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Stock Pickers Digest Hotline – Friday, August 12, 2011

August 12, 2011 -  One Comment
Posted by: Pat McKeough No categories
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CALIAN TECHNOLOGIES, $19.10, symbol CTY on Toronto, operates in two areas: the business and technology services division, which accounts for 74% of Calian’s revenue, provides engineers, health-care workers and other professionals to clients on a contract basis. The systems-engineering division contributes the remaining 26% of revenue, and sells hardware and software that is used for testing, operating and managing satellite and other communication systems.

In the three months ended June 30, 2011, Calian’s revenue rose 1.7%, to $58.5 million from $57.6 million a year earlier.

However, earnings fell 10.2%, to $3.5 million or $0.45 a share, from $3.8 million or $0.49 a share. This was mostly due to a slowdown in government contracts during the spring federal election campaign, and the higher Canadian dollar.

The company holds cash of $24.2 million, or $3.10 a share, and has no debt. Calian pays dividends at annual rate of $1.00 a share. That gives the shares a 5.2% yield.

Calian Technologies is still a buy.

Calian was recently covered in the July 2011 issue of Stock Pickers Digest. Click here to access it.

Calian was recently covered in the Stock Pickers Digest Hotline for May 20, 2011. Click here to access it.

BIRCHCLIFF ENERGY INC., $13.16, symbol BIR on Toronto, reports that its production rose 40.2% in the three months ended June 30, 2011, to 17,324 barrels of oil equivalent per day (including natural gas) from 12,357 barrels a year earlier.

Birchcliff develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border.

The company’s cash flow per share rose 50%, to a record $0.27 from $0.18. That’s mainly because of the production increase and higher oil prices.

Birchcliff is now expanding its 100%-owned natural gas plant at Pouce Coupe South, Alberta. These upgrades will double the plant’s production when they are completed in November 2012. That, plus further exploration and development, should increase the company’s production to roughly 27,500 barrels of oil equivalent per day by the end of 2012.

The company’s debt of $339.1 million is just 22.6% of its $1.5 billion market cap, so it can easily afford to borrow more funds to pay for further exploration and expansion.

Birchcliff Energy is still a buy.

Birchcliff was recently covered in the July 2011 issue of Stock Pickers Digest. Click here to access it.

Birchcliff was recently covered in the Stock Pickers Digest Hotline for May 20, 2011. Click here to access it.

DOREL INDUSTRIES, $23.81, symbol DII.B on Toronto, makes a wide range of products: including bicycles; ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs (including Eddie Bauer and Disney Baby licensed products); home furnishings, including chairs, tables, bunk beds, futons and step stools; and recreational products.

In the three months ended June 30, 2011, Dorel’s sales rose 1.9%, to $619.0 million from $607.7 million a year earlier (all figures except share price in U.S. dollars). The company’s recreational/leisure division’s sales rose 15.9%, mainly on strong demand for bicycles. That offset lower sales in the other divisions.

Earnings per share fell 30%, to $0.70 from $1.00 a year earlier, due to rising shipping and raw material costs. The company didn’t pass on all of these price increases to consumers, due to continuing economic weakness in the U.S. and Europe.

The company holds cash of $24.6 million, or $0.66 a share. Its long-term debt of $328.2 million is a reasonable 41.9% of its $782.4 million market cap.

Dorel is a dividend paying stock. Its annual rate of $0.59 a share yields 2.5%. The shares trade at a low 7.7 times the $3.10 a share that the company should earn in 2011.

Dorel Industries is a buy.

Dorel was recently covered in the June 2011 issue of Stock Pickers Digest. Click here to access it.

Dorel was recently covered in the Stock Pickers Digest Hotline for March 18, 2011. Click here to access it.

TIM HORTONS INC., $45.58, symbol TIH on Toronto, operates 3,189 coffee-and-donut stores in Canada, and 622 in the U.S.

In the three months ended July 3, 2011, the company’s earnings rose 1.5%, to $95.5 million from $94.1 million a year earlier. Tim Hortons spent roughly $206 million on share buybacks in the quarter. Due to fewer shares outstanding, earnings per share rose 7.4%, to $0.58 from $0.54.

If you exclude a severance charge for its former chief executive officer, the company would have earned $0.61 a share in the latest quarter. That matched the consensus estimate.

Sales rose 9.8%, to $702.8 million from $639.9 million a year earlier. Canadian same-store sales rose 3.8%, because Tim Hortons launched successful new products, like fruit smoothies. U.S. same-store sales rose 6.6%, as customers spent more per visit. The company also raised its prices to cover higher costs for coffee and other foods.

Tim Hortons is a buy.

Tim Hortons was recently covered in the July 2011 issue of Stock Pickers Digest. Click here to access it.

Tim Hortons was recently covered in the Stock Pickers Digest Hotline for May 27, 2011. Click here to access it.

CRITICALCONTROL SYSTEMS, $0.51, symbol CCZ on Toronto, sells services and software that help businesses better manage, access and store their information. CriticalControl gets about 60% of its revenue from clients in the oil and gas industry, followed by government (20%), health care (10%) and finance and retail (10%).

The company also makes traditional dry flow meters for natural gas wells, and electronic flow measurement devices (EFMs) for shale-gas drilling.

In the three months ended June 30, 2011 CriticalControl’s revenue fell 2.0%, to $12.5 million from $12.8 million a year earlier. Revenue at the Service Bureau Operations division rose 11%, while revenue rose 4% at the Canadian Energy Services division.

U.S. Energy Services revenue fell 16%. However, that was mainly because the division is shifting its production toward shale-gas equipment to take advantage of a major increase in shale-gas drilling in the northeastern U.S. As part of this plan, Critical Control is expanding its EFM plant in Indiana, Pennsylvania.

Earnings fell to $227,000, or nil per share, from $1.1 million, or $0.03 a share, a year earlier. Higher profits at the Service Bureau Operations were offset by the costs of shifting production at the U.S. Energy Services business.

Critical Control is a thin trader, but it’s a buy for aggressive investors.

CriticalControl was recently covered in the August 2011 issue of Stock Pickers Digest. Click here to access it.

CriticalControl was recently covered in the Stock Pickers Digest Hotline for June 3, 2011. Click here to access it.

BROADRIDGE FINANCIAL SERVICES INC., $21.58, symbol BR on New York, serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It mails and processes two-thirds of all proxy votes.

The company earned $175.8 million in its 2011 fiscal year, which ended June 30, 2011. That’s down 19.0% from $217.1 million in 2010. Earnings per share fell 12.2%, to $1.37 from $1.56, on fewer shares outstanding. That beat the consensus estimate of $1.36 a share. Revenue fell 1.9%, to $2.17 billion from $2.21 billion.

Broadridge’s clients are holding fewer special meetings; that was the main reason for the lower earnings and revenue.

However, the company continues to do a good job of holding onto its clients. As well, it has recently outsourced its data centre operations to IBM. This deal expires in June 2022, and should save Broadridge $25 million a year over the term of the contract.

The company expects to earn between $1.50 and $1.60 a share in fiscal 2012. The stock trades at 13.9 times the midpoint of the new range. Broadridge also raised its quarterly dividend by 6.7%, to $0.16 a share from $0.15. The new annual rate of $0.64 yields 3.0%.

Broadridge is a buy.

BroadBridge was recently covered in the August 2011 issue of Stock Pickers Digest. Click here to access it.

BroadBridge was recently covered in the Stock Pickers Digest Hotline for July 15, 2011. Click here to access it.

Our next Hotline will go out on Friday, August 19, 2011.

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One Response to “Stock Pickers Digest Hotline – Friday, August 12, 2011”

  1. PeterConnie on August 15th, 2011 at 4:33 pm

    Thanks for all the wonderfull advice you give. You and your team are doing an excellent job, keep up the good work.

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