Buy K-Bro Linen

Due to the weakness in the stock price of K-Bro Linen (TSX: KBL, OTC: KBRLF), the hospital laundry processor, we’re move it from Hold to Buy. We also increase the weight of the stock in the Dividend Champion portfolio from 1.7% to 2.7%. On Wednesday, news came out that the potential acquisition of Booth Centennial, a prominent institutional linen services provider in the Toronto area fell away. On the same day, K-Bro announced the award of a new, 10-year contract covering hospitals in the Vancouver area and the expansion and upgrade of laundry facilities in Vancouver as well as Toronto. We consider the current price weakness of this high quality, stable operation as a good buying opportunity with a reasonable valuation and a 2.7% dividend yield.    

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