Tech stock takes control of Loblaw’s health clinics

CALIAN TECHNOLOGIES (Toronto symbol CTY; www.calian.com) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems. In the three months ended June 30, 2012, Calian’s revenue rose 1.4%, to $59.3 million from $58.5 million a year earlier. Earnings rose slightly, to $3.48 million, or $0.45 a share, from $3.45 million, or $0.45 a share. Earlier this year, Calian bought Primacy Management Inc. of Burlington, Ontario, for $5.2 million. Since 2003, Primacy has been designing, building and managing in-store health clinics for Loblaw Companies (symbol L on Toronto). Primacy now operates 112 such clinics in Loblaw’s stores across Canada. [ofie_ad]

Technology stocks: Department of National Defense a major contributor to Calian’s revenue

At the same time, Calian’s business and technology services division continues to benefit from steady orders from various Canadian federal government departments (60% of revenue), including the Department of National Defence. The company’s backlog at June 30, 2012 was $611 million with terms extending to 2018. Calian holds cash of $29.7 million, or $3.86 a share, and has no debt. It has just raised its quarterly dividend by 7.7%, to $0.28 a share from $0.26. That gives the shares a high annualized yield of 5.5%. In the latest edition of Stock Pickers Digest, we examine the Primacy acquisition and whether the added revenue can give the company’s earnings a significant boost. We conclude with our clear buy-hold-sell advice. COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members In an age in which governments are being pushed to trim their spending, willingly or unwillingly, are you less likely to invest in stocks that derive a good deal of their revenue from government contracts? Or do you think certain companies or certain industries will always be in a position to benefit from government contracts? Let us know what you think.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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