Canexus Corp (CUS.TO) Buy, Sell or Hold

Canexus Corp (CUS.TO)

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COMMENT

Reported a disappointing quarter. Expected EBITDA of $30 million was actually $22 million. He owns through some of their convertible debentures. There is probably some upside on the stock from here but he prefers the debentures.

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TOP PICK

Manufactures sodium chlorate and chlor-alkali which is used for water treatment and pulp bleaching. Very attractive yield of 7.1%. Have $200 million of organic growth initiative that the have undertaken which will substantially increase EBITDA from 150 million to 180 million. Low cost manufacturer so even if things get really bad, they are going to survive. $10 in about 18 months.

COMMENT

This is been a real stunning performer in terms of execution. Dividend is very safe for now. Payout ratio is sound. EBITDA has doubled from the year before. Margins are growing and they have strength in all 3 segments. Getting a little pricey and the balance sheet is getting a little bit levered. He is selling this name into strength.

TOP PICK

Pays a good dividend, 6.7%. Industrial plants that produce goods that are essential for industrial growth. Growing at 20% per year.

PARTIAL SELL

Had a pretty good run for a couple of years now. Benefited from strength in North American paper bleaching and Brazilian strength. Now they are benefiting from strength in oil sands. Management says they have $200-$250 million of growth prospects over the next 5 years that is probably going to add $40-$50 million in revenue. Also had a lot of earnings momentum. Dividend is sustainable. Getting a little pricey. If you own, consider trimming your position.

TOP PICK

Chemicals that go in oil and gas and pulp and paper. A real play on a recovering economy. Nice yield 6.8%. They are organized as a trust, which is a positive for them.

PAST TOP PICK

(Top Pick Nov 11/11, Up 27.49% Total Return) Payout ratio will go well below 90% this year.

PAST TOP PICK

(A Top Pick Feb 2/11. Up 14.55%.)

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BUY

Going forward he sees significant growth in cash flows and payout ratio is very reason. Investors will be well rewarded in 2012.

BUY

Just reiterated very strong guidance that the sodium chlorate market is going to be very strong into 2013. This is due to restrictive covenants that were put on in the 2008 downturn so capacity utilization is going to be very tight. Earnings were better than expected by about 10%. 6% distribution is safe. Payout ratio of about 70% in 2012. Growing well in Brazil.

TOP PICK

Chemical manufacturer, primary 2 chemicals are for bleaching pulp or water treatment. This is the low cost producer in North America. Have $200 million of organic growth potential that he feels they will be able to realize in the next 12-18 months. Gives a good 9% yield. Payout ratio of 90%, going down to about 75% next year.

BUY

Sodium chlorate and chlor alkaline business. Great business with some good growth prospects. Looking for significant growth in cash flows in a few years. Illiquid stock. Very healthy distribution that is well covered.

BUY

Have a really great business. Say they still have pricing power in this month’s results. Distribution is safe with payout above 90%

TOP PICK

Produces sodium chlorate, a bleaching agent for the paper industry and chloral kali. Has invested significantly in its plans over the years and this is now coming to fruition. Expecting a 20% growth in cash flows over the next year. 8.7% yield.

PAST TOP PICK

(Top Pick Feb 17/11, Up 3%) It was just a long Buy.

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Canexus Corp (CUS.TO)