Transcontinental Inc.

First I want to talk about my recent trades. I sold my Husky Energy (TSX-HSE, OTC-HUSKF) stock. It no longer pays a dividend. I lost half my investment in this stock. I do not see things improving anytime soon. On a go forward basis I feel I am better off with Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) which I bought for my Registered Account. I only had 100 shares of Husky in my Trading Account and do not want to keep small amounts around and in any event I do not want investments in more stocks. In this account I replaced Husky with Evertz Technologies (TSX-ET, OTC-EVTZF), a stock I already own in this account.

Sound bite for Twitter and StockTwits is: Buy for Diversification. Price is relatively cheap to reasonable, but it has momentum. The problem for this company was it was into old style activities like printing and is trying to reposition itself into the new digital age and into packaging. See my spreadsheet on Transcontinental Inc.

I own this stock of Transcontinental Inc. (TSX-TCL, OTC-TCLAF). This is a dividend growth stock. It was on a number of dividend lists. However, it fell on hard times after 2008, but currently seems to be recovering. It is still on the Canadian Dividend Aristocrats Index.

This company has increased its dividends every year since 2002. Before that they were giving out dividend increases, but not every year. The dividend yield is low to moderate and the dividend growth is moderate. The current dividend is 3.32% based on dividends of $0.74 and a stock price $22.27. The 5 year, 10 year and historical median dividend yields are 4.10%, 3.72% and 1.30%. It is only in 2009 that the company's dividend move from low to moderate. The dividend growth for the past 5 and 10 years is 8.2% and 11.2% per year. The dividend growth over the past 15 and 20 years is 14% and 13.7% per year.

The Dividend Payout Ratio for the 2016 Financial Year is 38.6%. This is good. However, the 5 year DPR is 101% because the company had 2 years of EPS losses within the past 5 years. Analysts do not anticipate any further earning losses in the next couple of years. DPR is expected to be 29% in 2017. The DPR has been low for most of the history of this stock. They have never decreased the dividend, but it has been flat in some years.

Debt ratios are fine. The Liquidity Ratio for 2016 was 1.42 and the 5 year median is 1.08. For 2016 if you add in cash flow after dividends the ratio is 1.97. It has depended on cash flow to get a proper Liquidly Ratio in many years. The current Debt Ratio is 2.08. The 5 and 10 year medians are 1.78 and 1.85. This ratio has always been good.

Leverage and Debt/Equity Ratios are currently good, but have moved up and down over the years. The 10 year median ratios are 2.09 and 1.13 respectively. The long Term Debt to Market Cap Ratio is current at 0.25 and the Goodwill and Intangibles to Market Cap Ratio is 0.53. So these ratios are also good. You do not want these last two ratios to be close to or higher than 1.00.

This was my major purchase for the TFSA last year. I have made a return of 24.56% since then with 20.34% from capital gains and 4.22% from dividends. So this is pleasing. Growth in Revenue is non-existent. I would think I would like to see some before buying more of this stock. Growth in EPS is all over the place, but they give an Adjusted EPS that excludes lots of unusual items. Here growth is 4.8% and 5.3% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 4.33, 5.24 and 6.14. The corresponding 10 year values are 7.11, 8.31 and 9.50. The historical values are 10.21, 13.55 and 14.25. The ones for the past 5 and 10 years are really low as there were 3 EPS loss years in this 10 year period. The current P/E Ratio is 8.67. This is based on a stock price of $22.27 and 2017 EPS of 2.57. This stock price testing suggests that the stock might be relatively cheap.

I get a Graham Price of $28.34. The 10 year low, median and high median Price/Graham Price Ratios are 0.66, 0.82 and 0.96. The current P/GP Ratio is 0.79 based on a stock price of $22.27. This stock price testing suggests that the stock price is relatively reasonable and below the median. On an absolute basis any P/GP Ratio that is at or below 1.00 points to an undervalued stock.

The 10 year Price/Book Value per Share Ratio is 1.25. The current P/B Ratio is 1.60 a value some 28% higher. This P/B Ratio is based on BVPS of $13.89 and a stock price of $22.27. This stock price testing suggests that the stock price is relatively expensive. However, a P/B Ratio of 1.50 points to a good stock price on an absolute basis. The problem with this stock is that the Book Value has been traveling south lately until the last 3 years. This is because of earnings losses. However, the BVPS is up over 50% in the last 3 years. So this is an improvement.

The current Dividend Yield is 3.32% based on a stock price of $22.27 and dividends of $0.74. The historical median dividend yield is just 1.30% some 155% lower. The current dividend yield is lower than the 5 and 10 year median dividend yields of 4.10% and 3.72%. The dividend yield started to climb after the company had problems in 2008. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy, Hold and Underperform Recommendations. Sometimes it depends on your point of view if a company is a good buy or not. Most of the recommendations are a Hold and the consensus recommendation is a Hold. The 12 months target price is $21.19 a value below the current stock price. This implies a total loss of 1.53% with a capital loss of 4.85% and dividends of 3.32%.

Staff writers on Rives Journal say that the 14-day Commodity Channel Index for this stock is a negative 70.64. For this indicator a positive of 100 represents overbought conditions (high stock price) and an indicator of negative 100 represents oversold conditions (low stock price). Renee Jackson of The Cerbat Gem says that Scotiabank just reaffirmed their sector perform rating on this company. By the way, Sector Perform is a Hold rating. (See my blog for information on Analyst Ratings .) See what analysts are saying on Stock Chase. Many like it for how it is handling the shift away from printing.

The last stock I wrote about was about was National Bank of Canada (TSX-NA, OTC-NTIOF)... learn more . The next stock I will write about will be Enghouse Systems Ltd. (TSX-ESL, OTC-EGHSF)... learn more on Friday, January 27, 2017 around 5 pm. Tomorrow on my other blog I will write about Rethinking Retirement... learn more on Thursday, January 26, 2017 around 5 pm.

Transcontinental creates marketing products and services that allow businesses to attract, reach and retain their target customers. The Corporation is the largest printer in Canada and the third-largest in North America. Its web site is here Transcontinental 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.