Park Lawn Corp (PLC.TO)

Business is not going anywhere. They have made a number of acquisitions in Canada and the US. It is a sable, predictable business. You may see a takeout over the next several years.

The only publicly traded company in Canada where you can invest in the funeral and cemetery business. Cemeteries are very valuable assets, because it is very difficult to get new permits. This company is also able to build mausoleums on their grounds, so they have a huge future revenue stream coming. A very well-managed company. A little expensive, but that is because of the scarcity value. You buy this on weakness, and just put it away.

They have huge spare capacities. Nice dividend. He sees a lot of growth ahead of them.

A consolidator in the funeral home business. They are not doing this via debt. They use equity rather than debt. 3.25% yield. He still sees upside on this one.

Cemeteries. Price momentum on this is decent. A little too small for him. Good balance sheet and pays a 4% dividend yield. ROE’s are decent at 14%, and it is a nice, stable stock. He would feel comfortable holding this.

(Top Pick Dec 16/14, down 0.06%) A dividend of almost 4%. It meets all the requirements: High barriers to entry; High margins; Great demographic tail winds; Very well managed; Huge growth – they just built another mausoleum in New Westminster and expanding another. Free cash flow is growing along with revenues. They have 100 years of capacity. They just announced a huge acquisition in the US. They are still acquiring funeral homes and paying low multiples because they are the only ones looking at them. It is a great entry point.

This is more of a cemetery focused company and hasn’t had a significant presence in the funeral side, which is probably the better part of that industry. Trading at a fairly rich valuation multiple. He would prefer Service Corp (SCI-N) instead.

Parklawn Cementery. (PLC-V) He owns this stock and covers it. Pays a nice dividend. It has held up quite well in this market. They have had some growth.

This is a pretty good business. He really likes the industry. It has favourable demographics and is a consolidating industry. Very steady cash flow. This is a little more weighted to the cemetery side and less to the funeral business. He tends to like the economics of the funeral side a little more. Not particularly cheap, and at a more modest valuation level, he would probably look a little more closely at it.

A cemetery operator with an aggressive plan to consolidate the industry. Has seen these businesses grow like this in the past. Acquiring more cemeteries and also building a new mausoleum in Toronto. Economics look pretty attractive. Not dirt cheap, but if you can pick away at it. Pays a dividend. Once they start doing mergers and acquisitions, there will be more excitement about the stock. Dividend yield of 3.5%.

Only publicly traded company in this industry. 40 years capacity in cemeteries. Great dividend yield. Great way to play demographics.