Thursday, April 26, 2007

How Stella got her groove back...and kept it

When it comes to Stella-Jones Inc. (TSX:SJ), investors should be impressed with its Bullish stamina. SJ ranks at the top of the Toronto Stock Exchange in terms of Stock Trends Bullish longevity - logging in an incredible 255 weeks to date. In case you have never heard of SJ, today's Report on Business in The Globe and Mail can help:
Ever wonder where all those utility pools and railway ties that line our highways and byways come from? Stella-Jones Inc. of Montreal.
The only public company of its kind in North America was rated "buy," with a price target of $42.50 in initial coverage by Desjardins Securities. The stock is unchanged at $36.03 on the TSX Thursday, after coming from $17.50 last summer.
SJ was founded in 1993 out of Domtar Inc.'s wood preserving assets. Since 2003, it has spent about $110-million on acquisitions that have generated new sales of $160-million, winning a 15 per cent market share in North America. Running at a rate of one acquisition per year, SJ is the industry's leading consolidator, says analyst Pierre Lacroix.
He likes the story both for its internal and growth-by-acquisition potential. Two years ago, SJ expanded into the United States, which is expected to be the main growth platform, including acquisitions, in coming years, he predicts.
Given its growth potential, he is "confident that SJ will be able to maintain high valuation multiples in the next 12 months."
 It seems this bullish trend may reach epic proportions.
Stock Trends Report on SJ: