We have no additions or subtractions from How They Rate this month.

We are however, in the process of evaluating members of the coverage universe based on a combination of low market capitalization, low daily trading volume on the Toronto Stock Exchange and in the US and, most importantly, for those that aren’t paying a dividend at present, whether there’s a reasonable likelihood of ever doing so in the near future.

This is part of an effort to streamline our focus on companies with a realistic opportunity to build wealth for investors for the long term, keeping in mind too that part of the rationale for building a coverage universe is to provide context and comparison.

With all this in mind, we will begin paring the ranks next month.

Early candidates for removal from How They Rate coverage include:

• Armtec Infrastructure Inc (TSX: ARF, OTC: AIIFF) pays no dividend and has a market capitalization of just CAD56.3 million.
• Imvescor Restaurant Group Inc (TSX: IRG, OTC: IRGIF), which discontinued its dividend in March 2011 and has a market capitalization of just CAD62.6 million.
• Lanesborough REIT (TSX: LRT-U, OTC: LRTEF) hasn’t paid a dividend since March 2009, and its market cap is just CAD12.3 million.
• Tree Island Steel Ltd (TSX: TSL, OTC: TWIRF) pays no dividend and has a market cap of CAD13.6 million.
• Tuckamore Capital Management Inc (TSX: TX, OTC: NWPIF) pays not dividend and has a market cap of CAD14.3 million.

CML Healthcare Inc (TSX: CLC, OTC: CMHIF) shareholders have approved the CAD10.75 per share buyout of the company by LifeLabs Ontario. Closing of the deal now depends on the grant of a final order by the Ontario Superior Court of Justice approving the plan of arrangement.

Management expects all necessary approvals by Oct. 1, 2013, with shareholders receiving CAD10.75 per share in cash upon closing. CML shares will be de-listed from the Toronto Stock Exchange within two days following the close of the deal.

CML will be removed from How They Rate effective with the November 2013 issue.

Advice Changes

Boardwalk REIT (TSX: BEI-U, OTC: BOWFF)–From Hold to Buy < 54. The REIT selloff has gotten out of hand. This is a solid business with a high-quality portfolio, and management just reported good financial and operating results for the second quarter.

We prefer the higher-yielding REIT selections in the CE Portfolio Conservative Holdings, but Boardwalk is now well off its 2013 high near CAD68.50 on the Toronto Stock Exchange.

Colabor Group Inc (TSX: GCL, OTC: COLFF)–From SELL to Hold. The share price has rallied from an all-time low of CAD3.13 on July 11, 2013, a week ahead of the 66.7 percent dividend cut announcement, to CAD4.41 as of this writing.

Colabor has potential to capitalize on its solid brands and niche markets in an improving economy, particularly with the added flexibility the dividend cut provides. There are operational issues to work through, but the company is well positioned to get back on a sustainable growth track in 2014.

GMP Capital Inc(TSX: GMP, GMPXF)–From Hold to SELL. The independent investment dealer posted a 3.8 percent decline in second-quarter revenue to CAD60.3 million, though net income of CAD4.8 million improved on a year-ago loss of CAD400,000.

That was accomplished largely through the sale of contracts to provide advisory services to managed funds that generated CAD10.8 million. Excluding items the company posted a net loss of CAD300,000, as underlying business conditions remain difficult. Management maintained the dividend rate, but the payout ratio for the second quarter was negative.

Manitoba Telecom Services Inc (TSX: MBT, OTC: MOBAF)–From Hold to Buy < 33. The company posted solid second-quarter numbers, strengthening the case that the CAD520 million sale of Allstream, announced on May 24, 2013, has made the company a stronger, more focused enterprise.

Wireless revenue was up 4.5 percent, while wireless subscriber data revenue surged by 21.9 percent. “Strategic” services revenue, including wireless, Internet (3.6 percent) and IPTV (4.1 percent) all grew. MTS increased the number of customers with bundled services by 5.1 percent to 99,418.

Quebecor Inc (TSX: QBR/B, OTC: QBCRF)–From Hold to Buy < 24. It’s the early favorite among analysts in the “who benefits most from Verizon not coming north” contest. Quebecor is in a very strong position to buy a block of spectrum that will not be very expensive.

Wireless is already generating solid growth for Quebecor, which probably would have fared well in an auction that included Verizon.

Quebecor reported a 15 percent increase in second-quarter adjusted income from operations to CAD52.9 million, or CAD0.82 per share. Revenue was up to CAD1.09 billion. Videotron mobile unit posts solid sales and customer growth, while ARPU increased by 5.9 percent.

IBI Group Inc (TSX: IBG, OTC: IBIBF)–From SELL to Hold. The damage has been done, and the cash saved from the recent dividend suspension should help the company accomplish its turnaround plan. Management also raised its full-year revenue guidance.

Royal Host Inc (TSX: RYL, OTC: ROYHF)–From Hold to SELL. Second-quarter numbers show nothing but continued deterioration in the underlying business, as management continues to sell assets to pay down debt. Royal Host has been cash-flow negative “for several consecutive years,” and now management is striving to create a corporate and operational structure that is “sustainably cash-flow positive.”

Rating Changes

IBI Group Inc (TSX: IBG, OTC: IBIBF)–From 3 to 1. The company has suspended its dividend, with no clear guidance on when it will be resumed. Debt coming due before Dec. 31, 2015, is high relative to market capitalization, and overall borrowings are relatively high as well. IBI retains a point for the nature of its business, which is generally stable and defensive relative to other industries. IBI is particularly burdened by a debt load incurred in pursuit of growth.

ShawCor Ltd (TSX: SCL, OTC: SAWLF)–From 3 to 5. The company earns both payout ratio points–a low number for the second quarter and solid visibility on maintaining a low number for the next 18 to 24 months. And it earns two debt-related points, as its overall debt-to-assets ratio is very low and there are no obligations coming due before Dec. 31, 2015.