Analysis: DII And GOOG

A look at Dorel Industries and Google.

Dorel Industries Inc. came out of the gates strong this year. In March, the Montreal-based consumer products company released its 2004 numbers, which included record-breaking sales and profits. Then, in May, its first-quarter revenues flew by last year's figure by 19%. But on July 12, the company seemed to lose its footing, warning that after-tax earnings for 2005 would be about the same as in 2004, because of issues that included “manufacturing inefficiencies” in its home-furnishings division. The market responded, and the company's share price tumbled nearly 12% in one day. Dorel Industries stock hasn't recovered from that fall yet, but a few things suggest it might. The company's five-year average return on equity stands at a respectable 15.8%. As well, the firm boasts a 25.5% 10-year annualized total return. Not bad for a company that trades at a price-to-earnings multiple below 10. Watch for a potential comeback.

Sure, US$300 for a share of Google Inc. should raise a red flag. So should the relatively short time (11 months) that it took the search engine company to reach that height. But speculative investors may be interested in a few other numbers about the Mountain View, Calif.-based company. Take its price-to-earnings-growth ratio of 1.78. That figure falls well below the PEG for the S&P 500 of 2.7. Just remember, both those figures are based on the educated guesses of analysts. Speaking of analysts, 71% of the ones who cover Google rate it a Buy. Finally, the firm has close to no debt and net income of US$399 million in 2004, factors that together suggest the company won't go from dot-com to dot-gone any time soon. Nevertheless, with less than one year as a public company, Google has far from a proven track record. And Internet stocks, of course, are notorious for being volatile. But for investors searching for a place to put their play money, Google could still be a good bet.