atd b
ALIMENTATION COUCHE-TARD, $62.78, symbol ATD.B on Toronto, operates 8,006 convenience stores throughout North America and 2,217 in Europe, including Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia. In the three months ended October 11, 2015, Couche-Tard’s sales fell 5.7%, to $8.44 billion from $8.95 billion a year earlier (all figures except share price in U.S. dollars). The decline came from lower gasoline prices and the sale of its aviation-fuel business late last year. The higher U.S. dollar also cut the contribution from the company’s European operations. Without one-time items, earnings per share rose 20.0%, to $0.66 from $0.55, partly due to higher profit margins on merchandise and fuel. The company also paid less interest as it reduces the debt it took on to fund acquisitions, including its $2.7-billion purchase of Norway’s Statoil Fuel & Retail gas station chain in June 2012. As well, in March 2015, it paid $1.7 billion for the Pantry, which has more than 1,500 convenience stores in 13 southern U.S. states....
In June 1999, the Loewen Group, North America’s second-largest funeral company, filed for bankruptcy protection in the U.S. and Canada. At the time, it operated 1,116 funeral homes and 429 cemeteries in North America and 32 funeral homes in the U.K.
Loewen Group grew rapidly by acquisition, but it made other moves that greatly added to its risk.
For one, it took on a lot of debt to finance its purchases, many of which it bought at inflated prices in bidding wars with larger rival Service Corporation International.
The new operations’ profits didn’t cover the extra interest costs. Loewen eventually had to sell many of them below cost to comply with its debt obligations.
Loewen Group’s debt stood at $2.3 billion when it filed for bankruptcy in 1999. That was high even in relation to its market cap of $3.4 billion at its stock-price peak of $57 in 1996. It was insurmountable in 1998, when the company’s interest costs of $182.4 million exceeded all its earnings and cash flow. That year, Loewen had negative cash flow (more money flowed out than in) of $34.3 million.
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Loewen Group grew rapidly by acquisition, but it made other moves that greatly added to its risk.
For one, it took on a lot of debt to finance its purchases, many of which it bought at inflated prices in bidding wars with larger rival Service Corporation International.
The new operations’ profits didn’t cover the extra interest costs. Loewen eventually had to sell many of them below cost to comply with its debt obligations.
Loewen Group’s debt stood at $2.3 billion when it filed for bankruptcy in 1999. That was high even in relation to its market cap of $3.4 billion at its stock-price peak of $57 in 1996. It was insurmountable in 1998, when the company’s interest costs of $182.4 million exceeded all its earnings and cash flow. That year, Loewen had negative cash flow (more money flowed out than in) of $34.3 million.
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CANADIAN PACIFIC RAILWAY LTD., $198.88, Toronto symbol CP, has offered to buy U.S.-based railway Norfolk Southern Corp. (New York symbol NSC). The combined firm would be North America’s largest railway, with more than 56,000 kilometres of track. Buying Norfolk would also give CP greater access to ports on the U.S. Gulf Coast and Atlantic Ocean. Norfolk shareholders would receive $46.72 U.S. a share in cash and 0.348 of a CP share (or roughly 50% in cash and 50% in stock). That would give them 41% of the combined company....
ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed. These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand. This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states....
CHIPOTLE MEXICAN GRILL, $722.70, symbol CMG on New York, has hired Curt Garner as its first chief information officer. The company hopes Garner will improve its mobile presence, including the ability to order and pay through smartphones and tablets. Mobile apps have already paid off very successfully for fast-food and fast-casual chains like Domino’s, Panera Bread, Starbucks and Taco Bell. Previously, Garner spent 20 years at Starbucks in various technology roles, including CIO. The coffee chain recently finished rolling out its mobile ordering and payment app at its more than 7,400 U.S. outlets....
A history of thriving on acquisitions makes Alimentation Couche-Tard a top growth stock for us and one of the best investments in Canada
ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed.
These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand.
This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.
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These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand.
This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.
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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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