October 28, 2012 Comments

Shaw Communications is updated and rated Buy at CAN $21.06. It’s also a high yield stock at 4.6%. Shaw is up 4% this year to date, which combined with the dividend of 4.6% has been a good investment. It trades at 13 times earnings which is ostensibly reasonably attractive. However some accounting issues lead to an earnings figure that is not that reliable. Our overall rating is Buy. Subscribers should look at the full report to understand the basis for the rating.

I have added a new row to the report. This is a row to comment on “Long Term Predictability”. This new row is just under Outlook near the bottom of the report.

Ten years ago I wrote an article for this site that indicated that what we were really after was not just Growth-at-a-reasonable-price, but Predictable-growth-at-reasonable-price. Recently someone reminded me about that article. Also I recall how many times Warren Buffett has said he is looking for companies that he is reasonably certain will have materially higher earnings in 10 or 20 years. I have always shown the graph of past earnings growth and commented on outlook. But this new row in the analysis will make sure that I always turn my thoughts to the predictability of the company. It’s one thing to say that a company should continue to grow. It’s another thing to consider whether it is a company that might face major obsolescence, regulatory or fashion issues that make its growth inherently uncertain.

A major strength of the report format that I use is that it is consistent. The same list of numeric and non-numeric items always gets addressed in each report. Perhaps that takes away from the ability of the report to be customized for a particular industry or company, but I think the requirement for each report to always address a standard list of ratios and non-numeric topics has been a good approach.

By the way I use the term numeric and non-numeric here. In college I was taught to use quantitative (being numeric) and qualitative (a measure of quality and also usually being non-numeric). I think the terms numeric and non-numeric are far more reader-friendly.

The Canadian dollar had declined about two percentage points recently. This increases the value of U.S. stocks when measured in Canadian dollars. And it decreases the value of Canadian stocks when measured in U.S. dollars.)

By the way, stock investments in American companies (like investments in U.S. houses) are NOT investments that are “in” U.S. dollars. Instead they are in investments that are “measured” in U.S. dollars. There is a difference. An investment in a U.S. bond, is truly an investment “in” U.S. dollars.

When it comes to U.S. funds versus Canadian, I generally try to think of my U.S. investments as being permanently left in U.S. dollars. When i sell a U.S. stock, I keep the funds in U.S. dollars. That avoids a currency convserions fee which I would incur if I transferred that back to Canadian dollars.

However, today I am thinking of entering an order to convert some of my American cash back to Canadian. The reason is that most of my cash is in U.S. dollars and it might make sense to balance that out. And with the Cnadian dollar down, (or the U.S. dollar up) it seems like it might be a opportune time to transfer the cash. (I would not have been inclinded to do it when the Canadian dollar had recently risen rather than fallen).

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