Wednesday, June 13, 2012

McCoy Corp

When should you sell in a bear market? See comments blog.

I own this stock (TSX-MCB). I bought this stock in February 2011 and then in May 2011 to soak up small amounts of extra money in my TFSA. This is a dividend paying small cap. I have lost 3% per year on this stock. Of this negative total return, I got 2.22% in dividends per year. My capital loss would be 5.23% per year. This is not bad considering how bad the market has been recently. I have little invested in this company.

This is an industrial stock servicing the energy industry. Dividends have been inconsistent. It is a small company and they pay what they can when they can. In 2010, after two years of earning losses they discontinued the dividend. They restarted it in again in 2011. There has been two dividend increases this year and the dividends for 2012 are up 200% compared to 2011.

The most recent increase, which is 66.7%, takes place in June of this year. Personally, I do not mind investing in companies that pay dividends in such a manner. It is much better than companies paying dividends that they cannot afford to. I do live of my dividends, but different companies have different business cycles, so I have never had a time when I earned less in dividends than in the prior year. I also do not have a big portion of my dividends in such stock.

For this stock, total return is very good over the past 10 years, but really lousy over the past 5 year. This stock is down 11.2% per year over the past 5 years. The dividends were at 1.5% per year, so the capital loss was 12.7% per year. Over the past 10 years, this stock had a total return of 14% per year. Dividends gave 2.1% per year of this total return. The capital gain was 11.9% per year.

On this stock, the growth is better over the last 10 years than over the last 5 years. The growth in revenue is 1.3% and 14.4% over the past 5 and 10 years. The growth in revenues per share is a negative 5% per year, but over the past 10 years is 4% per year. Per share growth is less because the number of shares outstanding has been growing quite fast at 6.5% and 10% per year over the past 5 and 10 years. Shares have grown because they raised capital in a few years by issuing shares.

Earnings per share growth are 0% over the past 5 years, but 46% over the past 10 years. About 10 years ago, this company had negative and very little in earnings. Cash Flow per share growth is 2% over the past 5 years and 15% over the past 10 years. Growth in book value is 11% per year and 16% per year over the past 5 and 10 years. Book Value increased a lot under the new IFRS accounting rules.

The Return on Equity for this stock at the end of 2011was 16.9%. The 5 year median ROE on net income is much lower and not very good at just 8.5%. The ROE on comprehensive income confirms the good ROE on net income for the end of 2011, coming in at 14.5%. The 5 year median ROE on comprehensive income is also low at 7.5%.

Now on to the one really good thing about this stock, this is, the strong Balance Sheet. The current Liquidity Ratio is a great 2.38. The current Debt Ratio is also great at 2.76. The current Leverage and Debt/Equity Ratios are also quite good at 1.57 and 0.57, respectively.

I am pleased with my investment in this stock. This sort of stock can potentially provide great future dividend income. However, it is a very risky stock and you should not be buying it if you cannot stand to take on such risks.

McCoy provides innovative products and services to the global energy industry. McCoy's two segments, Energy Products & Services and Mobile Solutions, operate internationally through direct sales and distributors with its operations based out of the Western Canadian Sedimentary Basin and the US Gulf Coast. McCoy's corporate office is located in Edmonton, Alberta, Canada with offices in Alberta, British Columbia, Louisiana, and Texas. They are growing internationally. Its web site is here McCoy. See my spreadsheet at mcb.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

No comments: