Friday, January 20, 2006

Current Watch List

I currently have two watch lists, one for Canadian and one for U.S. equities. My focus this year will most likely be on spending my target $10K over about 3-4 purchases of Canadian stocks.

Here is my current Canadian list (I have simplified the view in order to make this easier to display):


To date, I am looking most carefully at Manitoba Telecom (MBT), Russell Metals (RUS) and one of the pipelines (Enbridge (ENB) or TransCanada (TRP)). In the meantime, I'm still waiting for paperwork on my Canadian ShareOwner account to be processed. Thoughts?

6 Comments:

Anonymous 0xcc said...

I would like to hear any evaluation you have done on Russel Metals. I have them on my 'start to pay attention to/look into' list but I haven't done anything about that yet. I first became aware of them through the top holdings list for the iUnits Dividend ETF (also on your list) but as I said I haven't done any research yet.

1/21/2006 10:33 AM  
Blogger Humble Investor said...

Hi 0xcc,

I also first noticed Russell Metals from their inclusion in the iUnits fund. My interest was further peaked when they were among only 3 other Canadian companies to rate an ‘A’ in both ‘growth’ and ‘value’ evaluations according to analysis done for MoneySense magazine’s list of Top 200 stocks in 2005. (I found the MoneySense analysis quite interesting and their (free) analysis report a good reference.) They were profitable even in the post 9/11 period that saw many others in the steel industry show losses or go out of business altogether. Looking at their company reports they also have a good history of buying back stock and are fairly acquisitive.

Russell has three main lines of business:
Metals Service Centres – Purchases and distributes to a broad base of approximately 18,000 end users through a network of 57 Canadian and 4 U.S. locations.

Energy Tubular Products – This segment distributes oil country tubular goods, line pipe, tubes, valves and fittings, primarily to the energy industry in Western Canada and the Western United States.

Steel Distributors – They act as master distributors selling steel in large volumes to other steel service centers and equipment manufacturers. First Call Consensus currently rates them a buy.

They have 2500 employees and are one of the largest players in their industry. Their annual dividend has increased 600% since 2000, uninterrupted except for one quarter in 2002 as a result of charges taken due to an acquisition:

2000 - $0.15
2001 - $0.20
2002 - $0.17
2003 - $0.29
2004 - $0.505
2005 - $0.90

Hindsight test: $100 spent on Russell Metals on May 8, 2000 would have purchased 24 shares (at $4.10) with a yield of 1.2%. Those same 24 shares would be worth $580 today and your yield on the original investment would be ($0.20/$4.18) = 24%.

1/21/2006 10:20 PM  
Anonymous 0xcc said...

Thanks for the information, that was fairly detailed! It seems like they deserve a closer look. I really like that dividend growth rate and the fact that they have done well through a difficult time.

1/22/2006 9:00 AM  
Blogger Humble Investor said...

I small correction - in 2000 the yield sould have been 3.6%, not 1.2%. Also, the math on the current yield should be ($1.00/$4.10) = 24%.

1/22/2006 9:15 AM  
Anonymous Anonymous said...

a lot of the companies you are looking at have DRIPS (dividend reinvestment plans). Once you are a registered shareholder (only need 1 share usually), you can buy direct from the company -- no commissions! Enbridge and Transcanada both have DRIPs. If interested, check out dripinvesting.org. There is a Canadian DRIPs forum where Canadians exchange/sell singles so that people can avoid paying brokerage fees.

1/22/2006 10:40 PM  
Blogger Humble Investor said...

I have to admit that though I looked into DRIPs a while ago, I must have unfairly written them off as too complicated.

I must say though that you were absolutely correct - I spent quite a bit of time researching them today and am quite excited about the prospects they offer. Lower cost of entry will also help me start sooner.

I may even document my DRIP initiation as a series of blog posts.

Thanks again.

1/23/2006 8:50 PM  

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Disclaimer: These articles are for information only, and are not to be construed as financial advice, legal advice, or a solicitation to buy or sell securities.