mercredi 20 juillet 2016

What'so great with Lassonde?

I've been watching Lassonde (LAS-A.TO) for a couple of years now and I'm amazed at how the stock performed since then, given the fact that, on paper, it's not such an amazing stock.

First, what is Lassonde? Plain simple: A company that produces and sells a wide variety of juices (mainly fruit juice).

The company hits an all-time high today at 206$. At the beginning of 2016, the stock was selling at 162$. It's quite a performance.

But, as I said, on paper, it's not that incredible:

Beta: 0,29 (pretty low)
PE ratio: 22 (pricey based on historical norms)
highest PE ratio last 5 years: 20
lowest PE ratio last 5 years: 12

Dividend yield: 1%
Dividend growth rate last 5 years: 7,5% per year
Payout ratio: 18% (pretty low)
EPS growth rate last 5 years: 11% (OK)
EPS growth last quarter VS same period last year: 67% (great!)
ROE: 14 (absolutely average)
ROE last 5 years: 14 (absolutely average)
Total debt: medium-high (more than 10 times earnings)
Number of shares oustanding: no dilution since at least 2006

I look at that and what I can say is that company has had an exceptional growth in the last year. However, the historical ROE is average and the debt is too high for me.

But it's probably one of the least risky investment anyone could do (precision: not risky at a fair price, and I'm not sure that 22 times earnings is a fair price). How could a business selling juices could have any problem with actual politics or be involved in any scandal (except of course if they put some rotten fruits in their juices)?

So, my thoughts are: great sector, great growth, price a little high and OK business.

The only reason why I'm writing about this business is because of it's performance. It may look a little arrogant but, with such numbers, I don't see how I could have been interested by that business. Usually, great performance comes with more great numbers than that. 

5 commentaires:

  1. The thing is, pretty much everything on the market seem overvalued to me.

    Maybe if there is a correction I would be looking to buy stock like Lassonde. But right now I'm holding still and even selling some positions that I dont like anymore.

    1. Frankly, with a ROE of 14, I don't see why I'd go with Lassonde. Logistec has a better ROE (juste un peu mieux) and operates in an industry which is harder to penetrate (in my view).

  2. The key statistic for Lassonde is CASH FLOW. This is from yahoo finance:

    CGI 17.6 billion market cap & 881 million levered free cash flow

    Couche-Tard 33.8 billion market cap & 740 million cash flow

    Lassonde 1.4 billion market cap & 113 million levered free cash flow. They got nearly 10% of their market cap coming back as levered free cash flow (8% actually).

    1. I don't evaluate stocks with cash flows. ROE and growth in earnings are much more important to me.

  3. You should, cash flow are money, earnings are not.