WAJAX CORP. (Toronto symbol WJX; www.wajax.ca) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the three months ended September 30, 2013, Wajax’s revenue declined 5.0%, to $338.5 million from $356.4 million a year earlier. Earnings fell 28.6%, to $11.5 million, or $0.69 a share, from $16.2 million, or $0.97. The declines mostly came from reduced activity in the Western Canadian oil and gas industry, which hurt results at Wajax’s power systems business. Lower mining equipment and construction sales more than offset strength in the materials-handling market.
Canadian stocks: Shares yield a high 6.7% even after company lowers dividend
Meanwhile, the company lowered its monthly dividend by 25.9% earlier this year, to $0.20 from $0.27. It made the cut to save cash until its markets rebound. The shares still yield a high 6.7%. Wajax needs a recovery in Canadian oil and gas drilling and mining to restore its revenue and earnings growth. The company’s long-term debt of $211.7 million is 35.2% of its market cap. In the latest edition of Stock Pickers Digest, we assess Wajax’s long-term outlook in light of prospects in the oil and gas and mining industries. We also look at the company’s earnings forecast and whether it can begin raising its dividend again. We conclude with our clear buy-hold-sell advice on the stock. (Note: If you are a current subscriber to Stock Pickers Digest, please click here to view Pat’s recommendation. Be sure to log in first.) If you’re a member of Pat’s Inner Circle and you’d like to ask a question about today’s article, please go to the question page reserved for you (be sure you’re logged in first). Click here to ask your question. COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Do you look for stocks that have regressed during a slow business cycle but have the potential to rebound when conditions improve? Do you have examples of stocks you bought when they were down and rewarded you with big gains? Follow us on two twitter accounts: We would like to remind you that you can follow us on two twitter accounts: @pmckeough and @TSINetwork. Pat tweets his ideas on investing, the economy and the markets with links to his commentaries. You also get analysis and recommendations on stocks and other investments from Pat and our editorial and research team with links to key articles from our newsletters and daily posts.
