Russel Metals (RUS.TO)

Was hit during the energy downturn. It is a pretty stable business and they are a stable operator. Dividend is well covered through 2016. They cut it in 2008. This is a cyclical company. You are looking for the company to grow over time. He thinks the total return prospects are pretty good from here.

Dividend yield of 8%. Generally when yields move to 8%, and if they have been pretty nicely established at 2.5%-3.5% for the duration and there is a vulnerability as to when they will cut or if they will, it is a great opportunity. The chart going, back to 2006, is not really negative. It is just simply in a Bear market. This is a very good company and one-of-a-kind in the Canadian market. Doesn’t think the conditions on this are hugely negative.

Feels like this company gets caught up in steel prices and China. This is really a throughput business, a really neat company. They warehouse and distribute steel in mid-tier US cities. As long as steel is selling, they make their margins. It should be consistent over long periods of time. He hasn’t figured out the right price to get this at, but it is pretty close.

About a 3^rd in the US and 2/3 Canada. Pays a good dividend. Dropped 8% today. At this level, he might even look at this. It is a cyclical, but they have managed well. Good balance sheet. Now that it is under $20, he is going to have a look at it.

An industrial company and its period of seasonal strength is from the middle of October right through until May each year. Technically it broke support recently. Underperforming the market and trading below its 20 day moving average. Short-term momentum indicators are all negative right now. Watch for technical indicators to go positive around the middle of October.

Outlook for steel is fairly sloppy, and some of it is oil patch steel. He believes the dividend is definitely safe for now, at least into 2016. Even if they cut, they are very disciplined. Has good confidence in management. Dividend yield of 6.9%.

Good company and well-managed. It gives a good diversification. However, 30% of their end market is energy related, which is why it has been a little soft. This is an interesting stock at this price.

Good company. Has a base and seems to be bouncing off it right now at around $24. This would be a little bit of an aggressive play, because it has had some volatility. If you want to, you could use this as a trade and it may hit $30, but watch it carefully.

Their biggest component is energy at about 40% or so. A lot of that is more of a service type revenue. Their philosophy is to pay out 80% of their earnings. This is a warehouse business, so there is not a lot of capital needed, other than inventory. The dividend looks okay for now.

One question that always comes up with this company is the safety of the dividends. It was always a constant 4%, but is now yielding 6%. They are really exposed to industry and infrastructure. It depends on your outlook for those areas. It has come off a bit, but is not at a level where it has shown up on his screens.

This is more tied into iron ore prices rather than energy. With iron ore prices dropping, stocks like this tend to get tarnished by the same brush as iron ore. This looks undervalued. The challenge would be the quality of its dividends. How well are they able to generate the cash flow to pay their dividends?

Materials in general tend to do quite well between now and May. Chart is starting to show a bit of a bottom and it looks like it is an opportune time to Buy. Just moved above its 50 day moving average, so it is starting to rebound. He would like to see more of a bottoming pattern though.

Feels the dividend is safe, but would not add to your holdings.

6% bond maturing April 19/22. (He is biased towards the short term because the market still feels fairly expensive. Corporate credit still offers pretty good value.) They have their challenges right now. They are a metals business, so a big part supports oil and gas, but on the other hand there are a lot of maintenance products they provide. Pretty low levered and has a pretty strong balance sheet.

Has a significant exposure to energy, somewhere between a third and a half of their business. They will certainly feel some pain. He really likes the management team. They have done a good job of maintaining the dividend. Cut their dividend in 2008 during the financial crisis, but increased it coming back out. The rest of their business actually stands to benefit from this. It is more economically sensitive, manufacturing related, so he thinks this is going to be okay through this. Thinks the stock overshot itself on the downside.