation

On my other blog I am today writing about living well...continue...

I do not own this stock Linamar Corporation (TSX-LNR, OTC-LIMAF). This stock is not on any on the Dividend Achievers list, nor was it on Mike Higgs' list. I looked at this stock back in 2000 and it was not a stock I thought fit my investment philosophy. This stock used to be on the Investment Reporter's portfolio stock list as an average risk stock. However, it has been taken off this list. They do not seem to review this stock anymore, either.

If you look at the dividends, they are currently below 1%, but the 5 year median dividend yield is 1.7% and the 10 year median dividend yield is 1.6%. Dividends are increased but this does not occur often. For a low dividend, the dividends increases are very mediocre at 5.9% and 7.2% per year over the past 5 and 10 years.

With the low dividend yield comes a very good Dividend Payout Ratios, with the 5 year median DPR for Earnings per Share at 11.7% and for Cash Flow per Share at 6.2%. The DPRs for 2012 were at 5.9% and 6.2% for EPS and CFPS. The ones for 2013 are expected to be even lower.

The stock price of this company crashed in 2008 and the stock price is up some 58% per year since then. The dividend portion of this increase is at 3% per year. If you look at the 5 years to the end of 2012, you get a different picture with the stock only up 3.9% per year with dividend portion of this increase at1.6% per year.

If you look at this stocks performance over the past 20 years, you will see that it has gone up and down, but has not gotten anywhere over the long term. It hit the current peak it now has in 1998 and was almost there again in 2007. It would seem that the only way to play this stock is to buy at its lows and sell at its highs. It hits lows in recessions.

The Return on Equity has fluctuated in the past but is currently good at 13.3% for 2012 and would probably be around the same for 2013. The ROE on comprehensive income can vary quite a bit from that on net income, but the 5 year median difference is with the ROE on comprehensive income being just 1.8% lower.

The debt ratios have fluctuated in the past with the Liquidity Ratio at times being quite low, but the Debt Ratio has always been fine. The current Liquidity Ratio is quite good at 1.80. The current Debt Ratio is also very good at 1.84. The Leverage and Debt/Equity Ratios are fine (but not low) at 2.18 and 1.18 currently.

The G&M has a September 2013 positive article on this stock. There is another G&M September 2013 article on this stock saying it is liked because of current insider buying.

When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $38.60. This implies a total return of 15.39% with 0.95% from dividends and 14.44% from capital gains.

I must admit that a lot of analysts currently really like this stock and think that it is a good current buy. However, I very much disagree. Of, course it is not the fault of the company that investors rockets the price up. Past performance of this stock would suggest that it is a bad time to buy when the stock price shows such exuberance. I also do not think that this is not a buy and hold stock.

My two stock tests that do not use estimates show that the current stock price is relatively too high. The 5 year median dividend yield is 1.69% and the current yield of 0.95% is some 44% lower. The 10 year Price/Book Value per Share Ratio is 1.26 and the current P/B Ratio at 1.81 is some 44% higher. See my spreadsheet at hse.htm.

Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar.

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.

Friday, September 20, 2013

K-Bro Linen Inc 2

On my other blog I am today writing about Good times and bad times...continue...

I do not own this stock K-Bro Linen Inc. (TSX-KBL, OTC-KBRLF). People were talking about this stock at the 2009 Toronto Money Show. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.

When I look at insider trading, I find $1.4M of insider selling and $1.4M net insider selling. There is a tiny amount of insider buying. The CEO has shares worth $3.5M of common shares and has no options. The CFO has shares worth $0.2M and has no options. An officer has shares worth $0.2M and has no options. A director has a few shares and has no options. This is just to give you an idea on insider share ownership and option values.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.12, 15.67, and 18.84. The current P/E is 24.11. This is based on a stock price of $33.27 and 2013 EPS estimate of $1.38. This stock test suggests that the stock price is relatively high. Also, for this company I find that the median P/E ratios are rather high. You would expect the 5 year median low to be below 10.00.

I get a Graham Price of $17.58. The 10 year low, median and high median Price/Graham Price Ratios are 0.90, 1.05 and 1.20. The current P/GP Ratio is 1.89 based on a stock price $33.27. This stock price test suggests that the stock price is relatively high.

I get a 10 year median Price/Book Value per Share of 1.52. The current P/B Ratio is 3.34. This is some 20% higher and this stock test suggests that the stock price is relatively high. When I look at the 5 year median Price/Cash Flow per Share Ratio, I get one of 6.68. The current one is 12.95 a value some 93% higher. This stock price test suggests that the stock price is relatively high.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus recommendation is hold. The 12 month consensus stock price is $36.80. This implies a 12 month total return of 14.07% with 10.61% from capital gain and 3.46% from dividends.

There is an article in iPolitics about the company getting a new contract. I think that this is a good company. However, I feel that stock price is far too high to buy this stock at the present time. See my spreadsheet at kbl.htm.

This is the second of two parts. The first part was posted on Thursday, September 19, 2013 and is available here.

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro Linen.

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.

Thursday, September 19, 2013

K-Bro Linen Inc

I do not own this stock K-Bro Linen Inc. (TSX-KBL, OTC-KBRLF). People were talking about this stock at the 2009 Toronto Money Show. This was one of the income trust being touted as currently a good buys with a very good yield. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.

This is another old income trust stock that still pays dividends monthly. This stock was listed in 2005. It has only had a couple of dividend increases and they were around 6.25% and 5.50%. The 5 and 7 year growth in dividends is only 1.6% and 0.9% per year. This is a negative because it is not at the rate of inflation. The dividend yield is decent at 3.5%.

The 5 year median Dividend Payout Ratio for earnings is at 104%. The DPR for this stock was above 100% for earnings when the stock was an income trust. This is quite normal for income trust stocks. The DPR for EPS has been coming down and the 2012 DPR for EPS was at 72%. The 5 year median DPR for cash flow per share is 49%. The one for 2012 was at 38%. (See my blog for information on Dividend Payout Ratios).

The outstanding shares have increased by 5% and 6.8% per year over the past 5 and 7 years. The outstanding shares have increased due to Share Issues and Stock Options. Except for growth in book value, growth under this company has generally been good.

Revenue is up by 11% and 14% per year over the past 5 and 7 years. Revenue per Share is up by 6% and 8% per year over the past 5 and 7 years. EPS is up by 16% and 12% per year over the past 5 and 7 years. Cash Flow per Share is up by 15% and 9% per year over the past 5 and 7 years. However over these periods Book Value per Share is up by less than 2% per year. It should be noted that income trust companies generally do not grow their book values.

The Return on Equity is good with the ROE for 2012 at 16.5% and the 5 year median ROE at 12.2%. The ROE on comprehensive income is almost the same as for net income.

The debt ratios are generally fine, but the Liquidity Ratio has varied and does not always get to the preferred value of 1.50. The 2012 Liquidity Ratio is just 1.31; however the current one is much better at 1.81. The Debt Ratio has always been strong and is currently at 3.04. The current Leverage and Debt/Equity Ratios are quite good at 1.49 and 0.49.

Current shareholders have done well as the total return on this stock is at 22.74% and 18.69% over the past 5 and 8 years. The dividend portion of these returns was at 6.31% and 6.72% with the capital gains was at 16.43% and 11.97%. On a go forward basis, the dividend portion of the returns will be lower. Before this switched from an income trust the dividend yield was in the 7% to 8% range, but it is much lower now at 3.5%.

This company has shown it can be a solid performer. However, since I prefer stocks that raise their dividends, at least to the rate of inflation, I would not currently buy this stock until it has shown an ability to raise their dividends. See my spreadsheet at kbl.htm.

This is the first of two parts. Second part will be posted on Friday, September 20, 2013 and will be here.

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro Linen.

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.

Wednesday, September 18, 2013

HNZ Group Inc

On my other blog I am today writing about the Dividend Payout Ratios...continue...

I do not own this stock HNZ Group Inc. (TSX-HNZ.A, OTC-CDHPF). I read an article in 2011 in the Financial Post called "Screening for small-caps" by Richard Morrison. This is a stock he mentioned. This stock has come up in Daily Buy and Sell Advisor of MPL Communications. Also, the Dividend Ninja Blogger mentioned this stock in a blog entry talking about High Yield Canadian Stocks. This company used to be called Canadian Helicopters Group (TSX-CHL.A)

This company is another old income trust which converted at the end of 2010 to a corporation. They did not change the dividends at that time. They do not have much of a history of dividends and only one real dividend increase of 5% in 2007.

Dividend Payout Ratios are fine with the 5 year median DPR for EPS at 52% and for cash flow at 41%. The DPR for the 2012 financial year were even lower at 33% for EPS and 23% for cash flow.

Before converting from an income trust, dividend yield were in the 11 to 12% range. They have been declining since then and are currently at 4.9%. It was felt at the time when the government announced the changing tax rules for income trust that a combination of dividend decreases and stock price increases would put the yield for old income trust companies in the 4 to 5% range.

The company peaked in 2011 with Revenue, EPS, cash flow and stock price all declining since then. Since the company only because a stock company in 2005, I only have some 7 years data except for Revenue. Even with value falling, the last 5 years grow rates are good.

Revenues have grown at 12% per year, EPS at 10% per year, stock price at 10% per year and cash flow at 11% per year over the past 5 years. However, analysts expect most of these values to decline somewhat in 2013.

This company has good debt ratios, with the current Liquidity Ratio at 2.16 and the current Debt Ratio at 3.13. The current Leverage and Debt/Equity Ratios are also very good at 1.47 and 0.47.

This stock has always been quite cheap. The 5 year low, median and high median Price/Earnings per Share Ratios are 4.23, 6.30 and 7.94. (The P/E Ratio has seldom broken above 10.) The current P/E Ratio is 6.91 based on a stock price of $22.31 and EPS estimate of $3.23 for 2013.

I get at Graham Price of $37.10. The 10 year low, median and high median Price/Graham Price Ratios are 0.40, 0.52 and 0.66. (A P/GP Ratio of 1.00 or below is generally considered cheap.) The current P/GP Ratio is 0.60. The 10 year Price/Book Value per Share Ratio is 1.06 and the current P/B Ratio is 1.16 a value some 9% higher.

I cannot do a Dividend Yield stock test because the dividend yield has been declining because the company changed from an income trust to a corporation. However, all my other stock price tests say the stock price is relatively reasonable, although on the high end of reasonable.

When I look at insider trading, I find $2.1M of insider selling and no insider buying. Insiders seem to be cashing in stock options and also selling shares that they owned. That is insider ownership is dropping. This is not particularly inspiring if you are thinking about buying this stock.

When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $26.30 and this implies a total return of 22.83% with 4.94% from dividends and 17.88% from capital gains.

The Petty Cash blogger has a good recent review of this company. He gives the company a pass at present because of high customer concentration. They also supply military support in Afghanistan. There are recent post on Canadian Money Forum about this company.

Loss of large customers could be a blow to this company. They also are giving the military support in Afghanistan and the war (or at least the west's part in this war) is winding down. I agree with Dean of Petty Cash. It might be wise to sit on the sidelines and see what happens. See my spreadsheet at hnz.htm.

HNZ Group Inc. is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, Australia, New Zealand and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Its web site is here HNZ Group.

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.

Tuesday, September 17, 2013

Reitmans (Canada) Ltd 2

On my other blog I am today writing about my friend's art show called Transformations 2013 ...continue...

I do not own this stock Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF), but I just bought some. See my comments below. I am following this stock as it was a stock on Mike Higgs' dividend growth stocks list.

When I look at insider trading, I find a very small amount of insider buying and no insider selling. The bit of insider buying seems to be insiders retaining stock options. There are two kinds of shares, common shares that are voting shares and Class A shares that are non-voting shares. Insiders own 83% of the common shares.

The CEO has shares worth $17.9M of common shares and $11.5M of Class A shares and has options worth $0.8M. The CFO has shares worth $0.3M and has options worth $0.6M. An officer has no shares and has options worth $06M. Another officer has shares worth $17.9M of common shares and $8.3M of Class A shares and has options worth $08M.A director has no shares and has options worth $0.4M. This is just to give you an idea on insider share ownership and option values.

The common shares are owned by the Reitman family under Reitmans and by Sherlex Investments Inc., which is also run by the Reitman family.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.33, 12.97 and 15.67. The current P/E Ratio is 17.78 based on a stock price of $8.00 and 2013 earnings of $0.45. It would seem that the ratio is saying that the stock is expensive. However, earnings have been dropping.

I get a Graham Price of $8.27. The current stock price of $8.00 has a Price/Graham Price Ratio of 0.97. The 10 year low, median and high median P/GP Ratios are 0.98, 1.20 and 1.46. This test says that the stock price is relatively cheap. A P/GP Ratio below 1.00 says the same thing.

The 10 year Price/Book Value per Share Ratio is 2.33. The current P/B Ratio is 1.18 on an $8.00 stock price. The current P/B Ratio is just 51% of the 10 year P/B Ratio. This test says the stock is relatively cheap.

The 5 year median dividend yield is 5.24% and the current dividend yield is 10%. The 10 year median dividend yield is even lower than the 5 at 3.9%. This test says that the stock is relatively cheap.

Unlike Le Chateau, there are still analysts that are following this stock. There are 3 analysts with recommendations and all the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month consensus stock price is $12.00. This implies a 12 month total return of 60%, with 50% from capital gains and 10% from dividends. Frankly, I do not believe this.

On the other hand you should buy stocks when they are cheap. So, I have just bought some 500 shares of this company today at $7.97. Personally, I think that if they do not make any money soon, they will cut the dividends.

You can find a review of the second quarter 2013 in Montreal Gazette. The blog Ticker Reporter mentions some recent downgrades of this stock by some analysts.

See my spreadsheet at ret.htm.

This is the second of two parts. The first part was posted on Monday, September 17, 2013 and is available here.

Reitmans (Canada) Limited operates a network of clothing stores specializing in women's & men's fashions and accessories. The company operates stores under the names Reitmans, Smart Set, Pennington Superstores, RW & Co., Thyme Maternity, Addition-Elle, and Cassis. Its web site is here Reitmans.

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.

Monday, September 16, 2013

Reitmans (Canada) Ltd

On my other blog I am today writing about the Importance of Capital...continue...

I do not own this stock Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF). I am following this stock as it was a stock on Mike Higgs' dividend growth stocks list.

I have dividend information going back to 1995. The company does not increase the dividend every year, but when they have not increased them for a few years, the next increase can be a good one. They probably stopped increasing dividends lately because the Dividend Payout Ratio for Earnings was above 100% for both the last two years ending in January 2012 and January 2013.

This stock peak in 2010 and has not done well since. The economic recovery from the last recession has been slow. This stock really has not done well since 2010. The stock price is down by almost 60%. Earnings are down more, as they have decreased by 65% as has cash flow. However, Revenue is only down by around 7%.

Dividend Payout Ratios for cash flow per share is usually around 33%, but the one for the financial year ending in January 2013, is at 64%. The DPR for EPS is even higher at 195%. Analysts had expected an increase in EPS for the financial year ending in January 2014, but if you look at the year ending at second quarterly results and the year ending in January 2013, EPS is down by 64%.

Analysts seem to expect that the cash flows for the years ending in January 2014 and 2015 will be negative; however, no analyst seems to feel that the dividends will be cut. The 5 and 10 year growth in dividends are at 3.9% and 23% per year. Even with the current drop in stock, the 5 and 10 year total return for this stock to date is at 2.52% and 11.3% per year.

Return on Equity has in the past been quite good, but the ROE for the year ending in January 2013 is at 5.9%. If you look at ROE for the year ending in August 2013, it is even lower at 2.1%. The difference in ROE on comprehensive income and net income has varied. The difference in ROE for the year ending in January 2013 was fine with the ROE on comprehensive income at 4.3% lower than the ROE on net income.

However, if you look at the difference between these ROE for the year ending in August 2013, the ROE on comprehensive income is 22% lower. This is not good. This is basically a warning.

One thing that this stock has going for it is the very good debt ratios. The Liquidity Ratio is 3.16. The debt Ratio is also very good currently at 3.93. These good ratios, of course, are likely to deteriorate if the company cannot make any money. The current Leverage and Debt/Equity Ratios are also good at 1.34 and 0.34. The other thing that is good is there is a lot of insider ownership, which I will talk about more tomorrow.

Often I tend to suggest investing in beaten down stocks. The market tends to over react to bad news from a company. However, this is a retail stock and this makes investing in it when it is beaten down more risky than say a utility stock. See my spreadsheet at ret.htm.

This is the first of two parts. Second part will be posted on Tuesday, September 17, 2013 and will be here.

Reitmans (Canada) Limited operates a network of clothing stores specializing in women's & men's fashions and accessories. The company operates stores under the names Reitmans, Smart Set, Pennington Superstores, RW & Co., Thyme Maternity, Addition-Elle, and Cassis. Its web site is here Reitmans.

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.

Friday, September 13, 2013

Granite Real Estate 2

On my other blog I am today writing about Income Investing in September 2013...continue...

I do not own this stock Granite REIT (TSX-GRT.UN, NYSE-GRP.U), but I used to. I first bought some of this stock in 2003. It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) Call on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold in 2009; being discourage it would ever do well.

Since this stock changed its symbol this year (from GRT to GRT.UN), the insider trading information is only back to the beginning of this year, rather than for the year ending in today. The insider trading report shows that there is $0.6M in insider selling and 0.5M in net insider selling. So there is a minimal amount of insider buying. The report also shows a minimal amount of insider ownership and no outstanding options.

Some of my normal stock price tests are useless here. I cannot use the dividend yield test as this stock changed to a REIT and greatly increased the dividend. I cannot use the Price/Earnings Ratios stock test because the company had negative earnings in 2007, 2008 and 2009 and this gives 5 year median P/E ratios that are not logical.

With the change in accounting and the changes from a corporation to a REIT, the Book Value has greatly increased, so I do not that a P/B Ratio test will tell us much. The Revenues have declined considerably over the past 5 and 10 years. (The decline in revenue is caused by the drop in revenue from Magna Entertainment Corp. (MEC)). However, I can say that the current Price/Sales Ratio is very high at 8.81.

If you look at Price/Funds from Operations, I get a current P/FFO Ratio of 11.25 and this is slightly below the 5 year median P/FFO of 13.10 and this test suggests that the stock price is cheap.

When I look at analysts' recommendations, I find Buy and Hold. The consensus recommendation would be a buy. The 12 month consensus stock price is $38.70. This implies a total return of 15.23% with 9.32% from dividends and 5.93% from capital gains.

The REIT Spot blog talks about recent changes to this company. Canaccord has a recent report on Granite REIT. They maintain a Hold rating on this company.

This company has changed so much that I do not think we can get useful information from the annual reports to make a decision on it. It is like a brand new company that has just started up. Also, since they have gotten rid of Frank Stronach, it is difficult to say how the new managers will do. See my spreadsheet at grt.htm.

This is the second of two parts. The first part was posted on Thursday, September 12, 2013 and is available here.

Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate.

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.

Thursday, September 12, 2013

Granite Real Estate

I do not own this stock Granite Real Estate (TSX-GRT.UN, NYSE-GRP.U), but I used to. I first bought some of this stock in 2003. It is a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold in 2009; being discourage it would ever do well again.

I look at this stock again to determine what I would have made if I had kept this stock until the current time. My total return per year would have been around 2.97% with 2.54% from dividends and 0.24% from capital gains. I do not regret selling. It would seem, in hind sight, I paid a reasonable price for this stock in 2003, but not in 2006. The stock is not yet back to where it was in 2006.

This stock was hit quite hard in the last recession and is only now recovering. In 2012, they have also changed the currency of both their statements and their distributions. The currency they used to use was US$, but they have changed to the Canadian $. In 2012, the company changed from a corporation to a REIT.

The company cut their dividend in 2010. However, the current dividends are much higher today. The 5 and 10 years growth in dividends is at 27.5% and 17.6% per year. They increased their dividends by 60% in 2011 and then by 150% in 2012. The most recent increase in 2013 is for 5%. In 2013 they have also changed the distribution from a quarterly one to a monthly one.

The Dividend Payout Ratio for 2012 is high for earnings per share at 132%. The DPR for cash flow per share was better at 80%. Analysts expect the DPR for EPS to be much better for this year and around 70%. The current dividend yield is quite good at 5.93%. The dividend increase for 2013 might be an indicator of future increases rather than the history over the last 5 and 10 years.

Revenues hit a high point in 2006. They have declined by almost 80% since then. The revenues are expected to increase in 2013 by around 4%. If you look at the revenues for the last 12 months ending in June 2013 compared to revenues in 2012, they are up by 3.6%. They are going in the right direction.

Earnings per share have been quite volatile and there were losses in 2008, 2009 and 2010. They did start to increase in 2012 and are up for the year ending in June 2013 compared to 2012 by 141%. Cash Flow per Share has also been rather volatile, but they are up over the past 5 years by some 12% per year.

The Return on Equity is rather low in 2012 at just 8.1%. The ROE on comprehensive income is not far behind at 7.1%.

The Liquidity Ratio is low at 1.36. However, REITs do tend to have low Liquidity Ratios. I prefer this ratio to be at 1.50 or higher. The Debt Ratio at 3.57 is very good. Leverage and Debt/Equity Ratios are also good and currently are at 1.32 and 0.32. You want Leverage and Debt/Equity Ratios to be low.

This company has increased the dividend quite a lot recently. However, this was done when it changed to a REIT. I would not expect the past increases to continue. The increase in 2013 was only for 5%. You should also note that REITs tend to increase their dividends just above the rate of inflation. You should probably not expect this company to be any different.

This is another new REIT with a good yield. It is hard to know how well the company will do as a REIT. See my spreadsheet at grt.htm.

This is the first of two parts. Second part will be posted on Friday, September 13, 2013 and will be available here.

Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate.

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.

Wednesday, September 11, 2013

Teck Resources Ltd 2

On my other blog I am today writing about Payday Loans Companies...continue...

I do not own this stock Teck Resources Ltd (TSX-TCK.B, NYSE-TCK), but I have in the past. In 2008, I wanted to cover some resource stocks and this is one that I decided to take a look at. I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.

When I look at insider trading, I find $2.4M of insider selling and this is all by officers, and 2.3M of net insider selling. There is little insider buying and all the buying is by directors. The CEO has shares worth $8.4M and has options worth $48.1M. The CFO has shares worth $0.2M and has options worth $14M. An officer has shares worth $0.1M and has options worth $4.5M. A director has shares worth $0.6M and has options worth $0.8M. This is just to give you an idea on insider share ownership and option values.

Norman Bell Keevil, Caisse de dépôt et placement du Québec, Sumitomo Metal Mining Co. Ltd. and Temagami Mining Company own around 85% of Class A shares and control the company. They also have considerable investments in this company with Norman Bell Keevil's investment worth around $23M, Caisse de dépôt et placement du Québec's worth around 294M, Sumitomo Metal Mining Co. Ltd.'s worth around 49M and Temagami Mining Company's worth around $144M.

The 5 year low, median and high median Price/Earnings Ratios are 6.38, 14.66 and 19.68. The current P/E Ratio is 17.08 based on a stock price of $27.84 and 2013 earnings estimates of 1.63. This suggests that the stock price is towards to high end of the reasonable range.

I get a Graham price of $34.06. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.97 and 1.26. The current P/BP Ratio is 0.82. This stock price tests suggest that the stock price is reasonable. A P/GP Ratio of 1.00 or less also suggests that the stock price is a good one.

The 10 year median Price/Book Value per Share Ratio is 1.85. The current P/B Ratio is 0.88 based on a stock price of $27.84. This current P/B Ratio is some 52% of the 10 year median P/B Ratio. This test suggests that the stock price is cheap. Also, on an absolute basis a P/B Ratio below 1.00 says that the stock price is cheap.

The 5 year median dividend yield is 2.29% (if you exclude the dividend yields for 2009 and 2010. The current dividend yield at 3.23% is some 41% higher. This test says that the stock price is cheap.

The analysts' recommendations are Strong Buy, Buy Hold and Underperform. Most of the recommendations fall into the Buy and Hold categories. The consensus recommendation would be a Buy. The 12 month stock price consensus is $31.50. This implies a 12 month total return of 16.38%, with 3.23% from dividends and 13.15% from capital gains.

The Motley Fool has a good review on this stock. It talks about how the company handled the problems that the purchase of Fording Canadian Coal Trust caused. Over all it is a positive view of this company. The Motley Fool also gave a buy rating on this stock in August 2013. The blogger Dividend Ninja talks about why he bought this stock in August 2013.

However, Zacks research felt that in August 2013 the company was in the overbought territory. On the NASDAQ site Minyanville thinks that on a technical note you should hold off buying this stock.

I think that my stock price tests basically say that this stock is currently selling at a very good price. This is a rather risky and volatile stock as it is in mining (S&P/TSX materials Index). See my spreadsheet at tck.htm.

This is the second of two parts. The first part was posted on Tuesday, September 10, 2013 and is available here.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck.

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.

Tuesday, September 10, 2013

Teck Resources Ltd

On my other blog I am today writing about the Global Warming Religion...continue...

I do not own this stock Teck Resources Ltd (TSX-TCK.B, NYSE-TCK), but I have in the past. In 2008, I wanted to cover some resource stocks and this is one that I decided to take a look at. I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.

The first thing to discuss is dividends. I have information from 1993 and from then to 2004 the dividends were level. Between 2004 and 2006 dividends increased 900% (from $0 .10 to $1.00 per share, annually). Dividends were then level until they stopped in 2008. Since dividends were restarted in 2004, they have increased by 350% ($0.20 to $0.90 per share, annually).

The current dividend yield is 3.23% based on a stock price of $27.84. The last dividend increases was 12.5% and was made in 2013. The 5 year median dividend yield is 1.29%. This is a resource stock so dividend volatility does not surprise me.

The Dividend Payout Ratios are fine. The DPR for Earnings per Share for 2012 was 58% and for Cash Flow per Share for 2012 was at 14.6%.

Have shareholder made any money on this stock? If you look at this stock to the end of 2012, the total return over the past 5 and 10 years is at 2.11% and 24.02% per year with 1.46% and 4.03% per year from dividends and 0.65% and 20.00% from capital gains.

If you look at this stock to date with a current stock price of $27.84, shareholders have made 39.29% and 13.34% per year, with 3.45% and 3.66% from dividends and 35.84% and 9.68% per year from capital gains. It would seem that perhaps the long term holding of this stock might be profitable.

Shares outstanding have increased by 5.6% and 4.7% per year over the past 5 and 10 years. Shares have increased due to stock options and share issues. They have decreased due to buy backs. There are two classes of shares. Class A shares have 100 votes per share and Class B shares have one vote per share. Norman Bell Keevil, Caisse de dépôt et placement du Québec, Sumitomo Metal Mining Co. Ltd. and Temagami Mining Company own around 85% of Class A shares.

Revenues and Revenues per share have grown nicely, with Revenues up by 10% and 17% per year over the past 5 and 10 years and Revenues per Share up 4% and 12% per year over these periods. Over the past 5 years, using 5 year running averages and Revenues per Share is up almost 8%.

Earnings per share have not done as well, especially over the past 5 years. There is a big difference between the 5 year running averages increase and 5 year increase so I will talk about the 5 year running average growth over the past 5 years and it is 0%. The EPS have grown by 11% over the past 10 years.

Cash Flow has grown by 4% and 26% per year over the past 5 and 10 years. If you look at the growth in 5 year running averages, growth is at 10% and 22% per year over these periods, respectively.

Return on Equity has varied a lot over the years. The 5 year median ROE is at 12.2%. However, 2012 was not a good year and that year's ROE is just 4.8%. If you look at ROE for the last year ending in June 2013, ROE is even lower at 3.8%.

There has been some variance between the ROE on net income and on comprehensive income. The ROE on comprehensive income for 2012 is 4.1%, some 15% lower. This is not far off. The difference between ROE on net income and comprehensive income for the year ending in June 2013 is 1.6%.

The last thing to look at is debt ratios and these are very good. The Liquidity Ratio is currently at 3.61. The Debt Ratio is at 2.11. The current Leverage (A/BK) and Debt/Equity Ratios are low and good at 1.90 and 0.90, respectively. These debt ratios will allow the company to ride out most economic problem times.

What I see in this stock is good debt ratios, good dividends and volatility. See my spreadsheet at tck.htm.

This is the first of two parts. Second part will be posted on Wednesday, September 11, 2013 and will be here.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck.

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.

Monday, September 9, 2013

Enbridge Income Fund Holdings

On my other blog I am today writing about the Graham Number or Price...continue...

I do not own this stock Enbridge Income Fund Holdings (TSX-ENF, OTC-EBGUF). I have followed this stock for some time but I have not owned it. I do own Enbridge Inc. (TSX-ENB, NYSE-ENB)

What I hate about this stock is that the financial statements are complex and they make it hard to find things, like EPS, which should be on the income statement. (Actually, in the latest quarterly report it is and I hope it stays there.) Since this fund is wholly invested in the Enbridge Income Fund (EIF), in order to fully investigate this stock you must also investigate the Enbridge Income Fund (EIF). The problem with complexity it is easy to get things wrong.

First I will talk about the dividends. The current dividend yield is 5.76% based on a stock price of $23.17 and dividends of $1.34 per share, annually. This is lower than the 5 year median dividend yield of 8.62%, but all past Income Trust companies have lower dividends yields.

Dividend growth has been at 5.18% per year and 4.59% per year over the past 5 and 10 years. What you have here is a company with good dividend with moderate dividend growth.

The 5 and 10 year total returns for this stock has been very good. The 5 and 10 year total returns are at 26.84% and 16.20% per year over these periods. The dividend portion of this return has been at 8.16% and 6.99% per year over these periods. The capital gain has been at 18.68% and 9.21% per year over these periods.

The Dividend Payout Ratios for this stock is not bad as far as earnings go paying out 83.5% in 2012. However, the DPR for cash flow is very high for 2012 at 110.8%. When looking at the EIF for DPRs, I find that that are still quoting DPRs based on Distributable Income. The statements say that DPR for DI is at 78.9% for 2012. If you look at DPR for EIF based on income, the DPR for 2012 is very high at 175.9%. However, the DPR for cash flow is quite good at 53.6% for 2012.

Looking at book value, the EIF has a negative $17.63 value. This stock has a positive $23.53 value. It is hard to say what the interplay is between these values. Also, Enbridge Inc. own shares in EIF. I always find a negative book value to be a problem.

The other thing I do not like is the debt ratios. For this stock they look very good in 2012 with Liquidity Ratio of 2.57 and a Debt Ratio of 33.65. However, the only think that this stock owns is shares in EIF and its 2012 Liquidity Ratio is 0.91 and its Debt Ratio is 1.21. A Liquidity Ratio of less than 1.00 means that current assets cannot cover currently liabilities. However, for EIF if you add in cash flow after dividends, the Liquidity Ratio is just fine at 1.57.

The 5 year low, median and high median Price/Earnings Ratios for this stock are 13.58, 16.21and 19.05. The current P/E Ratio is 16.55 based on a stock price of $23.17 and 2013 earnings of $1.40. (Note that if you compare the EPS for 2012 and for the year ending in June 2013, EPS has increased by 4.05%. The EPS estimates show the EPS declining by 5.4% in 2013.)

The above would suggest that the stock price is relatively reasonable. However, I think that a P/E Ratio of 16.55 is rather high for a utility stock. Also, I am not sure that "earnings" listed in the statements are true "earnings". This stock only owns units in EIF. I am not at all sure how meaningful stock price tests using Price Sales Ratio or Price/Cash Flow per Share Ratio would be. A test based on dividend yield is also not meaningful as the dividend yield has been decreasing on all old income trust companies.

What I can say is that, so far, shareholders have done well with this stock. There will be a decrease in the dividend yields that shareholders received over the past 5 and 10 years. I personally do not like stocks that are complex to investigate. I do not like investing in stocks that I feel I do not understand.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Hold, so the consensus recommendation would be a Hold. The 12 month consensus stock price is $25.50. This implies a total return of 15.82% with 5.76% from dividends and 10.06% from capital gains.

See my spreadsheet on Enbridge Income Fund Holdings at hse.htm and my spreadsheet on Enbridge Income Fund at enbif.htm.

Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income Fund Holdings.

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.

Friday, September 6, 2013

Great-West Lifeco Inc 2

I do not own this stock Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF). I have followed this stock for some time. This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. It is part of Power Financial TSX-PWF), so you probably should not buy both.

When I look at insider trading, I find that there is some $4.2M of insider selling. All the selling is by officers of the company. Selling seems to stock options being exercised. There is no insider buying. There are a lot of officers with stock options.

Also, Power Financial (TSX-PWF) owns some 69% of this company. Paul Desmarais who also owns a great deal of Power Financial and together with Power Financial the ownership in Great-West is around 78%. The CEO has shares worth $3.9M and has options worth $16.5M. The CFO has shares worth $6.3M and has options with $13.4M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.43, 12.29 and 15.65. The current P/E Ratio is 13.05 based on a stock price of $29.75 and 2013 EPS estimate of $2.28. This test shows that the stock price is reasonable. It is around the relative median price.

I get a Graham price of $26.31. The 10 year low, median and high median Price/Graham Price Ratios are 1.13, 1.29 and 1.44. The current P/GP Ratio is 1.13 based on a stock price of $29.75. This test shows that that the stock prices is reasonable and towards the lower end of reasonable.

The 10 year Price/Book Value per Share Ratio is 2.46. The current P/B Ratio is 2.20, a value some 90% of the 10 year ratio. This test says that the stock price is reasonable. (For this test to say the stock is cheap, the current P/B Ratio must be 80% or less than the 10 year P/B Ratio.

The 5 year median dividend yield is 5.23%. The current dividend yield is lower by over 21% at 4.13%. This puts the stock towards the high end of the reasonable range. However, the 10 year median dividend yield is 3.71%, and this is a lot lower than the 5 year median dividend yield. The 10 year median dividend yield is 11% lower than the current dividend yield and shows that the stock price is reasonable. The dividend yield has been moving up recently and that is why the current 5 year median dividend yield is rather high historically.

There are a number of analysts following this stock. The analysts' recommendations are Strong Buy, Buy and Hold. The majority of the recommendations are a Hold, so the consensus recommendation would be a Hold. The 12 month stock price is $31.60 which implies a 12 month total return of 10.35%, with 4.13% from dividends and 6.22% from capital gains.

I must say that I disagree with the Hold recommendations. This is a good company at a reasonable price. If you want to do well in this stock for the longer term, you buy when the stock is at least reasonable. I think that that the stock price is reasonable.

The Motley Fool has an interesting article about Life Insurance companies and interest rates. It talks about why increasing interest rates are good for these companies. The Investment Executive web site has an article on this company about their first quarterly results.

Insurance companies are starting to recover. If you wait for full recovery, you may not get them at a reasonable price. If you want the stock for the long term, you buy when the price is good and tuck it away in your portfolio for a while. In other words, buy now and do not wait for when everybody wants it. See my spreadsheet at gwo.htm.

This is the second of two parts. The first part was posted on Thursday, September 5, 2013 and is available here.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco.

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.

Thursday, September 5, 2013

Great-West Lifeco Inc

On my other blog I am today writing about the PEG Ratio...continue...

I do not own this stock Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF). I have followed this stock for some time. This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. It is part of Power Financial TSX-PWF), so you probably should not buy both.

This is a life insurance company. All life insurance companies are having difficulties in our current economic climate, especially with the interest rates being kept so low. As with other life insurance companies, this company has not raised their dividends for some time. Before 2009, they were considered to be a dividend growth company. They will probably be again, but when this will happen is a big question.

Prior to 2009, the dividend growth for this company was around 16% per year. The 10 year dividend growth is still good at 10%, but that is because of dividend increases before 2009. Dividends have not increased since 2009.

The Dividend Payout Ratios are still fine on this stock with DPR for earnings at 65% for the 2012 fiscal year. The DPR for cash flow is also fine at around 22% for cash flows.

The Total returns have been bad to just ok over the past 5 and 10 years. The 5 year total return is a loss of 3.3% per year with 4% per year from Dividends and a capital gain loss of 7.3% per year. The 10 year total return is 6.89% per year with 4.59% per year from dividends and 2.38% per year from capital gains.

The outstanding shares have increased by 1.24% and 2.64% per year over the past 5 and 10 years. The shares have increased due to stock options and Share Issues. They have decreased due to Buy Backs. Revenues have increased by 3% and 6% per year over the past 5 and 10 years. Revenue per Share has, of course, not done as well. However, if we look at Revenue per Share using the 5 year running averages, the 5 and 10 year increases are at 5.6% and 4.9%.

Earnings per Share are very good over the past 10 years, but poor over the past 5 years no matter how you look at it. The growth over the past 5 and 10 years, using 5 year running averages, is at 1% and 10.6% per year.

Cash Flow growth is also much better over the past 10 years than over the past 5 years. The 5 and 10 years growth in cash flow per share is 5% per year and 11% per year. The growth in cash flow per share over the past 5 and 10 years using the 5 year running averages is 2.5% and 14% per year.

The Return on Equity for this company has dropped a bit since 2009, but it is still good as it is over 10%. The ROE for 2012 is at 11% and the ROE on comprehensive income is just 5% less at 10.4%.

The debt ratios are fine and are in line with financial companies. The Liquidity Ratio is 1.36, but rises to 2.38 if you include cash flow after dividends. Liquidity Ratio is not really an important one for financial firms. The Debt Ratio is 1.07. The Leverage and Debt/Equity Ratios are 14.43 and 13.43, respectively.

This is still a solid company, but I am not sure when it will grow again. See my spreadsheet at gwo.htm.

This is the first of two parts. Second part will be posted on Friday, September 6, 2013 and will be here.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco.

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.

Wednesday, September 4, 2013

Canexus Corporation

I do not own this stock Canexus Corporation (TSX-CUS, OTC-CXUSF). I started to follow this stock last year after reading that it was part of Sentry Small/Mid Cap Income Fund. It is a small cap that pays good dividends. See stocks in this fund on G&M. Sentry home site is here. This stock was also mentioned by Michael Decter in May of 2012. Michael Decter is president and CEO of LDIC Inc.

This is another x-Income Trust company. The dividend yield is good and is currently at 7.67%. The 5 year median dividend yield is 8.61%. The company has only been around since 2005 and dividends have both increased and decreased over this period. Dividends are down by 8.96% over the past 5 years, but are up by 11.69% over the past 10 years. The company has also changed from monthly to quarterly payments of dividends.

The problem, of course, as with other x-income trust companies is that the Dividend Payout Ratios are too high. The 5 year median DPR for earnings is at 127% and for cash flow is at 102%. For the financial ending in 2012 the DPR for earnings was still over 100% at 194%, but the cash flow was a lot better at 67%. The company is not expected to earning much this year so DPR for earnings will not improve. Analysts do expect the DPR to be much better in 2015 at around 98%.

Shares have been rapidly increasing by 33% and 21% per year over the past 5 and 8 year. Increasing shares is neither good nor bad, particularly, but rapidly increasing share makes the values per share quite important. For example, Revenue has increased by 7% and 5.6% per year over the past 5 and 7 years, but Revenue per Share is down by 20% and 14% per year over the past 5 and 7 years. This is not a good showing.

Both Earnings per Share and Cash Flow per Share have fluctuated but have not made much progress. Book Value per Share decreased between 2005 and 2012 with 2012 being the first year of an increase. The Book Value has decreased by 28% and 22% per year over the past 5 and 7 years. Declining Book Value is quite common for Income Trust companies as they often payout a high percentage of earnings in distributions.

The other thing that makes this stock quite risky is the debt ratios. The current Liquidity Ratio is 1.04 and even with cash flow less dividends it is still low at 1.16. The current Debt Ratio is also low at 1.49 (where I would like to see it is at least at 1.50, so it is just below what I like.) The Debt Ratio used to be much better and has a 5 year median ratio of 3.52. The Leverage and Debt/Equity Ratios have varied a lot, but they are currently a bit high at 3.02 and 2.02 respectively.

Another problem is that the Return on Equity on Net Income for 2012 was some 14% higher than the ROE on Comprehensive Income. The difference is even higher for the last 12 months ending in June 2012. The difference is here is 33%. The problem this points out is that there might be some question about the quality of the earnings.

Analysts' recommendations are Strong Buy, Buy and Hold. The consensus recommendation is a Buy. The 12 month stock price consensus is $9.33. This implies a 12 month total return of 38.53% with 7.67% from dividends and 30.86% from capital gains.

From what I can see the high DPRs and low Debt Ratios makes this stock quite risky. The dividend yield is very good. See my spreadsheet at cus.htm.

Canexus Corporation is engaged in the production of sodium chlorate and chlor-alkali products, and operates a hydrocarbon terminal. They have four plants in Canada and two at one site in Brazil. Its web site is here Canexus.

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.

Tuesday, September 3, 2013

Le Chateau Inc

On my other blog I am today writing about limiting your exposure when buying stocks...continue...

I do not own this stock Le Chateau Inc. (TSX-CTU.A, OTC-LCUAF). In June 10, 2012 I started spreadsheet because of a request from Blog reader. It was also on my list of dividend and special dividend paying stocks. Jennifer Dowty wrote a column on Dividend Paying stocks in 2010. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. The Investor's Digest is a publication of MPL Communications. See publications on their site.

Currently, this stock is not doing very well. It stopped its dividend payments in 2012 and I am not sure anyone would guess on when they might restart. The years of 2011 and 2012 are years of losses. The first quarter of 2013 showed a loss also. There are no longer any analysts following this stock. Their last good year was 2009.

This is a potential problem when buying retail stocks, especially one in fashion wear. And, who knows if or when this stock will turn around and again be a dividend growth stock, which it was since 2005. It started dividends in, as far as I can tell, in 1994, and then increased them for the first time in 1998, the next increase coming 6 years later in 2005. Between 2005 and 2011 dividends increased each year. They paid special dividends in 2007 and 2009.

The strength of the stock has been the strong debt ratios. The Liquidity Ratio for 2012 is 2.79 and the 5 year median ratio is 3.03. The Debt Ratio in 2012 is 2.74 and the 5 year median ratio is 2.91. The Leverage and Debt/Equity Ratios for 2012 are also quite good at 1.68 and 0.68.

The other thing to note is the large insider ownership. The CEO owns some $30M of shares as does the founder of this company. There are two types of shares, Class A which has one vote per share and Class B that has 10 votes per share. The CEO and Founder own these shares. Barry Gruman also holds shares worth some $22M. Barry Gruman used to be an analyst at First Marathon Securities Ltd.

There is an interesting article on this company in the Canadian Business magazine. It talks about this company having flirted with disaster before and has come back. Insiders are sure that they can do this again. They are buying shares. In 2012, the company got a $10M loan from the company's founder Herschel Segal in this report from The Chronicle Herald. The company also got a line of credit from GE.

However, you look at this stock, it is a turnaround situation. Will it turn around? Insiders are saying they will make this happen. See my spreadsheet at ctu.htm.

Le Chateau is a Canadian specialty retailer and manufacturer of contemporary fashion apparel, accessories, and footwear at value pricing for style-conscious women and men of all ages. The Company has 231 retail locations, of which 227 are located in Canada and 2 in the New York City area. They also have 7 stores under license in the Middle East. Its web site is here Le Chateau.

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.