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Saw this posted on financialwebring by Opsyeagle. I would like anyones thoughts and opinions on this company. They operate 23 car dealerships accross Canada. (Cyclical, I know)

Recently, Q3 profits more than doubles, dividend raised 20% now. Annual dividend 11% !! P/E is 7.7

Thoughts?
 

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Don't expect a lot of growth from the company since it has indicated that it doesn't see much expansion from new dealerships in the near future. For some reason the auto makers don't like giving new dealerships to public companies anymore.

The good news is that the CEO (also the largest shareholder) has decided to significantly boost the dividends to shareholders since the current network of dealerships it owns spin off a ton of cash flow and it doesn't need it for growth.

It is well financed, is growing internally and currently sports an 11% yield. This yield is produced from a 46% payout ratio if you use the last few quarters of income and about a 30% payout ratio when looking at free cash flow per share.

The stock currently trades for 4.2 times earnings. This is what it did in Q3:

AutoCanada
2011 Third Quarter Operating Results

• Revenue increased 16.8% or $38.8 million to $270.1 million
• Gross profit increased by 17.8% or $6.7 million to $44.7 million
• Same store revenue increased by 21.6% or $46.5 million
• Same store gross profit increased by 22.9% or $8.2 million
• EBITDA increased by 104.8% to $8.2 million from $4.0 million
• Pre-tax earnings increased by 155.6% to $6.9 million from $2.7 million
• Net earnings increased by 163.7% to $5.2 million from $2.0 million
• The number of new vehicles retailed increased by 16.3%
• The number of used vehicles retailed increased by 11.2%
• Repair orders completed for the quarter decreased by 1.4%
• Parts, service and collision repair gross profit increased 3.5%
 

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Not bad. What I think is interesting about this stock is that it has actually been undervalued for quite a long time, while it just plugged along. It had some issues during the last recession but it's repair business proved to be a reasonably good hedge that the stock market seems to have ignored.

My opinion is, as ddkay has indicated, the only thing keeping it from going up is that it hasn't already gone up. When a stock has an 11% yield and trades at 4.2 x EPS, investors get skeptical.

I suspect that when this stock eventually doubles, and sports a 5.5% yield and trades at 8.4 x EPS, all with a 46% payout ratio and growing sales and profits, investors will feel more comfortable buying it then, then they do right now. As ddkay may say, it would then also have a good chart.

I have noticed, over my investing years, that the lion's share of investors prefer to wait until a stock has already gone up, before they make their first purchase. In any event, 11% dividend is not to bad, while one waits for that.
 

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Very abnormal move, ~200K went into the stock today. It may have broken out but now it's extremely overbought. I would wait for the week to pass for confirmation this thing has reversed direction. On my watchlist!
 

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Big 12% gap up this morning. Perhaps the CMF effect? :)
Certainly not the first time I've seen a stock pumped on here or FWF go on a tear right afterwards. I think these forums get a lot more quiet readers than they do active posters, and it does have an impact in small lesser known stocks like this.

I'd be curious to see the 'view' count on this thread.
 

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The number of views is listed on the main forum page. It was 158 when I clicked to make this reply. Hardly seems like enough to make an impact on the stock market. :)
 

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The number of views is listed on the main forum page. It was 158 when I clicked to make this reply. Hardly seems like enough to make an impact on the stock market. :)
Recent normal volume on this stock seems to be in the 1,000-10,000 shares per day range, so it could certainly be moved by a few dozen readers here all deciding to buy at once. Volume yesterday was 80,000.
 

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Stocks still going up. They just acquired another 2 dealerships (Voltswagen dealerships) so I guess I was wrong on their difficulty in growing out their network.

Keep in mind that although AutoCanada's dividends are quite high (8.7% yield) they will still only amount to $2.4 million dollars this quarter. They generated $10.2 million of free cash flow (cash available after maintenance capital) in the last quarter. This leaves plenty of money in the coffers for future investments, acquisitions and working capital. Or they may repay debt with it or pay it out in future or special dividends.

Anyway you look at it, this sucker is cheap.
 

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What a monster! Up 30% since this thread started...

Hey KaeJS if you're reading this thread, go back 1 page look at post #7 and tell me what do you see? :p
 

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I hope it is a Fortress Paper.

The main difference for me is that I would give AutoCanada about a 100% growth potential from here, unless new opportunities arise.

Fortress Paper's potential, however, far exceeds that.
 

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No fill yet :( maybe tomorrow, this thing has barely had a breather it should come down to at least 5.40s or lower 5s. It can just as easily lose half of its value over night though so buyers gotta be careful.
 

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I'm pulling my bid for now, need clarity on the macro situation, financials are still weak and we could see a 2008 scenario soon
 
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