jeudi 21 avril 2016

Savaria (SIS.TO)

In a civilization where people are older and older, there's nothing like a business selling things to help these poor old seniors to gain some mobility. Because old people often have lots of money and they don't care spending it to be mobile... for what? 

To see nobody. To wander in a fucking walmart maybe. 

But before they die in total indifference, old people like to move a little bit. So, Savaria (SIS.TO) is there to sell them elevators, wheelchairs and other things at a high price. What a joke. These people have worked all their fucking life to earn money. And that money eventually serves to help them enjoy JUST A LITTLE BIT of their last years of life with some technical help. Neil Young had it right: It's better to burn out than to fade away. 

Ok, enough for the pep talk.

Savaria is a rare example of a company that achieves high growth in Canada and Jason Donville may say something about that company in BNN in the near future. Because EPS have achieved a 19% annual growth over the last 5 years and 44% growth over the last year. These numbers are actually pretty good. There's very few companies in Canada with a growth like this.

The ROE has been around 18 over the last 5 years and is actually 21 (great ROE). And the debt is at a very reasonable level (less than 4 times earnings, which indicates a good management).

However, liquidities appear a little low. And the biggest problem is that Savaria appears to be a champion of dilution. Which means that the company has issued 39% more shares over the last 3 years... It's pretty bad if you ask me.

With that kind of company, you can bet that every high increase in the price of the shares will be followed by many extra shares issued in the market.... which will lead to a drop in price of the shares. 

So, that business has diarrhoea. Shares are like shit coming out of the anus of the company in a constant way.

To conclude, the price is OK, at about 17 times next year's earnings and the stock has had a nice rise over the last 7 years. I don't see how things could turn completely wrong at this point.

So, almost every indicator looks great, but on the dilution aspect, it's not my kind of company.

I may buy some shares anyway. But not before they issue some new shares, which should come sooner or later...

5 commentaires:

  1. Saying that senior waste their time in Wal-Mart is offending.

    They go to McDonalds too.

  2. Yeah, I forgot that. And the place they seem to prefer is Tim Horton.

    Quand même bizarre d'échanger en anglais avec un autre québécois...

  3. I don't know how to say tongue in cheek in French but keep it up Penetrator.

    I'm curious what you think of the Concordia situation!

  4. I've sold my shares a couple of weeks ago. There might be a buyout by Blackstone and I may miss a lot of money, but I'd rather stay with my stocks that I understand.