RiskGrade Chart - Oct-07

Below is a RiskGrade chart for stocks that currently pass my various screens. Only Samuel Manutech and Domtar fall below the red line and thus should not be considered further.



Below is a RiskGrade chart for stocks that currently pass my "buy-and-hold for two months" screens.

Table of Key Values

Below is a table which provides key values for some of the Canadian stocks I currently own.

Analyst Recommendations

Following are the analyst recommendations for Canadian stocks which I have recently purchased or am about to purchase. A value of 1.0 is assigned to stocks which are rated as a "Strong Buy" and a 5.0 is assigned to stocks which are rated as a "Sell".

Energy Savings Income (SIF.UN) ... 1.00
Trinidad Energy Services Income Trust (TDG.UN) ... 1.25
Focus Energy Trust (FET.UN) ... 1.33
Major Drilling (MDI) ... 1.38
Celtic Exploration (CLT) ... 1.50
Martinrea (MRE) ... 1.58
Domtar (UFS) ... 1.82
Toromont (TIH) ... 2.17
Canadian Western Bank (CWB) ... 2.50
Stella Jones (SJ) ... 2.67
Newalta Income Fund (NAL.UN) ... 2.75
North West Company Fund (NWF.UN) ... 3.00

It will be interesting to look back a year from now to see how valuable the analysts rankings were.

Out of curiosity, I put the above noted stocks in a RiskGrade chart so I can look at it in twelve months to see if there is any value in the chart in terms of predicting whether a stock is reasonably priced given the risk associated with it.

Recent Purchases

This week I have added to my holdings in Stella Jones (SJ) and Martinrea (MRE). Also, I purchased shares of Le Chateau (CTU.A). Le Chateau is a leading Canadian brand in specialty retailing offering a broad array of contemporary fashion apparel, accessories and footwear for women and men. The Le Chateau brand is sold exclusively through the Company's 195 retail locations across Canada, except for five locations in the New York City area. The Company's outlets are primarily found in major urban shopping malls and complemented with high pedestrian-traffic, street-front locations. The Company has a 47-year tradition of vertical integration from design and manufacturing to retailing.

Le Chateau was trading at a P/S of 1.08, a P/E of 12.78, has interim revenue growth of 15.7% and interim earnings/share growth of 36.4%. Add to that a 3.5% dividend. Earnings per share has increased every year since 2002.

Another Canadian addition to my portfolio this week is BFI Canada Income Fund. BFI Canada Income Fund, through its subsidiaries, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste collection and disposal services for municipal, commercial, industrial, and residential customers in five Canadian provinces and nine states in the United States. The Fund serves over one million customers with vertically integrated collection and disposal assets. BFI has increased its payout every year since 2002 and currently yields 6.6%. Interim revenue is up 15.2% and interim earnings/share is up 43.5%. On September 07, 2007, ScotiaCapital issued an Outperform rating for BFI.

Aggressive Small Cap Purchases

I recently purchased shares of Sino-Forest, Allen Vanguard, Timminco, ADF Group, Migao and Red Back Mining. Fortunately, I purchased Timminco just before it jumped 30%. I have a 49% profit in Timminco already. Too bad they all don't work out that way!

Energy Savings Income Fund

Today I added to my holdings of Energy Savings Income Fund. Energy Savings' business involves the sale of natural gas and electricity to residential, small to mid-size commercial and small industrial customers under long-term, irrevocable fixed price contracts (price protected for electricity). Energy Savings offers natural gas in Manitoba, Quebec, British Columbia, Illinois and Indiana and both gas and electricity in Ontario, Alberta and New York and, effective May 2007, electricity in Texas. By securing the price for natural gas or electricity under such contracts for a period of up to five years, Energy Savings' customers reduce or eliminate their exposure to changes in the price of these essential commodities.

Energy Savings recently announced is 18th distribution increase and currently yields 8.1%. Its earnings are stable (r2 = 0.90)

Highlights for the quarter ended June 30, 2007 included:

- Customer base reached 1,678,000, up 6% year over year. Gross additions through marketing were 95,000 up from 62,000 in Q4 and 65,000 in Q3.

- Sales (seasonally adjusted) up 17% reaching $374.3 million year over year.

- Gross margin (seasonally adjusted) of $55.3 million up 15%.

- Distributable cash after gross margin replacement of $30.8 million ($0.29 per unit) down 2%.

- Distributable cash of $26.7 million after all marketing expenses up 24%.

- Net income of $25.9 million, up 135% from $11.0 million year over year.

- Distributions up 19% year over year ending the quarter at $1.165 per unit with a subsequent increase to $1.21 per unit announced effective the September 30th payment.

September RiskGrade Chart

Below is the RiskGrade vs Return chart for my current holdings. Falling below the line are Domtar, Chemtrade Logistics, Molson Coors, Innvest Real Estate Investment Trust and Toromont. Stocks below the red line are generating insufficient return for the amount of risk.

RiskGrades for Aggressive US Stocks

Below is a RiskGrade vs Return chart for a number of US stocks that I considering purchasing. By posting these charts here I hope to review the returns from the stocks at some point in the future to determine if there is any value in the chart.