Russel Metals (RUS.TO)

Just bought Apex Distribution which will give them a good platform for future earnings growth. Lots of room to boost their dividend. Payout ratio of about 65%. Really good balance sheet so will probably make more acquisitions, which will fuel their growth. Try to buy on a bit of a pull back.

Margins move up and down a lot. Generate decent cash and good dividend. Just hold it if you own it for the dividend. 4.6%.

He would probably prefer to play this one on their convertible debentures although it is kind of up there as well. Likes steel and this company. 5% dividend yield should be safe.

Likes this as a company. 5.2% dividend is sustainable. Problem going forward is the pricing power on steel. Utilization rates of steel mills in US are in the low 70s and they need to be north of 80 in order to have any pricing power. A little expensive right now. Prefers in the low $20’s.

He was taking a more negative view after their earnings, steel prices were down. He was going to be a buyer at $23 and then they announced a letter of intent to buy Apex Distribution. If they can buy it, and he is pretty confident they will, it would be immediately accretive and generate EBITDA’s of about an extra $50 million. It will also give them immediate US growth opportunities that they wouldn’t have otherwise had.

Terrific looking chart which has a rising growth channel. Trying to break above its highs.

Decent payout ratio but is leveraged to iron ore prices. Had good earnings in the last little while. He is waiting for a lower commodity price before getting into a downstream channel like this one. Dividend seems to be safe.

Steel distribution company. Exposure to several industries, including oil and gas drilling (pipe supply). Has done a very good job of getting inventory management under control; working capital is down. Bond issue cleared up need for capital and there is room for dividends (5.6%) to increase. Health dividend that will grow over time.

This one has very strong seasonality, usually from October each year right through until as long as April. There is a fundamental reason to believe that this will work again this year. Steel prices have started to show increases indicating demand has started to recover. There will be an opportunity to buy the stock at lower prices.

Had thought that they would have to cut the dividend because it was cyclical. Stock went down but has come back nicely and is approaching a better time in the cycle. 5.6% dividend.