Superior Plus Corp not for the faint of heart

Feb 23rd, 2011 – 1 Comment

When it comes to what to do with SPB you have to ask yourself can you afford to buy and hold to earn a dividend or should you trade this one for income?


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Your discussion 17Sept10 at 12:02PM EDT has proven bang on. The board has reduced the dividend and the MD&A warns of another year of hanging on.

My dividend yield with the reduced dividend is about 9% pre-tax.

The downward trend began in 2005 and I don’t know if it was a function of the  2002 merger with ICG.

I’m wondering if its business results and downward Market pricing is a management problem or just a sector problem?  I.e., bad company (time to bail) or bad economy (expect a return to shareholder reward?)

Thank you very much.

Rod

Hi Rod,

I have posted on Superior Plus Corp(SPB TSX) three times in total since September 17, 2010. This will be the fourth time I have posted on the company because it has provided a valuable instructional tool.If you go to the search feature on this site and type in Superior Plus you can follow the analytical crumbs left behind as I followed the story for investors.

The last time I analyzed SPB on January 24, 2011 I made note of two features. A double bottom that signaled a reversal of the downtrend and the flex point surrounding the quarterly results scheduled for release on February 17, 2011. As you mentioned the board cut the dividend on February 17, 2011 and tanked the advanced. The charts will help answer some of your questions and perhaps give us some idea of the future direction for the stock.

The three year chart for Suburban Propane Partners LP (SPH NYSE) I believe answers your questions about the quality of management and the health of the propane sector. Clearly someone is creating wealth in the segment but its not SPB.

The three year chart for SPB depicts the double bottom that was identified in the January 24, 2011 report I posted for Ed. The stock continued in an uptrend from the close on January 24 of $11.72 to the peak high of $12.40 for a 5.8% gain. The Q4 results reported on February 17, 2011 stopped the advance in its tracks on the news that the board reduced the dividend.

The six month chart illustrates a classic example of what happens when management cuts a dividend. Nothing good. The close to close change represents a 10.48% loss. It was even worse for investors who bailed at the panic lows of $10.50.

When it comes to what to do with SPB you have to ask yourself can you afford to buy and hold to earn a dividend or should you trade this one for income?

Happy Capitalism!

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