Rogers Sugar Inc (RSI.TO)

Western Canada sugar extraction from beets. In the US there is a powerful sugar lobby that dictates how much sugar can come into the US. It is a smaller company that will grow or be taken out. 8.4% dividend.

In a bit of a duopoly situation, but there is no growth and they are struggling with margins. There are other companies with better growth. Hold it just for income.

The price of this tends to benefit from the rise in sugar prices, which tends to do well in the last quarter of the year, all the way through to March. Tends to benefit from all the holidays that have an increased demand for sugar. Also has a bit of a spurt in June. Sugar has been showing some signs of bottoming as the strong US$ has been hurting it. This stock has tended to show higher highs and higher lows. It looks good over the intermediate-term all the way through to March. Take your profits when Easter comes and that should be a good trade.

This is a regulated market and there is a bit of an oversupply. Mexico is one of their big customers and it is over supplied at the moment. Can’t see how this company grows. Wouldn’t be interested in this one. 8% yield.

Not a growth company, this is a “steady Eddie” dividend payer. The problem is that the last 4-5 quarters have been lousy and higher natural gas prices have affected them. There is a really weak demand for sugar. They are in a cutthroat competition for pricing. He owns convertible debentures which is the way he plays it.

Is the dividend safe? This is close. Sold his holdings at about $6.50 and got back in at around $5. The trouble is that the inputs are natural gas. Also, lost some Mexican contracts. Also, the overpayment of dividends is getting into the mix. If they cut their dividend, they are going to be in trouble because of the share price. It would be more sustainable. but in this type of business, you just want to see a quiet type of company. He would be a buyer if it got a little cheaper.

(Market Call Minute) Management has been buying their stock. It is a Canadian dollar play.

The big drop in February was because of an earnings miss. The one thing this has going for it is a little base being built. If it holds at around $4.50-$4.45, that would be good. There is going to be a lot of overhead resistance not far away. If you own, he would use a Stop of around $4.30.

Has gone down and stabilized over the past few weeks. Reported an awful 4^th quarter. Analysts are concerned they could cut the dividend and he is as well. A dividend cut has already been priced into the stock. He sold his holdings and bought their convertibles. Management has been buying back shares.

Chart shows an uptrend channel running from 2009 up to the end of 2012. Believes this is probably sensitive to natural gas prices. You have to decide if the natural gas run is over. He expects the big advance of natural gas is now behind us so this is probably okay at this price but he wouldn’t add at this price, and if you own, he would consider reducing your holdings. 8% dividend yield.

Sugar is a commodity. He looks for stable businesses. Unbelievably stable business plan. Nat Gas is an input. However, now they are losing a few contracts. They won’t be able to get them back. This isn’t a business that can grow. He can’t figure out why they lost the contract so is standing back.

We need to see a little more price action and see if the base starts to build again. It’s too early to tell if a base is going to build.

Nat Gas is one of their major costs. This company has not been a favourite of his. MX-T in contrast can pass on more of their cost increase in gas to customers. RSI has fierce competition off-shore. Not a great area long term.

Owns a little bit of this. Numbers last quarter were not good. This is supposed to be a boring company that immunizes its expenses, which is mostly natural gas which is creeping up. They also lost a big customer. Feels the distribution is safe for now. Has very good cash flow, but the competitive nature has really changed over the last couple of years.

Had a whiz-bang of a year in 2012 and then the last 4-5 quarters have been atrocious. In the past 2 years, they have been able to export sugar outside North America and that has been great for them. This business has no pricing power and has no growth and is dependent on GDP growth. Feels the dividend is safe for this year. Have a look at their 5.7% convertible bond which gives you almost as much yield as the stock, but with a little more safety.