CSU Constellation Software
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Excellent results released Wednesday. It will be interesting to listen to the CC Thursday morning, just before the bell. The stock still looks pretty cheap for me. The balance sheet is very solid and management negociated a larger credit facility, which should help fund bigger acquisitions. With earnings close to $8 in 2011, I see the dividend going higher later this year.
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151 Posts
They must have some great minds behind the scenes to be able to work with many different types of systems and make it so profitable. Im not up on this one, but story sounds good.
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759 Posts
If the company is good, the fundamentals are good, the dividend is good, the balance sheet is good - so why is the market so pessimistic after the results - was there bad guidance given?
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151 Posts
prob just an irrational move, therefore a buying opportunity.
It's well valued at current prices, but also not a huge company at $2B. If there were a few decent sized investors who got in, say, at $20-30 or maybe even lower and wanted to sell their gains now that the stock is becoming more normally valued at ~10 times earnings, they may have decided to get out once it hit the 52 week high. The stock has doubled in the last year so lots of people will probably want to lock in gains.
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15,839 Posts
félicitations if u are holding.
longtime favourite of successful small cap specialists pembroke asset management. Their golden track record goes back to 1968, ie longer than CSU has been in existence though.
don't forget the dividend is paid in USD. Hold this stock in a USD account.
Is it from TDW? TDW has always given the 'hold' position on CSU. One thing I'm concerned is the remark from their President, Mark Leonard, who said that he anticipates making further acquisitions, which may consume the free cash flow. When that happens, CSU would not hesitate reducing or eliminating the dividend.
Not that they pay a high yield, but I wonder if shareholders would respond unkindly to his remarks or his plan.
Not that they pay a high yield, but I wonder if shareholders would respond unkindly to his remarks or his plan.
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2,342 Posts
you can always journal the shares over to USD
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915 Posts
No smart investor would have a problem with a company delivering a 35% return on equity hanging onto cash and reinvesting in the business.
Anyway CSU needs financing for the long term so it will be interesting to see how they deal with this, because cutting the dividend is not going to make a big difference.
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56 Posts
No smart investor would rely on a company delivering a 35% return on equity.
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Maybe I am being to subtle.
Try: "If you have a brain then you shouldn't depend on a company returning 35% ROE consistently because it is simply not possible to sustain."
If you don't know why then good luck - I give up.
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915 Posts
The point is an investor is extremely unlikely to take the dividends and earn a rate of return better than this company is delivering. Of course it won't be sustained indefinitely, and I never said that it could be.
When the firm is deciding how much to pay out and how much to keep they are considering 3 main points:
-The firm's present investment opportunities
-The investor's present investment opportunities
-Tax implications
Jason Donville has owned Constellation Software (CSU.TO) for a couple years now, with 60% returns
he recommended it on BNN again as a top pick expecting another 60%
he said $250 before he was right, said $300 now (its 295), and says next year will be $400
any CMFers have any comments?
he recommended it on BNN again as a top pick expecting another 60%
he said $250 before he was right, said $300 now (its 295), and says next year will be $400
any CMFers have any comments?
I personally wouldn't buy stock with P/E 58 and yield 1.5%
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