When A Stock Doesn't Have Much Daily Average Volume?

         What is the one thing that would cause a massive panic in people lives.  One thing we all take for granted.  When we drive or walk down a road we often do not think about it as it is all we know and we do not know any different.  I am talking about the trucking industry.  The saying "If you got it, a truck brought it" is so true.  The stones to make a retaining wall, the steel gates for businesses, cars, and gasoline at the gas station. A truck has to be utilized to bring all these to their current location in one form or another.
       
         Titanium Transportation Group Inc is a relatively new trucking company.
      

Titanium Transportation Group Inc is a Canada-based transportation and logistics company, which offers its services in North America. It operates in various segments, including Truck Transportation, Logistics and Corporate. It provides freight transportation services to customers, including large multinational corporations across various industries, with truckload and cross-border trucking services, freight logistics, and warehousing and distribution services. It offers trucking services through a range of trailer types, including flatbeds, step-decks, heavy axle trailers and other specialty equipment, totaling approximately 400 power units and 1,000 trailers. It also provides a range of ancillary transportation services, such as third-party logistics and freight forwarding. It also offers warehousing and distribution services, including order management and fulfillment, shipment consolidation or de-consolidation, cross dock, and reverse logistics (refurbished and restock processes). Source: Google Finance

    Titanium Transportation Group Inc. was founded in 2002 as logistics broker.  Their first truck was purchased in 2005.  In 2007, Zzen Group made a private equity investment.   The company has made 7 acquisitions from April 2011 to March 2015. The company remained private up until April 2015 and then became a public company.  The are listed on the Canadian Venture Exchange under the ticker symbol TTR.  The company is headquartered in Bolton, Ontario.

     Currently the stock trades at $1.13 a share and has a market cap of $42.63 million.  According to a June presentation, Zzen Group owns 39.2% of the company, which corresponds to 14,657,482 shares.  Titanium had 37,388, 510 shares outstanding as of June. The next highest shareholder is the founder and CEO, Tim Daniels, who owns 9.8% of the company with 3,667,647 shares.

     TTR does not have very low trading activity with an average daily trading volume of approximately 3500 shares. The company has made some acquisitions after they went public.

     Over a span of 5 years there revenue has grown each year in 2 of the 3 segments.  The revenue consists of 3 segments which are corporate, logistics, and trucking.  The corporate segment has grown to  $116.6 million in 2016 from $32.7 million, which represents a compound annual growth rate of 37.42% over 5 years.  The logistics segment has grown to $33.9 million in 2016 from $15.8 million in 2012, which represents a CAGR of 21.03% over the last 5 years.  The trucking segment has grown to $84.0 million in 2016 from $17.2 million in 2012, which represents a CAGR of 48.66% over the last 5 years.

    TTR has grown revenues a lot over the last 5 years. As they are relatively a new company, they will be growing the company and likely not pay a dividend.  Could the company continue to grow?  The company has currently has over 400 tractors and over 1300 trailers.  The company does not do intermodal as of this time, from what I get from there website. I believe the company will get involved in intermodal by opening terminals in major markets in Canada or develop partnerships with major carries in different geographical locations. Canada has access to a lot of freight from all over the world via their ports located in Vancouver, Prince Rupert, Montreal and Halifax. Canada also has 2 class one railways in Canadian National Railway and Canadian Pacific Railway. 

   Conclusion:

  Trucks play an important vital role in our lives as everything moves by truck at one point or another. Trucking is a very cost intensive business, which affect the margins.

 I do believe this company will do well in the future, but will face some immediate future due to the high possibility of a recession. North America has not had a major recession since the 2008-2009.  A recession, on average, happens every 8-10 years. 

   Today, I ended up purchasing 1000 shares at $1.24 inside my margin account. I had limit orders in over several days but the price never went down to my limit price. Last night, I apparently mis-typed my limit price of $1.08 by typing $3.08.  Always double check or even triple check your orders when it comes to the markets.  The order got filled at $1.24 this morning at the market opening.  I guess I should be thankful as my purchase price got of been higher.  I will hold on to my shares for now as I do not expect the stock price to fall that much in value.  With the stock thinly traded, I do not expect much movement in the stock over the next few months unless a major announcement happens of some sort. This is a stock that an investor or trader has to be patient with and just go about other business.

   The company could be acquired by one of the major players in the industry.  I own shares currently in TFI International which is involved in Transportation and Logistics and Canadian National Railway.

Disclosure:  Long TFII, TTR, CNR

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Alberta Economy And The Price of Crude Oil

         Alberta is a province in western Canada that is known for its oil and gas industry.  Alberta's neighboring provinces Saskatchewan to the east and British Columbia to the west has oil and gas as well.  These neighboring provinces do not have nearly the quantity of oil has Alberta.  Alberta has has the oil sands located in the Fort McMurray area.  Alberta is said to have the 3rd largest amount of crude oil in the world, behind only Saudi Arabia and Venezuela.  The east coast of Canada currently imports about $12 billion worth of oil for Saudi Arabia on a yearly basis.

        A couple of months back, the Alberta finance minister released the budget for the upcoming fiscal year.  Finance minister Joe Ceci based his predictions on oil being $55 a barrel.  Why is this important to know?  Alberta does not have a sales tax, unlike all other provinces have a sales tax separate from the federal GST (Good and Services Tax) or a harmonized sales tax (HST).  The HST is a combined tax of the GST and provincial sales tax. Alberta gets tax money from royalities from the oil and gas industry on top of corporate taxes and personal income tax.  A few years back, Alberta was known for the Alberta Advantage due to its strong economy and low taxes.  The price of oil started to decline around Sept 2014 when it was trading at around $92 dollars. Since then we have seen government changes at the provincial and federal level.

     There are lots of Albertans who are out of work and are losing their homes.  The jobs they had in the oil and gas sector are not easily replaceable in terms of skill and wages.  People who work directly in the oil patch or with companies that involve workers going to rigs to do fracking, cementing, wireline operations etc. have cut back their staff by huge amounts of the last 3 years.  We have some pundits believing that Alberta is coming out of the recession.  I totally disagree as the recent optimism has subsided with oil fallen well below $50 a barrel. Currently, WTI crude oil is trading at $43.44 per barrel as of the time of this writing. Alberta is known has a high cost producer, unlike Saudi Arabia is a low cost producer. 

     The provincial government is going to be running a bigger deficit than they originally thought as oil patch activity is way down when oil prices at these levels.  Lots of people have moved out of Alberta, while some oil patch workers are hesitant to re-enter the oil and gas industry after the fallout due to the recession. There is still a net migration of people in Alberta despite the low oil prices.

     The scary part of the Alberta recession is that the stock markets are flirting with all time highs for Canada and the United States.  History has shown that recessions happen ever 8 to 10 years. These recessions affect the entire country or countries around the world.. Major recessions also cause crude oil to be low.

      Currently, there is an oversupply of crude oil and plus the surgence of renewable energy companies affecting the price of crude oil. Some countries are members of OPEC (Organization of Petroleum Exporting Companies) can sway the price of oil when OPEC member companies get together.  Canada unfortunately is not a member of OPEC. 

     Cities and towns in Alberta have been hugely affected by the low oil prices.  Calgary is said to have an office space vacancy nearing 35%.  Calgary is where a lot of oil and gas companies have their corporate headquarters.  Lots of small communities spread throughout Alberta are feeling the pinch as well as they get a lot of oil patch workers stopping in their communities for some food or lodging.

Conclusion:

    The recession in Alberta affects the entire country has a whole.  Besides the workers inside its own border, people from all across the country come to work in Alberta.  These out of province workers spend money in their home regions which increases tax revenue for their respecting provincial governments.

     Personally, I do not believe the recession is even close to being over.  Every week, we hear in the business news that we have an oversupply of crude oil. Canadian companies are hesitant to drill when the prices are this low as their chance of not being profitable are too high.  Just a few months ago, I recall a person on Business News Network saying that a company in Alberta used to hire oil patch workers at $40 per hour and now hired some people back at only $15 per house. I believe oil will dip down to around $40 per barrel before he hit $45 per barrel again. 

     Often is says the one rig creates approximately 135 jobs both directly and indirectly.

      I do believe Alberta will have to institute  a sales tax within the next couple of years if this recession caries on. 

   What are your current thoughts on crude oil and the effects on the economy?

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Dream Office REIT - Recent News

         Dream Office REIT is the result of a name change within the last couple of years . The REIT was formerly known has Dundee REIT.  I have own units in this REIT for awhile.  I owned units in Whiterock REIT in 2011.  Dundee REIT acquired Whiterock REIT, so I decided to keep my units which became units of Dundee REIT in 2011. I have purchased more shares by both buying more units and via DRIP.

        Dream Office REIT has cut its distribution in the past year of so from $2.24 per unit per year to $1.50 per unit per year.  That decrease alone represented a decrease of 33.03%.  The share price  dropped considered over the last 5 years as evident by the chart below.

     

Click to Enlarge

Below is a 1 year chart and the units of struggled to trade over $20.00 per unit.   

    On June 22, Dream Office REIT  (ticker symbol : D.UN) announced a sale of $1.7 Billion of properties with $1.4B sale to KingSett , including interest in one of there signature properties Scoita Plaza.  Scotia Plaza is in Toronto.  The trust announced they will be reducing their annual distribution from $1.50 down to $1.00 per unit per year starting with the July 2017 distribution to be paid Aug 15, 2017.   You can read more about this here. 

   The REIT seems to be poorly managed.  D.UN has office properties in Canada.  I think the REIT management should concentrate on paying down the debt  even with interests being so low.  They currently have 106 properties with 15.4 million square feet of gross leasable area.  They have a portfolio occupancy of 86.5%.  They have properties in Alberta that have been in trouble due to the low oil prices.  Due to the recession in Alberta the past 3 years, Calgary has 33% vacancy with regards to office properties. They have a high concentration of properties in the Greater Toronto Area.


Conclusion:

       I currently own 795 units of D.UN.  So, this distribution cut to $1.00 per unit per year will reduce my dividend income by $397.50. 

      As the leases are coming up for renewal,  they have companies not renewing or doing so at lower prices due to the climate of the economies of Canada and the United States.  Companies are hesistant about being bullish on the Canadian economy as we are in odd situation.  The odd situation is interest rates being so low, the price of oil being low and the stock market at all time highs.   

      If my adjusted cost basis on my positions were below $20.00 per unit, I would definitely look to selling my positions if the price went over $20.00.   The price went up on Friday, but I believed it will be short lived.  I believed the REIT will trade between $17 and $19 for the next several quarters.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.