Canwel Building Materials Ltd. (CWX-T)

He thinks it is fairly well run, but is concerned about the sustainability of the high dividend yield – especially in the cyclical sector of building products. He would like to see the debt reduced first. (Analysts’ price target is $7.90)

This lumber distributor sells to the large retail outlets. He does not like their debt levels after an acquisition in the US and thinks this is holding the dividend from being increased. The distribution business is very competitive and he would prefer not to hold this.

Controlled by a Vancouver family who have done a good job of managing. Safe dividend, and he expects good growth numbers. Slightly levered. You're okay to own it. He needs to study this stock more. They have production in California, so he's not sure how tariffs--a nightmare to figure out in general--will effect them. Pays a 7.7% yield

The CEO is superb. They are making some acquisitions in the US in hot markets. He likes the outlook. It is a place to park some money. Not a bad investment and dividend in a toppy market. There is commodity risk and weather risk in it, however. (Analysts’ target: $7.50).

[Caller concerned about over 9.2% dividend]. They are a distributor of wood products in Vancouver. They acquired a distributor in Hawaii. The issue is with the debt levels and payout ratio. There are onetime events like weather events in their favour. But until the debt and payout ratio comes down he would not own it.

It broke out just prior to the equity deal they did. The balance sheet is considerably better now. It had improving price momentum. Good return on equity and they beat on their last quarter. It is not quite enough for him to own it yet.

He likes this story. He used to own some. He sold because it had done well. He is not buying it because he has so many housing related stories. But he likes it. He would continue to hold it.

Too small-cap for what he does. Great price momentum, scores in the top 20%. Valuation is not bad in the top 30%, driven by really strong ROE of 31%. Reasonable Price to Book at around 1.5% at a 6X CE. It recently had a good earnings beat. The standout is probably its high yield of around 8% with a payout ratio of 162%, and they are going to have to backfill that. The only potential concern is a little bit high on EB on the EBITDA and the yield is not necessarily fully covered by earnings. Also, they recently issued stock to buy their convertibles back. The converts pay a lower yield than the stock, so they are using higher yield to buy back a lower yield piece of debt. Hopefully, they have something in the pipe in terms of acquisitions that can drive that, otherwise that was not a good financing move.

Did a $60 million financing deal, which really solidifies their balance sheet. He really likes the company and the theme. The US housing construction and renovation market is pretty hot, which is where the majority of their earnings come from.

High yield of 12%, but a pretty bad balance sheet. This is not something that he would hold other than possibly as a Short.

(Market Call Minute) Very low margin. It is not going to go anywhere for years to come.