Opinions Robert Lauzon
Keystone North America Inc.KNA.TOHOLDApr 28, 2008
Operates funeral homes. Last year was particularly slow. Generally should be a stable business. US$ income that has been converted into Cdn cash flow, which has been a problem. Recently cut their distributions and are doing a rights issue and lowering their debt, which is positive but a bit dilutive. Fairly valued.
Robert LauzonUnknown
$6.60
Stock price when the opinion was issued
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TOP PICK
Yield of about 20%. Completely unknown. Converted from an income trust. Fifth largest funeral home, cemetery in North America. Great earnings.
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13% yield. Funeral homes in the US. Converted from a stapled income trust, which the US could lap up on a tax effective basis. Part stock, part bond.
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Wasn't actually structured as an income trust but as an Income Depository Security that consisted of a common share and some debt paper clipped together. They are proposing to replace debt with more equity. Rights were issued to unitholders. This allows debt to be replaced with common shares. He feels it makes sense to exercise the Rights.
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Very good management team. Won't be as impacted from the tax changes as it is mainly US operations. Because it is small cap, it seems to fly below everyone's radar. Would have liked to have seen a faster pace in consolidations and acquisitions.
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COMMENT
Funeral homes across the US. Stable business. Recession proof. Foreign exchange risk. Manageable debt. If you are a bull on the US$, it would be a good stock to own.
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