Comparison of Stock of Four Canadian Companies - Essay Example

Portfolio Management Comparison of Stock of four Canadian Companies To help in portfolio management an analysis and comparison of the choices available is the first step in risk management. We look at the stocks of four Canadian companies with a view to maximize both short and long term gains with a balanced and carefully considered selection. Kangaroo Media Inc. incorporated in 2000 with is headquartered in Mirabel, Canada is involved in the manufacture, commercialization, sale and rental of portable wireless audiovisual multifunction entertainment systems. The company operates through its subsidiaries in Canada and the United States. The company offers Kangaroo -TV, a medium for targeted advertising, merchandising, market surveying, and branding1. The recent history of the company shows that it has continued making losses and its share prices have dipped to CAD 0.49 (January 11, 2008: close) - an all time low. The 52 week high is recorded at $3.86 as recently as on December 2, 2007 - a drop of 87% in 17 trading sessions. The plunge thereafter is not surprising, as the stock has found its rational floor from an all time high of $7.65 on May 12, 2006. The rapid fall is despite the news emanating from the company in recent times: Kangaroo TV Launches New and Unique Formula One Content at Brazilian Race2 (October 24, 2007) Kangaroo Media appoints Robert Mimeault as President and COO3 (November 1, 2007) Kangaroo Media declares third quarter 2007 financial results4 (November 8, 2007). The share price movement indicates no connection with stock market indices; with a beta of -0.17 compared with the S&P Index. None of the other indicators like PE, Ask-Bid gap throw up any relevant numbers for analysis. Any investment in this share can only be based on a gut-feel. Technology employed by the company is unique and has good market potential. The only reason for holding this stock is the likelihood of a takeover by a larger and financially stronger company - then too the new company is not likely to offer a very high price to shareholders in case of an aggressive takeover. This stock is useless for prudent portfolio management. Any stocks held should be sold at the best possible price. World Point Terminals, Inc. and its subsidiaries are engaged in operations of liquid bulk storage and terminal facilities in the United States and the Bahamas. They provide storage, blending, and transportation of crude oil, refined petroleum products, and other liquids to their customers. The company's center point terminals store residual oils, such as liquid asphalt and heavy fuels; and lights oils, such as gasoline, diesel, and heating oil. It also provides crude oil storage services through its south riding point terminal facility. In addition, the company, through a joint venture, operates a fleet of tugs providing marine services5. The company was founded in 1942. The company's stock performance has been good. Some of the key performance indicators are: PE ratio of 21.2, EPS $7.80; 52-week high $26.50; 52-week low $13.68 and present price $15.00 (January 9, 2008 close). We observe that the movement of the stock take place in a narrow band and is mostly linked to the S&P Index as indicate by a beta of 0.966. Some of the key developments announced by the company in recent times are: Financial Reports for the third quarter and nine months ended June 30, 2007 reported7. World Point Terminals Inc. Announces Earnings Results for the First Quarter Ended March 31, 2007 World Point Terminals Declares Extraordinary Dividend Payable on December 15, 2006 The latest financial report is heartening for the investor and performance on all fronts has been good. Net profit margin is up to 30.51% for the quarter and 28.65% for the first nine months as compared to 24.41 for 2006. Return on equity is up from 10.07% in 2006 to 25.35% for the quarter; the year to date return of 11.98% reflects the temporary setbacks the company had in the first six months and it appears to be emerging out of its troubles. The extraordinary dividend (the company does not pay dividends normally) $8.00 per common share in December 2006 may hold attraction for a new investor as speculation of another dividend this year is strong. The share is at a price close to its lowest level that resulted, perhaps, because of concerns over crude prices and availability, and is showing signs of recovery. It is recommended to buy this stock. Cusac Gold Mines, Ltd. engages in the acquisition, exploration, development, and mining of precious metal resource properties in Canada. The company holds interest in the Cassiar Gold property located in the Cassiar Mining District of the Liard Mining Division in Northern British Columbia comprising approximately 43,243.44 acres of mineral claims. The projects within this property include gold production from the Table Mountain Mine; gold exploration in the Taurus II Project area; and gold exploration in the Taurus Deposit area8. The company was acquired by Hawthorne Gold Corp. on November 9, 2007 for $13.6 million at an offer price of $0.12 per share9 representing a marginal increase of its currently traded price of $0.09 per share. The transaction is going through completion of the requisite formalities. With the proposed issue of one share of Hawthorn for every seventeen Cusac shares the stock holder is likely to benefit by about -28 percent. 17 shares of Cusac @ 0.09 represent an investment of $1.53 and Hawthorne share is currently trading at $1.96 and showing an upward trend. This is manifest in the marginal rise of the stock from $0.07 to the present $0.09. There is no benefit of carrying out a financial analysis of the performance of Cusac since that has no meaning in the present circumstances. Looking into the profit that might be made as a result of the takeover it is better to hold the shares of Cusac. Ascalade Communications Inc. is into the business of designing, developing and manufacturing of digital wireless communication products. The products are branded for retailing companies - Ascalade has no brand of its own. Products include digital cordless phones, VOIP phones, digital wireless baby monitors and digital wireless conference phones10. With an EPS of -$0.36 and a projected loss of $2.9 million in the third quarter performance11 the present price of $1.20 (January 11, 2008 close) is likely to go down further. This is despite the move of the company to move its operations to their new factory in Qingyuan, China12. However, once the benefits of cheaper manufacture in the new facility start kicking in the financial performance of the company will improve and the share price will reflect this with a substantial rise. The present price can be expected to fall over the next few months, and therefore it is better to wait for some time and buy in small lots once the price level reaches the $1.10-1.00 bracket. 119... 947132795 Read More