Two to watch
Over the last month two stocks have come out with quarterly and annual reports that have been quite good but have had no appreciation in price.Namely,Western Forest Products and Temple Hotels.Western has been impacted by the trucker's strike in Vancouver but not in a significant manner.They released their report on February 20. The other company ,Temple Hotels,has had an increase in funds flow both in 2012 and 2013.Adjusted funds from operations increased from$.44 to $.51 to $.70 per share over the two years.The P/E ratio is now only slightly above 8 times.
Pivotal years
Both have had pivotal years.Western Forest (WEF) reduced the ownership of it's main shareholder Brookfield Special Situations from 49% to 42%.It also upgraded two of it's key plants in British Columbia.It does need a bigger presence in pulp and paper and is selling it's Woodfibre Pulp Mill.Maybe they can reverse this before closing.Wood chips are becoming a bigger market in China.Total revenues increased by only less than 10% but net income was up more than 200%for the quarter and annually.Net income for the fourth quarter was $.13 per share.The next quarter is traditionally better and we could see $.15 per share.It is easy to forecast $.60 for 2014.Better than Ainsworth Lumber and half of Canfor's earnings ;both trade at a higher price than Western.There doesn't appear to be any acquisitions likely for Western but they may try to buy back more shares from Brookfield but the price will be higher than last time.
Temple Hotels bought $197 million worth of new properties representing 8 hotels and two more in 2014 for a value of $59 million more.They still have $35 million in cash for other acquisitions.They also sold 4 million shares of Holloway Lodging for a $5 million cash gain and $21 million in proceeds.Total revenue is up 66% from 2012 while adjusted funds from operations is up 30% from 2012 and payout ratio has fallen to 76%.All good numbers but Temple Hotels has to get it' occupancy ratio a little higher than 71%.Furthermore, the healthy rise in the adjusted funds flow per share means they will have little trouble raising a small amount of equity.
The next quarter, the next year
Western needs one more quarter to convince investors that they can earn $.50 to $.60 per share for the year.Also they need to swing a deal with Brookfield to buy back 10 to 20 million shares and reduce their holding.Spring is usually a good quarter and anything higher than $.15 per share will augur well for the year.Maybe they will even hang on to their Woodfibre Pulp Mill- a handy addition.
Another good quarter
Temple Hotels has not gotten much attention with their good fourth quarter but another good quarter and they will be hard to ignore.Temple says they want to acquire a hotel in Western Canada or the Fort Mcmurray area.These hotels tend to have high occupancy rates and would bring their overall occupancy rate higher.On the other hand, their payout ratio is solid and they have cash on hand.TPH may take a look at acquiring someone like Lanesboro REIT which in total has a market capitalization of only around $25 million and has properties in the Fort Mcmurray area.TPH has already bought a property from them.Temple Hotels has a high growth rate in revenues earned and funds flow; they will be hard to resist buying with another good quarter.In addition, TPH has shown good acumen in buying new hotels. send requests for advice on stock purchase to daleandmac@gmail.com or mcintyredale1@yahoo .com
Pivotal years
Both have had pivotal years.Western Forest (WEF) reduced the ownership of it's main shareholder Brookfield Special Situations from 49% to 42%.It also upgraded two of it's key plants in British Columbia.It does need a bigger presence in pulp and paper and is selling it's Woodfibre Pulp Mill.Maybe they can reverse this before closing.Wood chips are becoming a bigger market in China.Total revenues increased by only less than 10% but net income was up more than 200%for the quarter and annually.Net income for the fourth quarter was $.13 per share.The next quarter is traditionally better and we could see $.15 per share.It is easy to forecast $.60 for 2014.Better than Ainsworth Lumber and half of Canfor's earnings ;both trade at a higher price than Western.There doesn't appear to be any acquisitions likely for Western but they may try to buy back more shares from Brookfield but the price will be higher than last time.
Temple Hotels bought $197 million worth of new properties representing 8 hotels and two more in 2014 for a value of $59 million more.They still have $35 million in cash for other acquisitions.They also sold 4 million shares of Holloway Lodging for a $5 million cash gain and $21 million in proceeds.Total revenue is up 66% from 2012 while adjusted funds from operations is up 30% from 2012 and payout ratio has fallen to 76%.All good numbers but Temple Hotels has to get it' occupancy ratio a little higher than 71%.Furthermore, the healthy rise in the adjusted funds flow per share means they will have little trouble raising a small amount of equity.
The next quarter, the next year
Western needs one more quarter to convince investors that they can earn $.50 to $.60 per share for the year.Also they need to swing a deal with Brookfield to buy back 10 to 20 million shares and reduce their holding.Spring is usually a good quarter and anything higher than $.15 per share will augur well for the year.Maybe they will even hang on to their Woodfibre Pulp Mill- a handy addition.
Another good quarter
Temple Hotels has not gotten much attention with their good fourth quarter but another good quarter and they will be hard to ignore.Temple says they want to acquire a hotel in Western Canada or the Fort Mcmurray area.These hotels tend to have high occupancy rates and would bring their overall occupancy rate higher.On the other hand, their payout ratio is solid and they have cash on hand.TPH may take a look at acquiring someone like Lanesboro REIT which in total has a market capitalization of only around $25 million and has properties in the Fort Mcmurray area.TPH has already bought a property from them.Temple Hotels has a high growth rate in revenues earned and funds flow; they will be hard to resist buying with another good quarter.In addition, TPH has shown good acumen in buying new hotels. send requests for advice on stock purchase to daleandmac@gmail.com or mcintyredale1@yahoo .com
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