Stocks On My Radar

Although I have not had much time recently to do any in-depth analysis, here are some stocks that appear to offer interesting characteristics and the potential for an attractive buy price:

World Color Press – Previously, “Quebecor World”, in the printing business. The company emerged from bankruptcy protection on July 21, 2009. It entered bankruptcy largely due to financial issues rather then fundamental business problems. The common stocks of recently reorganized companies sometimes offer attractive buying opportunities due to selling pressure by previous debt holders. Reorganization information is at this link (including management projections):

World Color Press - Plan of Reorganization Documents

Arctic Glacier Income Fund - Recently cut their dividend. They are now the subject of US Department of Justice Antitrust investigation. The accusation is that Arctic Glacier and its peers in the packaged ice industry had been avoiding competing with each other in the same geographical market. One of their competitors the Home City Ice Co. has already plead guilty and is facing a fine of between $24M and $48M USD. Arctic Glacier is a larger company and is likely facing a fine larger than that if proven guilty. The stock is trading at approx. 2 times avg. cash from operations valuing the entire company at about $69M CAD. It looks like this might be too low even given the antitrust investigation and warrants further investigation.

AG Growth International – What a horrible name for a corporation…Sounds like something out of my grandmothers’ mutual fund portfolio. That aside, the company makes agriculture equipment and grain storage products. They have recently converted from an income fund to a corporation via reverse merger, which may be a cause for undervaluation. I don't know anything about the agriculture industry, but the shares look cheap based on how much they are on track to earn this year. Revenue for the first 6 months of 2009 vs. 2008 is up 34%, partly due to price increases. 3rd quarter is usually strongest for their seasonal business.

TVA Group Inc. – Trading at 6.5 times LTM Earnings. They are a francophone media company operating in 3 businesses: television (conventional and specialty), publishing and movie distribution. They are the market leader (about 56% market share) in the francophone conventional television market and are expanding into the more profitable specialty channel industry (currently 8% market share). Recently purchased Sun TV is losing about $6M after tax, and may be written off soon which will result in earnings increasing by about 10%. A rebound in the publication segment could produce comparatively large gains in earnings based on recent margin expansion in this business segment. The distribution business operates as a sort of "option" and can produce large gains depending on if any blockbuster films are released in a given year. The subordinated voting structure is a potential risk. One person I talked to suggested that the management might be depressing the stock price in attempt to buy the entire company cheaply. It is possible but it seems like they would be doing many more things wrong if they were trying to depress the stock price, rather then booking record revenue like they did in 2008. They have repurchased about 10% of their shares in the last year and have filed an issuer bid to repurchase another 5%. My feeling is that 6.5x earnings is much too low. For instance, competitor Astral Media trades at 12x.

Other stocks looking cheap at first glance:
- Clublink Corp.

I'd like to mention again that I have in no way done in-depth analysis on any of these stocks besides TVA Group. Thus far, they are just things I am looking into.

Disclosure: The above is in no way an offer or recommendation to purchase or sell securities. I own shares in TVA Group Inc.

SG