Category Archives: Stock Analysis

Canadian Apartment Properties REIT: Should You Buy It?

If you want safe monthly income, add Canadian Apartment Properties REIT (TSX:CAR.UN) to your watch list. You can sleep well at night holding the quality units.

apartments

Why is it a high-quality REIT? What’s a good valuation (i.e. price range) to buy its units to prevent overpaying and to boost your starting yield? First, let’s see if it’s the kind of business you want to own.

Canadian Apartment Properties REIT Overview

  • Market cap: $4.1 billion
  • Price: $29.60 per unit
  • Yield: 4.2%
  • Payout ratio: 72%

Canadian Apartment Properties REIT started out with 2,900 residential suites in 1997 when it had its IPO. Since then, it has grown to a portfolio of about 48,514 suites.

CAPREIT growth 1997 to 2016

Source: CAPREIT Q2 2016 Presentation – Slide 7

Assets

Canadian Apartment Properties REIT is most notable for its assets from the stable Ontario province, which makes up half of its portfolio. Its assets in Ontario, Quebec and British Columbia all maintain high occupancies.

In total, the three provinces make up 83% of the REIT’s portfolio and adds stability to its financial performance. As a result, the REIT’s portfolio occupancy was 98.2% as of the end of June 2016.

CAPREIT portfolio diversification by geography Q2 2016

Source: CAPREIT Q2 2016 Presentation – Slide 23

The top three provinces from where the company earns the highest net operating income (NOI) margins are British Columbia (an NOI margin of 68.8%), Ontario (60.4%), and Alberta (60.4%).

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Stella-Jones Inc. Growth Stock Analysis

What first brought my attention to Stella-Jones Inc. (TSX:SJ) was its dividend growth history. Yes, it only yields 0.9% today, but Stella-Jones has consistently increased its dividend per share at a double-digit rate for the last decade.

So, it wouldn’t come as a surprise that it has been outperforming the market.

railway ties

Stella-Jones’s stable business beats the market

Stella-Jones has been outperforming the market. In the last 10 years, its annualized returns were over 27% while the S&P 500’s  annualized returns were 6.3%.

More impressively, since 2005 when it started paying a growing dividend, the Stella-Jones stock has appreciated 2,800% — a 29-bagger! That is, a $1,000 investment would have turned into $29,000, excluding the dividend paid. In fact, the 2.5% yield in 2005 would have turned into a yield on cost of 21% by 2016! Read More

Linamar Corporation Q2 2016 Analysis

About Linamar Corporation

Auto parts manufacturer assembly line

Linamar Corporation (TSX:LNR) manufactures highly engineered products, powering vehicles, motion, work, and lives and is ranked 33rd among the top 100 automotive suppliers in North America.

It has 57 manufacturing locations, 6 research and development centres, and 21 sales offices in 17 countries in North and South America, Europe, and Asia.

Q2 2016 and half-year results

Today Linamar rose a whopping 10% after releasing its Q2 2016 results.

Linamar increased its sales by 21% to record levels of $1.66 billion and increased its operating earnings by 29% to record levels of $213.7 million compared to Q2 2015.

The double-digit growth is attributable to its Powertrain/Driveline segment, which delivered strong sales and operating earnings growth of 26.1% and 45%, respectively. This more than covered for the “meh” results from its Industrial segment, whose sales increased 2.1% and operating earnings declined 3.3%, because the Powertrain/Driveline segment contributed about 84% of the sales and 79% of the operating earnings in the first half of the year. Read More