I guess the stable cash flow has no dependence on their profitability, unless of course they went bankrupt, however the growth of the dist. and share price would obviously be highly dependant on that profitability.

Good Baked Shrimp Penné too!

Last year, BPI opened 41 new restaurants and closed down 1. Obviously, if the number of restaurants is shrinking, that may reduce the fund’s cash flow.

I started buying Boston Pizza [BPF.UN] recently when I did deeper into the fundamentals.

SSSG [same store sale growth] averages 6.4% for the past 10 years with 2006 SSSG of 8.4%. On top of SSSG, there are also new restaurents addition. On aggregate therefore, the total sale growth is to the tune of around 18%.

Purely on SSSG rate, Boston Pizza as a business are better than the likes of expanding businesses like Wal-Mart, Tim Horton, McDonalds, Shoppers Drug Mart, Sleep Country etc. Yet the P/E is the lowest of all named and the yield is the highest and aggregate sales growth are in double digits. There is in theory, no capex required as all but 3 are franchise stores, and so are all new restaurents commitments on hand.

Boston Pizza is therefore a value stock, a growth stock and a high yield stock.

Moreover, SSSG can be forever, but margin expansion is only temporary plus there is a pratical ceiling. Over the long-term, a company can only cut costs so much.

Inter Pipeline can freely depreciate its assets to derive at the most tax advantageous position. By over depreciating, its income and book naturally fall short “on paper”.

BTW, 80% payout is conservative for pipeline trusts.

Have you read my post on “How to pick pipeline trusts”?

IMO, a pipeline play, like Inter Pipeline, is a safer way to participate in the O&G sector.