Russel Metals (RUS.TO)

A name he likes and has been purchasing it over the last month or 2. It has a path for growth through infrastructure, and pays a good dividend. They may not grow the dividend a ton in the near future, but will be able to maintain it. Expects there will be capital appreciation. Along with the dividend, he would expect 15%-20% upside.

You can be buying now or on a pull back. There are strong tailwinds from steel prices and infrastructure spending as well as a strong balance sheet. They acquired small companies. It is expensive, however. It is cheap on a price to cash flow relative to its 5 year. It has a high dividend. The payout ratio is 102%, but he models it going down next year. Their energy segment is about 35% of their business and is the wild card.

He looked at the name 4-5 months ago, and really liked it. Waited for an entry point but missed the boat. A great name. The dividend is sustainable. The nature of their business tends to be anti-cyclical, from a cash flow point of view.

Has been pretty volatile over the last 3-4 years. It has a significant amount of businesses that is geared towards energy services. Great management team. If it gets over $30, that is where you would want to take some profits. 5.5% dividend yield.

It is interesting. It is a commodity oriented stock that maintained its yield. It is trading based on higher capital spending in North America. He prefers to get his dividends elsewhere, but it is well managed. It is semi-infrastructure. We are seeing a recovery there. Trump may only allow US steel to be used.

Chart shows a downtrend during 2015 that has been broken, followed by a base. Typically, what happens is that when you get a break, you almost always get a test of that breakout. That is called the neck line. It might come down another $.50-$1 and still be in the safe zone. As a disciplined technical person, you let it test the zone, in this case about $24, make sure it bounces and then you buy it.

It is a bit of a leveraged play on infrastructure. It is an older Canadian company that distributes specialized metals. It will do well in economies that are growing.

On his watch list. It pays a good dividend of over 7%. You could see some upside in the stock. It is a volatile space, so you are going to have to own it and not pay a lot of attention to it, and he thinks it will grind higher over the next couple of years.

It is a cyclical. It got down to EBV earlier and had a big bounce. He thinks it will come down to EBV ($13.60) again. They are paying out more than they are earning. Don’t touch it. Look at it if it gets to the single digits.

Had improved results in their metal service business in Q1. They are looking to sell some US operations to help fix the balance sheet. They have a good bank line, and probably have some good, long term growth, but their payout ratio is 125% 2016 (est.). They may cut their dividend in Q3 if their energy outlook does not improve. If he owned, he would be selling Calls on it. 6.5% dividend yield.

It has done very well. Everything is ticking along for them. They made several improvements to their balance sheet over the years and the dividend is not risk. As we get clarity as to where scrap metal prices will settle out we will find out if the dividend will increase or not.

Doesn’t see a lot of upside in this, and he is Short. The steel price rally, which has taken this company higher in the first half of the year, will be fleeting. There are a lot of external issues that have influenced it. At the moment the company is not making its dividend, which is always a perilous spot to be in. Trading at an excessive valuation.

This is a company that returns money to shareholders with dividends through the bad times. It is a high cash flow business, especially when they are drawing down inventories. If steel prices come off again, there is the risk that in 2017 they may have to cut their dividends. The yield is 6%+.

A very well-run company. Operates in a volatile business of steel distribution, but has a very attractive free cash flow generation. It tends to be a bit countercyclical, in that when things get tougher they work their inventory levels down, and the free cash flow actually goes up more. Pays a very healthy dividend which he feels is sustainable. A good, long term company to be in. Wait for a pullback to put new money in.

He is most concerned with their vertical called Oil Country Tubular, pipes that go into the oil/gas industry, which has been down. They also sell into the agricultural industrial sector. Very well-managed. They will try to maintain the dividend, but with the weakness in their oil service side, he has a few concerns. They collect margins, so as steel prices are lower, they try to maintain the percentage, but the actual dollar amount could impact them.