Canadian Housing: It Actually Is Different This Time [View article]
Great info. Thanks for that. I disagree that the credit crisis 'delayed' the Canadian crash. It was a comparatively strong economy fueled by natural resources that 'delayed' the crash.
Canadian Housing: It Actually Is Different This Time [View article]
This is a fair point. I am certainly not suggesting that the Canadian real estate market remains on its current trajectory. Its just not likely there will be a collapse.
Also, what I am suggesting here is that Canadians are not as over-indebted as we might think. In this low-rate environment, they can fairly comfortably make their payments.
Canadian Housing: It Actually Is Different This Time [View article]
Right. The Canadian government may take a hit ... but the question is, how much of a hit? Will it be enough to impact Canadian long-term rates? If the Bank of Canada has to step in and buy up long-term Canadian debt to keep rates down, this will negatively impact the dollar, which will strengthen Canadian exports, which is still Canada's number 1 economic driver. So we have natural support.
Canadian Housing: It Actually Is Different This Time [View article]
There is some truth in this. I am not arguing that prices will continue increasing as they have. It is likely that they flatten out, especially in an increasing rat environment.
The counter to your argument, however, is that, presumably, if we find ourselves in an increasing interest rate environment, it would be because 1) economic growth has reached potential 2) inflation has increased and needs to be contained.
In this scenario, it is likely that Canadians will have higher incomes, which will help them afford higher rates.
Canadian Housing: It Actually Is Different This Time [View article]
Not true. The argument that was made in the US in 2006 and 2007 was that housing prices will NEVER FALL. Thats what was plugged into all risk models at the rating agencies and investment banks and that's how the lenders justified the massive risks they were making with their subpar borrowers.
Canadian Housing: It Actually Is Different This Time [View article]
I think the poor Chinese economy this year is directly related to the slowdown already being experienced in the Vancouver area (and to a lesser extent downtown Toronto). So goes China, so goes that Vancouver housing market.
Canadian Housing: It Actually Is Different This Time [View article]
I think it is an important distinction to make that the Canadian housing market, in and of itself, is unlikely to cause enough damage to precipitate a major recession in Canada. Of course there are plenty of other extraneous factors that could lead to a larger collapse, but you could say that about any market at any point in time.
Canadian Housing: It Actually Is Different This Time [View article]
Right. Rates are invariably tied to the US because of the impact of the strong loonie. Carney is threatening to to raise rates, but its an empty threat.
Anti-Recession Indicator: Corporate Profits Surge To New High In Q2 [View article]
this is a very bullish sign to be sure ... in the most recent recession, for example, the hit to corporate profits would have impacted the ability of both corporations and their employees (who were laid off) to meet debt requirements, thus impacting bank balance sheets.
there is the counterargument that the European banking crisis will be caused by GOVERNMENT's inability to repay, regardless of the strength of corporate profits.
Primo Water Sell-Off Is Seriously Overdone: Original Story Remains Intact [View article]
Thanks for the "basic lesson in finance". I've got plenty of education in that regard so, again, you can save the personal attacks for someone else.
Annualizing SG&A for 2011 and applying it to 2012 is probably not a good approach, given that SG&A has increased steadily over the past 5 years. It has decreased as a % of sales, but on an absolute basis it has increased qutie substantially. And while they may turn cash flow positive sometime in mid-2012, in the meantime, they will generate no cash to fund their growth over that period. You are indicating they will have $40 mil in operating cash at the end of 2012, which may happen, but they need cash NOW in order to get to the end of 2012.
I also note from their investor presentation that by the end of 2012, they anticipate fully 15% to 20% of sales to come from the appliance for their new soda dispenser system. That would equal the % of sales derived from their water dispenser. Presumably, then, sales of consumables related to the soda dispenser would be near equal to sales of consumables from the water dispenser. So it appears that nearly all of their sales growth (some $90 mil in 2012) will come from this new product. so the soda dispenser would achieve in 1 year what the water dispenser achieved in 5+ years. Their entrenched and growing relationships with retailers will speed up the process, but this still strikes me as an aggressive estimate for a new product.
Then there is the part where Lowe's and Wal-Mart make up some 60% of PRMW's sales. Perhaps adding locations with other retailers will not be so easy.
Point is, while there is alot to like about this company, there are also plenty of questions that probably justify its current price.
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Also, what I am suggesting here is that Canadians are not as over-indebted as we might think. In this low-rate environment, they can fairly comfortably make their payments.
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
The counter to your argument, however, is that, presumably, if we find ourselves in an increasing interest rate environment, it would be because 1) economic growth has reached potential 2) inflation has increased and needs to be contained.
In this scenario, it is likely that Canadians will have higher incomes, which will help them afford higher rates.
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Canadian Housing: It Actually Is Different This Time [View article]
Will Investment Funds Save Office Depot? [View article]
Primo Water Sell-Off Is Seriously Overdone: Original Story Remains Intact [View article]
Anti-Recession Indicator: Corporate Profits Surge To New High In Q2 [View article]
there is the counterargument that the European banking crisis will be caused by GOVERNMENT's inability to repay, regardless of the strength of corporate profits.
Primo Water Sell-Off Is Seriously Overdone: Original Story Remains Intact [View article]
Annualizing SG&A for 2011 and applying it to 2012 is probably not a good approach, given that SG&A has increased steadily over the past 5 years. It has decreased as a % of sales, but on an absolute basis it has increased qutie substantially. And while they may turn cash flow positive sometime in mid-2012, in the meantime, they will generate no cash to fund their growth over that period. You are indicating they will have $40 mil in operating cash at the end of 2012, which may happen, but they need cash NOW in order to get to the end of 2012.
I also note from their investor presentation that by the end of 2012, they anticipate fully 15% to 20% of sales to come from the appliance for their new soda dispenser system. That would equal the % of sales derived from their water dispenser. Presumably, then, sales of consumables related to the soda dispenser would be near equal to sales of consumables from the water dispenser. So it appears that nearly all of their sales growth (some $90 mil in 2012) will come from this new product. so the soda dispenser would achieve in 1 year what the water dispenser achieved in 5+ years. Their entrenched and growing relationships with retailers will speed up the process, but this still strikes me as an aggressive estimate for a new product.
Then there is the part where Lowe's and Wal-Mart make up some 60% of PRMW's sales. Perhaps adding locations with other retailers will not be so easy.
Point is, while there is alot to like about this company, there are also plenty of questions that probably justify its current price.