Death & Taxes…or Bitcoin

January 5, 2018

Hey Everyone,

I’ve deliberated long and hard on whether I should write an email about the current cryptocurrency craze, and ultimately my decision was made for me. One of my favourite bloggers just wrote an excellent article on the topic:

Here’s an excerpt:

… imagine that someone had found a cure for cancer and posted the step-by-step instructions on how to make it on-line, freely available for anyone to use.

Now imagine that the same person also created a product called Cancer-Pill using their own instructions, trade marked it, and started selling it to the highest bidders.

I think we can call agree a cure for cancer is immensely valuable to society (blockchain may or may not be, we still have to see), however, how much is a Cancer-Pill worth?

I encourage you to read the rest of this analogy, it’s quite enlightening. He also notes that Bitcoin is now worth $235 BILLION. This is the equivalent worth of Nike and McDonald’s…combined. I would speculate that this is a tad overvalued.

FYI Mr. Money Mustache is a computer engineer who retired in 9 years, so I think he knows a thing or two about coding and finances.

Ultimately, I do see uses for crytocurrencies, and definitely the underlying blockchain technology, but most likely in specific business applications. And even if it does become a commonly accepted currency, my expertise is in business investments and I would never trade any currency–not U.S. dollar, not gold, and not bitcoin; currencies don’t create value like businesses, they just measure it. Sure there may be ways to make money off of it as a trader, but I’ll stick to what I’m good at (and I recommend that you do too).

Back to Business

Now in regards to the title of this email. Death & taxes are a couple of of the few things guaranteed in this life (and don’t think that cryptocurrencies are immune from taxes), and I’ve discovered a business that specializes in one of them. Skip to the bottom of the email for a summary.

Ever wonder who manages cemeteries? Many of ’em are ma & pa owned, but there’s a company on the TSX that has been rapidly consolidating them across North America: Park Lawn Corporation (PLC). As their homepage states, they’ve grown from 6 properties in 2013 to 88 currently, located in provinces from B.C. to Quebec, and states from Texas to Illinois. They’re essentially a REIT. And while many REIT investors are looking to play e-commerce (ie. warehouses), or the baby boomers’ old age (ie. senior homes), after-life care business quietly thrives in the background, day in and day out.

Now, these 88 properties consist of more than just cemeteries. They also include “crematoria, funeral homes, chapels, planning offices and a transfer service.” You’d be surprised the numerous products and services that they sell to people (and businesses!).

While the company has grown rapidly, they are far from being done. With a market cap at just $350M, they would be the smallest company in my portfolio. With that being said, they do have a somewhat limited history. They didn’t embark on this phase of growth until their new CEO took the helm in 2011, so evaluating them is difficult. He does, though, have a sizeable 10% stake in the company, which shows his interests are aligned with shareholders’.

But what do the numbers look like?

  • Their income has tripled in the last 5 years, but EPS has only grown at ~10% annually due to rapid share increases
  • Book value and revenue have each increased 5x since 2011
  • Virtually no debt (using mostly equity to fund acquisitions, hence the share increases)
  • Return on equity (ROE) has been averaging roughly 11% in recent years, foreshadowing exceptional returns for shareholders
  • Profit margins are about 10% which is incredible
  • Dividends being paid out were slightly higher than the net cash flow provided by operations up until recently, but the CEO has emphasized that dividend growth is unlikely as they focus on growing the business

All-in-all, these are quite solid numbers for a small-cap company, and growth opportunities are many in the upcoming years.

The Downside?

The stock isn’t exactly cheap. Trading at about 35x earnings and 20x expected future earnings, the company is valued at similar levels to prestigious brands like Constellation Software and MTY Food Group (some of our favourites). I personally also don’t expect the company to grow quite as fast, perhaps in the 15-20% CAGR range, which puts them in the middle of the pack of my 15ish favourite companies.


Park Lawn isn’t necessarily a proven company, but the business is as simple and recession-proof as it gets. The company is small, barriers to entry high (regulatory hurdles), and the industry fragmented (largest player owns 16%, top 5 own 21%), providing ample opportunities for growth. If you’re looking to get into real estate, this is one of the most steady options there is, as the retail environment around us is rapidly changing. The company is expensive but can provide unique diversification for your portfolio.

I don’t own them yet, but I will foreshadow that I am looking to sell Agrium (now Nutrien) in the near future (that’s for another email in itself), and will likely put the proceeds towards this company if that happens, particularly if there is a pullback in PLC’s shares.

As usual, if you have any questions or comments, feel free to email.

Happy New Year!


“We make a living by what we get.  We make a life by what we give.”

Update: I am quite concerned about PLC’s share dilution.  I discuss this further in my 2017 Annual Review.  I have tried contacting the CEO about it with no luck, but I will be sure to update my readers once I get a response.  For now I am maintaining my small position and will keep a close eye on capital allocation.

Also, in their Q2 2018 earnings release, they provided very specific goals to achieve by 2022.  This provides excellent metrics to estimate an investor’s expected return over that time frame.  I haven’t shown this calculation in any of my blogs, but it would provide excellent practice if you’re wanting to learn how to perform this calculation.

Check out my Mid-August 2018 Update for guidance 🙂

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