Q: Good Afternoon.
What is your opinion of Chemtrade? Does it have some growth potential? Is the dividend safe? Also, I have owned Topaz for a while and it has been hovering around the 25-26 dollar range. Is there much growth left in this company?
I am considering switching from Topaz to Chemtrade for more growth and a higher dividend. What is your opinion of this move?
As always, thanks for your excellent service.
Jane
What is your opinion of Chemtrade? Does it have some growth potential? Is the dividend safe? Also, I have owned Topaz for a while and it has been hovering around the 25-26 dollar range. Is there much growth left in this company?
I am considering switching from Topaz to Chemtrade for more growth and a higher dividend. What is your opinion of this move?
As always, thanks for your excellent service.
Jane
5i Research Answer:
At 9X forward earnings and at a 6% yield, we think CHE.UN looks ok. Growth is low at roughly 3% a year on the top-line but again, the valuation helps to account for this. EPS can be volatile. The dividend is covered by cash flows.
Topaz is more oil focused so the businesses are a bit different but growth is higher while offering a similar yield. The valuations are different as well with TPZ at 48X forward earnings (but 11X EV/EBITDA). CHE has had a good run and we might be reluctant to sell into the good momentum but over time we would be ok with this switch, just less confident it should be 'now'.