alimentation couche-tard
Toronto symbol ATD.B, is the largest convenience store operator in Canada, with over 2,000 stores. It also has more than 3,000 U.S. stores in 28 states.
SIERRA WIRELESS, $28.66, symbol SW on Toronto, makes modules and software that connect products, including vehicles and smart electricity meters, to the Internet. This is known as machine to machine, or more generally as the Internet of Things (IoT). The company continues to sign up clients for its new IoT Acceleration Platform, which combines cloud computing, hardware and telecommunications networks to monitor machines remotely. For example, Veolia Water Technologies UK, which provides water-treatment plants and systems to companies and municipalities around the world, is now using the IoT Acceleration Platform to help its customers monitor critical data such as flow, pressure and temperature. This cuts its clients’ labour costs and lets them respond to problems as they happen....
SHERRITT INTERNATIONAL, $0.81, symbol S on Toronto, has suspended its $0.01-a-share quarterly dividend to conserve cash. The company had previously cut its payout from $0.043 a quarter to $0.01 in early 2014. Nickel prices have fallen 32%, to $4.50 U.S. a pound, since it made that cut. The elimination of the dividend should save $12 million a year. Sherritt has also said it will cut its 2016 capital spending by as much as 25% to 35%. Earlier this year, it lowered its planned 2015 capital spending to $195 million from $210 million....
METRO INC. $35 (Toronto symbol MRU; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 245.5 million; Market cap: $8.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.metro.ca) operates 600 grocery stores and 250 drugstores in Quebec and Ontario.
The company is benefiting from the 75% of privately held bakery Première Moisson it bought last year. Metro paid $101.6 million for its stake in this business, which has 23 stores and three plants in Quebec. Rising food prices are also boosting its sales and earnings.
In its fiscal 2015 third quarter, which ended July 4, 2015, Metro’s earnings gained 13.1%, to $163.5 million from $144.5 million a year earlier. It spent $203.0 million on share buybacks in the quarter, causing earnings per share to rise at a faster pace of 18.5%, to $0.64 from $0.54.
Sales rose 6.1%, to $3.8 billion from $3.6 billion. Same store sales gained 4.3%. Metro also owns 5.7% of Alimentation Couche-Tard (Toronto symbol ATD.B), which operates convenience stores in North America, Scandinavia and Eastern Europe and is a recommendation of Stock Pickers Digest, our newsletter for aggressive investing. Due to a special charge, Metro’s share of Couche-Tard’s earnings fell to $8.7 million in the latest quarter from $9.1 million a year earlier.
The company is in a strong position to keep making acquisitions and buying back shares. Its long-term debt of $1.1 billion is a low 13% of its market cap, and it holds cash of $5.1 million. The stock trades at 17.2 times the $2.03 a share Metro will likely earn in fiscal 2015. The $0.47 dividend yields 1.3%.
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The company is benefiting from the 75% of privately held bakery Première Moisson it bought last year. Metro paid $101.6 million for its stake in this business, which has 23 stores and three plants in Quebec. Rising food prices are also boosting its sales and earnings.
In its fiscal 2015 third quarter, which ended July 4, 2015, Metro’s earnings gained 13.1%, to $163.5 million from $144.5 million a year earlier. It spent $203.0 million on share buybacks in the quarter, causing earnings per share to rise at a faster pace of 18.5%, to $0.64 from $0.54.
Sales rose 6.1%, to $3.8 billion from $3.6 billion. Same store sales gained 4.3%. Metro also owns 5.7% of Alimentation Couche-Tard (Toronto symbol ATD.B), which operates convenience stores in North America, Scandinavia and Eastern Europe and is a recommendation of Stock Pickers Digest, our newsletter for aggressive investing. Due to a special charge, Metro’s share of Couche-Tard’s earnings fell to $8.7 million in the latest quarter from $9.1 million a year earlier.
The company is in a strong position to keep making acquisitions and buying back shares. Its long-term debt of $1.1 billion is a low 13% of its market cap, and it holds cash of $5.1 million. The stock trades at 17.2 times the $2.03 a share Metro will likely earn in fiscal 2015. The $0.47 dividend yields 1.3%.
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: Building on strategic acquisitions and a strong financial position, we see Metro Inc. as a top growth stock among Canada’s consumer giants.
As part of our three-prong approach to investing, we recommend investors spread their money out across the five main economic sectors: Manufacturing, Resources, Consumer Goods, Finance and Utilities. We also advise investing mainly in well-established companies, and downplaying stocks in the broker/media limelight. Due to recent stock market turmoil, investor interest in one of the less-volatile sectors—Consumer Goods—is rising. That includes the three Canadian retailers we analyze below. All are profiting from recent acquisitions, while their upgraded stores are attracting more shoppers. They’re also rolling out effective loyalty programs that spur repeat visits....
ALIMENTATION COUCHE-TARD INC., $59.94, symbol ATD.B on Toronto, hit a new all-time high this week after reporting improved profits in the latest quarter. Couche-Tard operates 7,987 convenience stores throughout North America. The Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. In Europe, the company operates 2,229 stores across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia....
You can find a lesson about acquisitions in our latest edition of Wall Street Stock Forecaster, which we sent out last week.
Investors often under-estimate the hidden risk of a corporate strategy of growth-by-acquisition. This strategy is inherently risky. It’s a little like buying new stock issues.
Acquisitions generally come on the market when it’s a good time to sell. That may not be, and often isn’t, a good time to buy. Insiders and managers at the selling company know a lot more than the buyers about the company itself, and its business strengths and weaknesses.
Some takeovers work out well for the buyers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become a habit.
Takeovers are more likely to succeed when the buyer is already a successful company and is under no pressure to buy anything. That way, the buyer can take its time and wait for a truly attractive, low-risk opportunity to come along.
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Investors often under-estimate the hidden risk of a corporate strategy of growth-by-acquisition. This strategy is inherently risky. It’s a little like buying new stock issues.
Acquisitions generally come on the market when it’s a good time to sell. That may not be, and often isn’t, a good time to buy. Insiders and managers at the selling company know a lot more than the buyers about the company itself, and its business strengths and weaknesses.
Some takeovers work out well for the buyers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become a habit.
Takeovers are more likely to succeed when the buyer is already a successful company and is under no pressure to buy anything. That way, the buyer can take its time and wait for a truly attractive, low-risk opportunity to come along.
...
ALIMENTATION COUCHE-TARD $57.58 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 567.4 million; Market cap: $32.7 billion; Dividend yield: 0.4%) completed its $1.7-billion acquisition of The Pantry in March 2015. The move added 1,500 convenience stores in 13 southern U.S. states, bringing Couche-Tard’s total to 7,848 locations throughout North America. In Europe, the company operates 2,230 stores across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia. In the three months ended April 26, 2015, Couche-Tard’s sales fell 18.6%, to $7.29 billion from $8.95 billion a year earlier (all figures except share price in U.S. dollars)....
MANULIFE FINANCIAL $22.70 (Toronto symbol MFC; Shares outstanding: 2.0 billion; Market cap: $45.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.0%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment management services.
In the three months ended March 31, 2015, Manulife’s earnings per share gained 5.4%, to $0.39 from $0.37 a year earlier. Revenue rose 25.1%, to $7.83 billion from $6.26 billion.
The company continues to expand in growing Asian markets. Right now, about 40% of its insurance premiums come from that region, which is adding to its revenue and profits.
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In the three months ended March 31, 2015, Manulife’s earnings per share gained 5.4%, to $0.39 from $0.37 a year earlier. Revenue rose 25.1%, to $7.83 billion from $6.26 billion.
The company continues to expand in growing Asian markets. Right now, about 40% of its insurance premiums come from that region, which is adding to its revenue and profits.
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