Student Transport of America Ltd. (STB.TO)

Sees the 2013 payout ratio at 97% and the 2014 at 84% so the dividend is sustainable. Believes their new focus on improving margins and reducing costs and to expand rather than going into new markets with equity raises is the right strategy. Raised his price target to $6.71. For income oriented investors, this is an okay name to be owning right now.

Top notch management. Not a fast growing business. School bus business. Flat market, and they depend on fuel costs. Dividends are consistant, but don't expect to get rich on it.

Dividend appears well supported right now. Sees an 89% 2013 payout ratio. Thinks it has some capital appreciation here. He sees margins expanding by 60 basis points to 18.6% for 2013 as well as and additional 300-400 basis points in the next 3 years. If that comes to fruition, he feels the stock has upside. You don’t want to own too much of this.

Had some drama earlier this year. Payout ratio swelled to about 108%. They did this after an $84 million equity issuance which made sense when they had more shares that they had to distribute cash flow to. Thinks the equity raise was a good use of their capital which brought there debt to EBITDA down to 3.1 from 4.6. This gives them the fire power to grow by acquisition. Payout ratio of 8.6% is pretty safe. He is modeling 19% growth for 2013. Try to buy at around $6.40.

Price target (Originally shown as Distribution in error. My apologies.) Was cut today but he still has a pretty constructive view and a price target of about $6.75. Had a precipitous fall this summer because their payout ratios blew out from a pretty conservative level to about 108% because they issued about 84 million shares. He thinks it was good use of their capital structure because it eliminates some debt and gives them the ammunition to pursue their long-term strategy of acquisitions in a fragmented space. Feels the distribution is safe and his payout ratio target is about 90% for 2013-2014. There is still growth with this name.

(Market Call Minute.) Has never understood the excitement with that company.

Took a big drop about 3 weeks ago because of a report that the company was not going to be able to maintain its distribution resulting in a severe cut to the distributions. The author makes some valid points but a number of firms refuted the comments. 7%-8% yield.

0-4 year olds is the fastest growing demographic apart from the seniors. We are having a baby boom so it speaks well to the student transportation business. Out sourcing of student transportation is a necessity.