Russel Metals (RUS.TO)

This is a “peak of the cycle” stock, i.e., it requires a very good economy with strong demand for its products in order to make a lot of money. This is not the kind of stock he likes. The 5.4% dividend is probably safe.

Just reported and it looks like they beat the numbers the market had been anticipating. Expects the stock price to move higher tomorrow. On a longer-term basis, a lot of this has to do with the oil/gas market, as they do a lot of pipes. The dividend has fairly good coverage, so feels it is fairly safe with some possible growth.

As of Q2, earnings are up 31% year-over-year on better margins. He sees the recovery in steel prices continuing. The wildcard is what happens in their tubular energy sector. Has a high dividend. 80% payout ratio this year and 74% next year. Trading at around 8.2X EV EBITDA versus its peers at around 9.6. Good balance sheet. A good story.

This is at what he considers resistance. If he had a “break even”, he would be a seller. His model price is $44. In the last 8 years, EBV 3 has been a significant resistance for this stock. There is more value elsewhere.

A steel service business. They don’t make steel, but they fabricate it, bend it and shape it to pipe, etc. They do a lot of business in Northern Alberta, and things are picking up there. Doesn’t think it is too late to buy this.

Great management. Operates in a pretty tough business segment, both industrial manufacturing and energy field services. He really likes management. Good dividend yield of 5.5%. If looking to purchase, wait for it to get to $22-$23.

This is going to go higher. It could have been a Top Pick. He is looking for $32 over the next 12 months. Its earnings were up last quarter by 31%. He likes the recovery in steel prices, and their tubular segment, which is linked to the energy sector, which has been improving. The dividend is pretty safe right now. 80% payout ratio on EPS for 2017. Trades at a multiple that is below its peers.

The chart shows a “head and shoulders bottom”. You get a shoulder, and then a low, and then the next low is higher than the last low. The stock is attempting to break the neck line, and the chart needs to show that it has definitely broken it. $30 would suggest that the “head and shoulders bottom” is in place, and it could have lots of upside. Wait for another dollar or so before buying it.

It has a 5.9% yield with a 74% payout ratio. Expect an 11% increase in earnings in November. The ROE is 10.5%. (Analysts’ target: $32.00).

There is a little bit of a bid underneath this whole growth profile area, particularly in oil and gas. Numbers show that the inventory is being worked off and there are a lot more rigs coming on. Chart shows a nice trend going from the lows at the beginning of 2016. Indicators are wanting to turn up, but are sort of bouncing around not sure what to do. A stock like this is going to be sensitive to all things economic. Wait until midweek next week and see what is happening with the FMC days. Take half your full position during that time. There is going to be a little resistance around $26, followed by more resistance around $28. There is a lot of seasonality on this. It usually has a fantastic August.

The dividend is sustainable. It was cut in the last major downturn and that may have been a mistake. We have seen an update in North American activity.

This provides steel to both energy services industry as well as mid-and small type manufacturing firms. That has been going well. They are seeing some infrastructure demand in Ontario and Québec and energy demand in the West has stabilized and started to pick up. Located both in Canada and the US. Dividend yield of 6%.

He owns bonds of this company. It is a very cyclical stock. They have cut the dividend before and will again if need be. It is going to be a volatile stock, but it is a very well managed company.

This is part of infrastructure and energy recovering. Q1 EPS beat by 30%. He is fairly bullish on steel prices. They have a competitive advantage being Canada’s largest distributor. He models earning recovering by 55%. They also have a pretty good balance sheet. Dividend yield of 6.1%. (Analysts’ price target is $31.)

Payout ratio is about 102%, down a lot from 2016. It is starting to do a lot better. Metal prices have come up a lot. One of the largest distributors in Canada. Their energy segment, a pretty big component of their business, is a bit of a wildcard. He has been adding to this a lot over the last 6 months. Dividend yield of 5.7%.