Superior Plus Corp (SPB.TO)

(Market Call Minute.) This is in 3 different businesses, propane, construction products and energy management. Has had a nice run up.

(Market Call Minute) Lots of moving parts, but they got pinched by lower propane prices because of a warmer winter and this won’t repeat itself. Their recent acquisition is accretive to them. It has more to go.

Wouldn’t qualify this as a defensive. The chart shows 2 higher lows in February and April, which is pretty good. There may be a little bit of resistance at this point. From a technical perspective, it is still a little bearish, so he would be careful. Make sure the $9.80 is not breached.

Very cheap at 11X earnings with an 8% dividend yield. In the process of acquiring Canexus (CUS-T), but markets are giving no credit for this. There are regulatory risks that the deal gets turned down, but there should still be some premium priced into this that maybe it will go through. If it goes through, there could be a very nice expansion in multiples because they are going to be generating a lot of cash flow. Since this valuation is not being given any credit, you have upside opportunity, but very limited downside risk. It is also a utility giving stability. The dividend should be good.

Has a pretty healthy PE ratio. Dividend yield of 7%+ and ranks pretty well on his metrics. However, analysts have been bringing their estimates down recently, so he would be careful in the short term.

They were disappointing on their latest earnings. Just lowered their cash flow guidance, but cited a recent equity raise that they did to fund their Canexus (CUS-T) merger and IT expenses next year. The problem with them not growing as much means that their balance sheet is a little more levered than you want it to be if they get approval for their merger. The good news is that Canexus will be very accretive for them, and will really strengthen their chemicals platform. They have a lot of their operations in the US. In 2016 all their US hedges roll off, which will be a bit of an FX tailwind. Likes the name.

Reported quarterly results that were a little bit messy. It certainly disappointed the street. Recently announced the acquisition of Canexus (CUS-T), and he thinks the outcome of the regulatory review will be in the middle of next year. That should provide some clarity for the stock. Sold off because the operational results were not very good. It is also an entity that is highly leveraged. This is probably a victim of a little bit of tax loss selling. Thinks the intrinsic value of the entity as a whole is far greater than $10, especially if they sell their construction business.

Have made an offer to buy Canexus (CUS-T), which might run into a few regulatory hurdles. If they do manage to get the deal through, it is going to be very accretive. Have 2 other businesses, propane distribution and a consumer’s products division, (drywall and sheet wall that they sell.) The propane distribution is excessively stable. The dividend yield of 6.9% is very safe.

There are a couple of places where we could’ve hung our hat. It looks like about a week ago, where it bounced right up to that, but then was repelled back down. Watch the level at around $10.70 to see if it will hold there, and that would be a sort of place to hang your hat on.

Chart shows a gradual upward channel from 2013, and is now starting to turn down a little. This has the same general tendencies as the overall market. He wouldn’t be buying at this time. Wait until the fall.

He sold a couple of months ago. He thinks there are better places to go. The dividend is okay, though. There is a fight with CRA and if they lose it could be negative for the stock.

Selling construction materials division. Their focus is to pay down debt, reduce costs, etc. You won’t see a dividend increase any time soon. He is indifferent about it.

Has owned it. It is like a dividend paying energy company. Would not be adding.

Doesn’t believe they will cut the dividend. Will probably grow about 5% next year and 10+ the next year. If you wait long enough you could see multiple expansion.

Convertible debentures? Usually you see convertible debentures on weaker credits that might have some underlying promise as far as the equity goes, but they are paying you something for that risk. This company has been around for a long time in the propane/gas distribution business. Not a liquid market so not something that you could easily Sell or Buy in the marketplace.