Monday, March 21, 2016

Melcor Developments Inc.

Sound bite for Twitter and StockTwits is: Price is Reasonable. It is hard to say if the stock price will go lower. Oil has recently been going up, but will this continue. People are optimistic, but cautious about this being the beginning of a recovery. I will certainly buy more if it goes below $10.00. See my spreadsheet on Melcor Developments Inc.

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.

This stock just lowered their dividends by some 20%. Dividends on this stock have gone up as well as down. The stock has often increased their dividends. The growth in dividends to the end of 2015 over the past 5 and 10 years is at 11.4% and 14.9% per year. However, the recent decrease in 2016 lowers dividend growth considerable to 3.7% and 4.8% per year over the past 5 and 10 years.

I think that the company is being prudent by cutting their dividends. This company operates out west and times are not the best in this area of Canada at the present time. I will hold on to my shares as times will get better, but, of course, no one knows when.

I am doing well over all on this stock because I bought some stock in 2009 when the stock tanked. I am earning 4.42% on my original costs. After 7 years, the dividends have covered some 35% of the cost of my stock.

I still consider this stock a dividend growth stocks, but the dividends do fluctuate. They will probably continue to fluctuate. Alberta and Western Canada as a whole tends to have boom and bust times. When you are dependent on resources, this can happen.

The company has very good debt ratios. This is also prudent on their part. The Liquidity Ratio for 2015 was 5.36. The Debt Ratio for 2015 was at 2.07. The Leverage and Debt/Equity Ratio for 2015 are 1.93 and 0.93.

The 5 year low, median and high median Price/Earnings per Share Ratios are 5.36, 6.07 and 6.79. The 10 year ratios are higher at 5.38, 8.10 and 9.33. The historical median P/E Ratio is 7.08. The current P/E Ratio is 8.64 based on a stock price of $13.82 and 2016 EPS estimate of $1.60. This stock price testing suggests that the stock price is reasonable but above the median.

I get a Graham Price of $32.55. The 10 year low, median and high median Price/Graham Price Ratios are 0.36, 0.56 and 0.68. The current P/GP Ratio is 0.42 based on a stock price of $13.82. This stock price testing suggests that the stock price is reasonable and below the median.

The current dividend yield is 3.47% based on the new dividend of $0.48 and a stock price of $13.82. The 5 year median dividend yield is 2.92% and the historical median dividend yield is 2.73%. These dividend yields are some 19% and 27% lower than the current dividend yield. This stock price testing suggests that the stock price is reasonable and below the median.

This is a little covered stock. There are only two analysts covering it and both give it a Hold recommendation. The 12 month stock price target is $15.75. This implies a total return of 17.44% with 3.47% from dividends and 13.97% from capital gains.

This is a news release by Melcor on Stockhouse about their 2015 financial year. It was not great year and they are decreasing their dividends by 20% for the first dividend of 2016. This Real Estate company operates mostly in Alberta. This article on CBC talks about MRD shelfing plans for land near Regina because the costs do not work. Item on MRD is a little over half way down the page. This article by Doug Madison on FMN talks about Laurentian Bank downgrading this stock from a Buy to a Hold and lowering their target price.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here and here.

The last stock I wrote about was Enbridge Inc. (TSX-ENB, NYSE-ENB)... learn more. The next stock I will write about will be TransAlta Corp. (TSX-TA, NSYE-TAC)... learn more on Wednesday, March 23, 2016 around 5 pm.

Also, on my book blog I have put a review of the book A New History of Life by Ward & Kirschvink learn more...

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor Developments Inc.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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