I own this stock of Goodfellow Inc. (TSX-GDL, OTC- GFELF). I started to look at this stock when I was searching for small cap stocks that paid dividends. It looked like an interesting stock. Goodfellow is a small cap stock that the Investor Reporter has written about a number of times.
In 2014 the outstanding shares were not increased for stock options. When I look at insider trading, I find no insider buying and minimal insider selling. Some 40% of the company is owned by members of the Goodfellow family and Stephen Jarislowsky. Stephen Jarislowsky is a well-known Canadian Financier.
The 5 year low, median and high median Price/Earnings per Share Ratios are 14.03, 14.68 and 15.32. The corresponding 10 year P/E Ratios are much lower at 8.09, 11.23 and 13.20. The current P/E Ratio is 12.67 based on a stock price of $10.39 and last 12 months of EPS of $0.82. (There are no estimates for this stock.) This stock price test suggests that the stock price is relatively reasonable.
I get a Graham Price of $16.10. The 10 year low, median and high median Price/Graham Price Ratios are 0.58, 0.65 and 0.75. The current P/GP Ratio is 0.65 based on a stock price of $10.39. This stock price test suggests that the stock price is relatively reasonable. Also, a P/GP Ratio of less than 1.00 suggests that the stock is cheap.
I get a 10 year Price/Book Value per Share Ratio of 0.75. The current P/B Ratio is 0.74 based on a BVPS of $14.05 and a stock price of $10.39. This stock price test suggests that the stock price is relatively reasonable. Also, a P/B Ratio of less than 1.00 suggests that the stock is cheap.
The 5 year median, historical average and historical median dividend yields are 3.85%, 4.66% and 3.85%. The current dividend yield of 4.81% is 25%, 3.4% and 25% above these yields. This stock price test suggests that the stock price is relatively reasonable.
As far as I can see no analysts follow this stock.
This company recently reported their results for the 15 months ending in November 30, 2014. There is an interesting article by Robert Tattersall in the Globe and Mail about a Ben Graham way to detect undervalued stocks. He says that he favors Ben Graham's iconic "net-net working capital" screen as a starting point for identifying undervalued stocks worthy of additional research. This stock is included in his list of undervalued stock. Benjamin Sinclair of Motley Fool has his own take on Robert Tattersall's column. He thinks that this stock is undervalued for good reasons.
Sound bite for Twitter and StockTwits is: Stock price is cheap to reasonable. It may be cheap for a good reason, but I am not ready to give up on this just yet. See my spreadsheet at gdl.htm.
This is the second of two parts. The first part was posted on Wednesday, February 25, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. The company serves customers throughout Canada, the United States and abroad including the UK and China and the Middle East. H.Q is Delson, Quebec, just outside Montreal.
It is about 60% owned by insiders. Its web site is here Goodfellow.
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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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I just found your blog doing some research about Goodfellow inc. and I find it very interesting! It seems that the price has not moved since about two years. It still looks undervalued, maybe more than it was. The P/B ratio is very low at the moment. It does have a small profit margin, though and it is a small cap company (about 75 million dollar market cap). It would be interesting to have a follow-up for this company!
Unless something happens, I only review stocks yearly. I just did not find that it was necessary to do anything more. I will review again, but since it was in February of this year of my last review it will be awhile.ReplyDelete