Russel Metals (RUS.TO)

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.

Their payout ratio is elevated. It is hard to see what the catalysts are. Their balance sheet is in pretty good shape so they can probably keep up the dividend for quite a while. You might take a little off the table if you have a gain.

Seasonal strength runs from the end of January all the way through to the beginning of May. The average gain during that time over the past 19 years is about 15%. The chart shows it found the low in January. It is finding support at the 20 day moving average and its 50 day is now curling higher. Although the 200 day is still curling lower, it is above that level now, which should act as a bit of support. It is now presenting warning signals. Momentum indicators are rolling over, and MACD did negatively diverge from price over the past few days. You might consider taking some profits.

This has had a big move down, but compared to a lot of other investments it has actually held quite well. Had a breakdown in the latter part of 2014 which was a pretty good warning sign. If it holds right where it is at, it will be pretty interesting at this price.

This was a pretty good dividend story for many years. It really depended on the construction cycle. Maybe today is a good point to start looking at it, particularly if we are going to get the infrastructure spending the government is talking about. Doesn’t know what shape the balance sheet is in currently, and is something he would examine before investing in it.

The company says their dividend is sustainable. He models 138% payout ratio on 2016 estimated earnings. Fund the dividend through their credit facility, and they do have a pretty good balance sheet. 55% of the business is metal service centre and 32% is their energy area that has been knocked down with what is happening in Alberta. Doesn’t know if you can trust the dividend.

This is going to run into a little bit of resistance right around the $18 range, so you could have a trade. Ranks really poorly on his monthly-weekly rankings.

Likes the TSX this year and is thinking it is going to be a good year in 2016. Metals are going to have to be the driving force. The stock is trending a little bit lower and looking for support. Overall this has been acting quite well. Technically it is not something you have to own today. If you own it, he doesn’t see any downside pressure.

Had a negative transit last week and broke below $16.71, which is his Sell signal. The yield is 9.70%. This year it is only going to earn $0.97 and next year $1.32. It is not even covering its dividend. Thinks the dividend will be cut.

(Market Call Minute.) A steel fabrication shop, primarily servicing the oil industry, so this is a no-brainer.

Getting closer to a Buy. He keeps looking at their bonds which are giving about 6%-6.5%. Owning this grade of bonds is very interesting. However, there is no liquidity in the corporate bond market, so if there is some disturbance in the bond market, you will get higher gyrations because there is no liquidity, no bank participation, and fewer people that have the ability to buy these. The neat thing about this company is that it has much more of a throughput business. The 8% dividend yield is probably coming down.

A great amount of their product goes into oil companies, as well as agriculture. He is concerned about the dividend at 8.4%.

Has been under a fair bit of pressure. Its valuation is not yet cheap enough to make it a real compelling Buy. Trading at around 9.5X EBITDA. Price to cash flow is not bad at 7X, but pretty low ROE. Even the recent beat on earnings didn’t do much for the stock. High yield of 8% and there is concern on the stability of that.

There are weak metal prices, weak margins in metals and weakness in the energy segment right now. Good long-term value, but no catalyst to get this year’s price higher right now. The dividend is not a safe as you think. He doesn’t know if they are going to have sufficient free cash flow in 2015-2016 to cover their dividend. A riskier name.

Earnings came out and were a little disappointing, but we are at that point of the cycle where earnings are expected to be disappointing. A pretty darn efficient management in terms of using shareholder capital and running their business well. They feel they can keep the 8% dividend yield.