DH Corporation (DH.TO)

TOP PICK
It has room to appreciate. It is cheap, safe and stable.
BUY
Has a fantastic track record. Managing to squeeze more margins through innovative thinking and new products.
DON'T BUY
Has been one of the stars in the business trust area. May actually have turned a corner and be facing a decline in volumes which is affecting their core business. Doesn't see any opportunity for capital gains.
TOP PICK
Pays about 8%. Haven't done well in the market over the last couple of quarters. Excellent track record in terms of operating their business conservatively and increasing distributions. Low debt. Made an acquisition which the market didn't like but she feels will be valuable in the longer term.
DON'T BUY
The chequing industry is a very mature one. Cheque usage has been declining for years and is currently in about a 3/5% decline. Company has done a good job in mitigating a lot of the headwinds. Recently made an acquisition in the mortgage business but they paid a huge multiple, about 14 X cash flow. Timing is at the peak of the cycle.
BUY
Made an acquisition that is primarily involved in the brokerage business. The stock has fallen off quite a bit. There should be continued growth and thinks the stock has been oversold. Good value at these prices.
TOP PICK
Have increased distributions 7 times since they went public. Recently acquired Filogix, a high-growth software business that puts together a mortgage lender and mortgage broker. Sold off too much.
BUY
Dominant player in the cheque industry. Although cheque usage is declining 3% or 4% per year, they are managing it by some creative ways. Down because the overall market is down. Acquired a software company unrelated to their more business. Good value.
TOP PICK
They provide the cheque services to a lot of the financial companies. Decent pricing power. Good, steady cash flows. Cheque usage has declined, but they have been able to expand into other areas and their margins are improving. Good value.
BUY
Have been subject to a little bit of natural decline in cheque usage but have introduced innovative new programs. A good solid name.
BUY
Should be a core holding in most income trust portfolios. Have a fantastic track record of growing their earnings despite their product of paper cheques.
TOP PICK
Have long term contracts with all the major Canadian banks. Good visibility and stability in their revenue. Have a good track record of offsetting the slow decline in cheque usage. Very conservative in their payout ratio. Very attractive at these levels.
DON'T BUY
The major supplier of printed cheques to the chartered banks. Cheque usage has been in decline. Have a lot of cost efficiencies. Has had some earnings revisions downwards.
PAST TOP PICK
(A Top Pick July 15/05. Up 9%.) Slow and steady. Good core holding for a portfolio.
PAST TOP PICK
(Top pick May/6, up 10%)
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