Buy Despite a Possible Payout Cut

Article Excerpt

HARTCO INCOME FUND $3.10 (Toronto symbol HCI.UN; SI Rating: Average) sells computers and consumer electronics, mainly through CompuSmart and MicroAge retail stores. The fund, formerly Hartco Corp., converted into an income trust last August, and changed its fiscal year end from January 31 to December 31. In the three months ended December 31, 2005, Hartco lost $0.18 a unit on revenue of $177.3 million. That compares with income from continuing operations of $0.25 a share on revenue of $165.7 million in the three months ended January 29, 2005. Hartco blamed the latest quarterly loss on clearance sales of slower-selling products and store closing costs. The units fell $1.50 due to fears that tough competition and falling margins would force Hartco to cut its monthly distributions of $0.05 a unit (the annual rate of $0.60 yields 19.4%). Even if Hartco cut its distributions in half, the units would still yield nearly 10%. Hartco is a buy, but only for highly aggressive investors. investors…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.