> Although CCL has a PE of 10 now, increasing aluminum costs
> and a rising Canadian dollar might change that.
Since I've just done some research into CCL Industries I'll pass along some info and also give my opinion (you didn't ask for it, but... ;-). They are a packaging conglomerate with manufacturing in various countries, so the aluminum bottle thing is just one small segment of their total business, which extends to plastic and paper containers, labels, etc. The company has been around for 50 years and is profitable. Moreover, they are hiring 100 more people at their Canadian HQ this year, according to the CFO this week.
You are right to point out that a higher Canadian dollar could hurt their margins somewhat. The currency aspects are a bit complex - but basically the company gets roughly half its revenue in Euros and half in US Dollars, so the fall of the US dollar hasn't hurt it too badly, and also, like most international companies it does currency hedging. With good demand, the risk seems manageable.
As for the aluminum bottle - sure, it's a gimmick. This is called "marketing" and while the fad will likely die down after a while, it's still growing now, and the point is that it shows the company continues to be creative at new ways to make money - at least, as "creative" as you can be in the packaging industry. This is a healthy sign.
So my opinion is that the stock is currently quite undervalued, either compared to its competitors (which are less profitable) or on a forward earnings basis. I don't know why, and I don't really care. I have a small position and will be watching their quarterly reports. Oh, they also pay about a 2% dividend..
Anyway, this is not a recommendation to buy, just my two cents (US cents ;-).
I would be interested in hearing about any other Canadian stocks people think are worth a look.
Happy investing!
Kevyn |
