I took a serious look at this company in December 2008 and January 2009, and I saw at the time that it met our criteria. This stock had been recommended to me by a client. However, there were bargains galore in 2008-2009, and when I built the Equities model in January 2009, I felt that other companies warranted my attention. After waiting patiently for seven years, the recent decline offered me a buying opportunity, with the stock having fallen from $53 to $39 early in the year.
Stella Jones (Toronto: SJ) operates in two key sectors in Canada and the U.S.: utility poles and railway ties. It also produces treated wood. These two sectors produce products which, to my mind, are essential to human life. I can’t imagine how we could do without electricity, cable or telephone poles. And what about wooden railway ties? These products have to be replaced regularly, and the company is the dominant player in these two industries in North America. The type of boring business that I like. Over the past five years, earnings growth has averaged 25%. The owners are strongly committed to the management, and Mr. Jones holds more than 30% of the shares via a holding company.
This post has been excerpted from a June 2016 letter of the Robitaille Group at Desjardins Securities.
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