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Has anyone taken a look at CML Healthcare Inc.? I've been looking at it on and off - it seems like it has solid financials (7.82% dividend yield as well) - the only thing I'm not overly fond of is its P/E ratio but the stock price is still quite low. It looks like they have reduced their assets over the past two years but profits are increasing. Anyone else think this is a good buy, or do you recommend something else in the health care sector?
 

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I had looked into CML a while ago, so don't recall all the details and analysis, but it wasn't very attractive (to me) then.
The yield was too high and they had recently botched a US expansion.
I also don't like the fact that their fate is so heavily dependent on govt. regulation.
Who knows when what regulations may change and fees for their services reduced or their margins capped.
Their dividends haven't changed in a while and the stock has done nothing since they converted.

If you want to play the local health care sector but don't like pharma stocks like Valeant, take a look at a health care property REIT like North West Health Properties (NWH).

Disclosure : I have no position in any of the companies mentioned above.
 

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I hold CML as a core holding representing a small percentage used mainly for income with the 8.88% current dividend yield.
The stock price is pulled up and down due to factors such as low volumes, shorts, large institutional shareholders rebalancing, stops being triggered because of sudden decrease etc.
Looking at the charts will tell you that it bottoms out at this time of year, try and take advantage of the dips

CML had a new CEO take over earlier this year, the US expansion was botched by the old CEO.
Based on their last conference call the new management team sees the dividend as safe, given the 2nd quarter results and the new long term $400 million line of credit in Feb/12 with a 5 year maturity

They plan to issue a news release before the market opens on September 18th detailing the Company's new growth strategy
The Ontario liberals have already cut some income from the lab testing services and medical imaging services, so the worse is most likely over
 

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........I also don't like the fact that their fate is so heavily dependent on govt. regulation. Who knows when what regulations may change and fees for their services reduced or their margins capped. Their dividends haven't changed in a while and the stock has done nothing since they converted.
Based on their last conference call the new management team sees the dividend as safe, given the 2nd quarter results and the new long term $400 million line of credit in Feb/12 with a 5 year maturity.They plan to issue a news release before the market opens on September 18th detailing the Company's new growth strategy.The Ontario liberals have already cut some income from the lab testing services and medical imaging services, so the worse is most likely over
See link http://business.financialpost.com/2...-healthcare-target-warns-dividend-is-at-risk/ RBC Capital obviously thinks that the dividend is not safe and reduced target price from $11 to 9.50. I own this stock and watched its gradual way down since Oct 2010. Harold is right, stk depends too much on provincial regulations. Several provinces have cut spending on lab work and medical imaging and I don't think the worst is over yet.

Edit: We have 35% capital loss on this stk and are thinking of selling it prior CML's announcement of growth plan
 

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dividend cut

Annual dividend reduced from 0.75 to 0.53

CML HealthCare Provides Corporate Update
- Announces plan to divest diagnostic imaging business - Annual dividend of $0.53 per common share to be paid on a quarterly basis - Announces intention to implement a normal course issuer bid - Peter van der Velden joins the Board of Directors - CML to host investor call today, January 16 at 10:00 a.m. (ET)

http://tmx.quotemedia.com/article.php?newsid=57276783&qm_symbol=CLC
 

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wooo that was a close one. I was looking at this one a couple days ago and I was close but decided to take a pass - if I remember because the payout was too high.
Now take that same thought process and ask yourself what you would have done if the dividend had only been $0.53 per year instead of $0.75. The reason I suggest this is because what you did is exactly what many others did. Pass on buying this stock because the payout ratio was more then 100%, and hence why the stock price was declining. So the important question today is, will all the new investors that review this investment a few months from now, decide to pass on it or perhaps decide to buy it. Those decisions will drive the stock price going forward.
 

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The first one was just an adjustment for the income taxes that the Feds put on them and other income trusts, therefore I would call it only one cut, but that is just my opinion and not overly relevant.

One has to see that at some point that cut will get moved to the history books but the stock will still sport a "very wide moat" business with a 10 x PE ratio, very low capital expense requirement, a 7.5% dividend yield with an 80% payout ratio.

I can't see that lasting, but again, just my opinion.
 

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The reason I suggest this is because what you did is exactly what many others did. Pass on buying this stock because the payout ratio was more then 100%, and hence why the stock price was declining.
This is one of the first few things anyone must look at before investing in any company. You may bypass some stocks that pay > 100% that might later turn around, but more often than not the risks are not justified.

One has to see that at some point that cut will get moved to the history books
At a minimum, I would wait for an entire year of reporting (4 quarterly reports) before re-assessing. Maybe longer, but that's the minimum. You might miss out on a quick bounce, but long term gains come from years of holding successful stocks, not betting on turnarounds shortly after dividend cuts.
 

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This is one of the first few things anyone must look at before investing in any company. You may bypass some stocks that pay > 100% that might later turn around, but more often than not the risks are not justified.



At a minimum, I would wait for an entire year of reporting (4 quarterly reports) before re-assessing. Maybe longer, but that's the minimum. You might miss out on a quick bounce, but long term gains come from years of holding successful stocks, not betting on turnarounds shortly after dividend cuts.
problem with that strategy, while you wait and see company improving, it can double easily, remember stocks are looking into the future and if funds see clc doing something right they will pile in... but as usuall there's 2 sides, you might buy now expecting grow and the company does the opposite and before your know you in -50% paper loss
 

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Right, on the 14th you were admiring the 'nice juicy dividend', but that's not what held you back, what was worrying you were the last 2 quarterly reports. I remembered for you. :chuncky:
hahaha yes and the quarterly reports!! Can you do that trick on demand? I could take you to work with me for show and tell ;)

OptsyEagle: I get what your saying but as everyone else has said is it worth the risk? I don't mind taking a flyer here in there in fact I'm prone to it but this is one I passed on. Perhaps if I knew the stock/company better and had some real faith in it I would change my mind. Simply looking at the techinals wasn't enough for me.
 

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Did I mention that the business has a "very wide moat" and sports a 10 x PE ratio, has very low capital expense requirements and now has a 7.5% dividend yield, with an 80% payout ratio. You also have to note that medical laboratory testing is almost a monopoly business for CML, in Ontario anyways. At worst a duopoly on some tests, but there not the majority.

Yeah sure, new crap can happen, but it looks to me that the company has pretty much gone back to its Ontario/BC medical tests roots. In that business I would like to think that the expanding number of elderly customers this country has, that are going to need a lot of medical tests, will more then make up for any government cost controls that might be enacted.

.
 

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Yeah sure, new crap can happen...
I get what you are saying OptsyEagle, and if one already owns the stock, tough luck & we have all been there, but if you don't, and the problems are visible via financials, etc., it's best to be patient.

Sure there are times when you will definitely miss the boat on a particular troubled stock by waiting too long to get onboard; as the saying goes: 'you snooze you lose', but not really, as there is never a shortage of beaten-down stocks these days in any sector! There is always uranium stocks. :)

I would not necessarily be against buying shortly after a reduced dividend; it would depend on the stock & other factors that you mentioned, but I would not immediately jump at the idea.

Had thompsg been admiring the 'nice/juicy dividend' last July as opposed to earlier this week, & ignored the financials & bought at $10 as a result, he would now be down around -30%. Had he bought earlier this week, even if the stock were to drop an additional 20% after he purchased it, it would be better than being down -50% [-30% + additional -20%]. Easier to recover -20% than -50%.

Often times the cautious wait could make a big difference, even if you had just purchased 100 shares:

- 100 sh @ $10 = $1,000 [last July's price]
- current -30% drop = $700
- losses = -$300

- buy today 100 sh @ $7 = $700
- assume a drop of -$20% = $560
- losses = -$140

Btw, stop-loss orders can't always protect you.
 

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Not to quibble the obvious, but the 30% drop would still have been mitigated somewhat by the "juicy" divvy, so your math is a little off ie the $300 loss is against a $60 divvy gain - %10 annual for six months.
I left out the obvious on purpose, as I knew somebody who would be paying attention would bring it up. :)

However, the point that I was trying to make, was for the stock to be bought when the downside potential was already limited, hence the focus was on the share price, not the dividend per se.

Not to compare, but I had bought MFC just 2 months after the div. had been reduced, when in fact, I should have bought much later [but I did not understand all the other factors back then, ie: interest rates, etc.].
 
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