Wednesday, July 15, 2009
Canam Group Inc. is an industrial company specialized in the design and fabrication of construction products and solutions (i.e. concrete, steel and wood structures for large projects). The company employs close to 2,600 people in Canada, the United States, Romania and India, and has partnerships with companies in Saudi Arabia, the United Arab Emirates and China.
The financial situation of the company is strong, with only $70M in debt and net earning of $48M ($0.99 per share, diluted). A dividend of $0.04 per share is paid quarterly, for a dividend yield of 2.5% (a decent yield) on a dividend payout ratio of 20% (which leaves plenty of room to grow the company).
The stock currently trades in a $6-7 rande, while the book value is above $9. That's a discount to book value of 25 to 35%. Using the Graham formula to calculate the fair value of the stock, I get close to $13, for a margin of safety of 50%. A classical value pick.
Why is the company trading so low? I believe it is the uncertainty of the economy. Although economic stimulus packages -- with an emphasis on infrastructures -- have been announced in many countries (including both Canada and the U.S.), the markets seem unsure whether this will be enough to maintain the earnings of the company. I believe that, even if those fears prove to be true in the short term, the company will flourish over the long term (5 years or more).
I can afford to wait.
Wednesday, July 8, 2009
Toys are not going to go away anytime soon. New toys are always sold, since few children want last year's hot items. The recession may pressure the earnings somewhat, but the company should still be able to make a profit and continue paying its dividend. Although I don't see the company as a high-growth, this should provide a moderate but steady growth of about 5-10% per year (when including the dividend).
Hasbro currently pays out a dividend of $0.20 per quarter, for a yield of 3.4%.
The company's DRiP/SPP has no fees, and allows monthly purchase of little as $25.
Thursday, July 2, 2009
The market continued its rise this month, although things became more volatile with both ups and downs. As I mentioned last month, I am not convinced that this spring's rise is solid and I expect things to weaken over the summer, as the severity of job losses impact the economy. The price of oil rose has began stalling around $70, and the Canadian dollar has move down a little from its recent peak of the beginning of June.
I have money ready to be deployed in my self-directed RRSP account, and I continue to slowly add money to my DRiPs.
Assets ($145 067, up 1.7 % from $142 605)
- Bank Accounts $3 981 (up 23% from $3 227)
- Emergency Funds $2 604 (up 0.3% from $2 595)
- RRSP Accounts $35 742 (up 2% from $35 051)
- Non-Registered Investments $14 527 (up 7% from $13 550)
- Home $88 050 (stable)
Liabilities ($64 839, up 0.1% from $64 233)
- Credit Cards $3 845 (up 26% from $3 051)
- Mortgage $60 836 (down 0.35% from $61 050)
- Line of Credit $0 (stable)
- Debt / assets: 0.445 (down from 0.447)
- House value / total assets: 0.607 (down from 0.617)
My credit card debt went up this month because of planned expenses: new tires for the car (about $550) and materials for the work I have begun on the back yard (about $500).
The one bad news this month was that at work the project I was working on has temporarily been put on hold by our client. We are confident that it will restart within a few months -- it is a delay, not a cancellation -- but this will cause us some headaches when things restart. In the meantime, I've been assigned to another smaller project. So there is a little bit of uncertainty on this side.
Just to be of the safe side, Princess and I decided to postpone the addiitonal windows replacements. So instead of replacing three more windows over the summer (for about $3 000 -- our windows are large), we will wait until December to order this year's set along with next year's. Both sets would be installed next summer. That will allow us to take advantage of the Canada renovation tax credit announced in January, while deferring most of the expense to next year. We will review this plan in a couple of months to see if it is still viable.