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Gold/Mining/Energy : Dorel Industries (DII.B , M or T) good earnings report
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To: Jay Arkay who wrote (23)10/6/1997 12:48:00 PM
From: Jay Arkay   of 96
 
Yet another analyst's BUY recommendation for Dorel. Well-known analyst Jacques Kavafian of Research Capital (the leading Canadian analyst for airlines) has set a 12-month price target of $40 on the shares (it has already moved much faster than he anticipated, as the shares were at $27 when his recommendation was issued; the shares closed last Friday above $32). His report is summarized in the last issue of Investor's Digest (October 10, 1997).

According to the report, Dorel's management has a big stake in the company (it was begun as a family company and several family members are in the top management positions). Kavafian noted that, as its product mix shifts from low margin to high margin products, Dorel's profitability should continue to grow. His EPS forecast is $1.90 in fiscal 1997 and $2.30 in fiscal 1998. With these forecasts, I would target the shares at closer to $45-50 by the end of 1998 (barring a general market slump, of course).

Even $50 would price Dorel shares a bit below the overall TSE-300 PE multiple, and this for a company with an outstanding record of revenue and sales growth, first-class management oriented to shareholder value, as well as a balance sheet that has sharply improved over the past few years and will continue to do so.
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