Tuesday, July 22, 2014

Ballard Power Systems Inc.

I do not own this stock of Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), but I used to. Back in 1997, I read about Ballard and fell in love with the idea of cars running with fuel cells. I could help save the environment and also make some money. It was very attractive. I sold this stock in 2006 because it had lost its attraction. It did not seem that Ballard fuel cells would be in any car anytime soon.

I lost on this stock by 5.32% per year or almost 38% of the money I invested. I was ahead in 2000, but the stock started to fall in October 2000 and never recovered. The stock has been rising since early 2013 and has continued to rise in 2014. However, it is still some 75% lower than when I bought it in 1997.

Have investors made money lately? Over the past 5 years investors have made 17.57% per year. This was all capital gain, of course. This capital gain could also disappear again as quickly as it came. Over the 10 years investors have lost 5.7% per year. Again, this is all capital loss.

The good news is that this company does have revenue. The bad news is that it does not make any profit or cash flow from this revenue. Revenue peaked in 2003 and has fluctuated, but basically has been declining since. However, analysts expect revenues to pick up again over the next few year.

As far as earnings go, the company had one year of profit in the past 10 years and that was in 2005. The company has had no positive cash flow in any year in the past 10 years.

Another good thing is the debt ratios. The Liquidity Ratio is 2.30, the Debt Ratio is 2.30 and the Leverage and Debt/Equity Ratios are 1.71 and 0.71. These are all great ratios.

There are not many analysts following this stock. When I look at analysts' recommendations I find Strong Buy and Hold recommendations. The consensus recommendation would therefore be a Buy. The 12 month consensus stock price is $3.88 US$. This is some 6.3% lower than today's US$ price of $4.14.

There is an investors news alert on Ballard on Market News Call after the stock jumped up 5% today. There is also a news article in the Wall Street PR about Ballard Power profiting from Toyota producing a fuel cell car. However, I heard all this before in 1997 when I first invested in this company. The fuel cell car went nowhere then. Is it different this time?

Sound bit for Twitter and StockTwits is: invest on hope, not financials. That is people are still probably investing in this company as I did, on hope, not because of the financials. I thought it was good that the company had revenue at the time I bought it. However, at some point a company must make earnings and cash flow. On the other hand, this company has survived a long time without much of either. See my spreadsheet at bld.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Ballard Power Systems, Inc. is a global leader in PEM (proton exchange membrane) fuel cell technology. They provide clean energy fuel cell products enabling optimized power systems for a range of applications. Ballard offers smarter solutions for a clean energy future. Its web site is here Ballard.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, July 21, 2014

Artis REIT 2

On my other blog I am today giving answers, as best as I can to recent questions asked about having a dividend stock portfolio continue...

I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. Distributions have only increased by 0.57% over the past 5 years. This is extremely low and way below inflation.

In the insider trading report there is a minimal about insider buying and insider selling with a small net insider selling. The outstanding shares were increase by around 221,000 shares with a book value of $3.5M and this amount of shares were worth around $3.3M at the end of 2013. This number of shares is way less than one half of one per cent of outstanding shares.

There is insider ownership with the CEO owning shares worth around $8.0M and an officer with shares worth around $5.4M. There are not only stock options but there are other stock options like vehicles called Restricted Units. So, there is a moderate amount of insider ownership and stock options.

You cannot do any stock price testing using Price/Earnings per share Ratio as the 5 year low, median and high medina P/E Ratios are 3.18, 3.59 and 4.01. These are so low they are unrealistic to use in a stock price test. The 10 year ratios are even worse because they are negative. The current P/E Ratio is 20.55 based on a stock price of $15.82 and 2014 EPS of $0.77. On an absolute basis, a P/E of 20.55 does seem a bit on the high side for a REIT.

I get a Graham Price of $17.20. The 10 year low, median and high median Price/Graham Price Ratios are 0.71, 1.29 and 1.77. The current P/GP Ratio of 0.92 says that the stock price is relatively reasonable.

The 10 year Price/Book Value per Share Ratio is 1.01. The current P/B Ratio is 0.93 a value some 8% lower. This stock price test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 8.35% a value some 18% higher than the current dividend yield of 6.83%. This stock price test suggests that the stock price is rather high. The historical average dividend yield is even higher at 12.77%. However, the historical median dividend yield is 7.13% and using these figures in the test gives a stock price that is relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold Recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $17.10. This implies a total return of 14.925 with 8.09% from capital gains and 6.83% from distributions.

An article by Biz Journals talks about a recent office purchase by Artis REIT. A Motley Fool article talks about now may be a good time to be in REITs like Artis. The blogger called the Dividend Blogger talked about 6 REITs to consider in August 2013.

Sound bit for Twitter and StockTwits is: Price is reasonable for a REIT. See my spreadsheet at ax.htm.

This is the second of two parts. The first part was posted on Friday, July 18, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Artis REIT's portfolio is comprised of industrial, retail, and office space in Canada and the United States. Its web site is here Artis REIT.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, July 18, 2014

Artis REIT

I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. Distributions have only increased by 0.57% over the past 5 years. This is extremely low and way below inflation.

This REIT has not been around very long having only been listed on the TSX since 2004. It was listed as Westfield REIT. It was rebranded as Artis REIT in 2007. In a lot of cases I do not have a full 10 years of data.

Dividends were increased a bit at first at just over 1% in 2008 and 2009. However, they have been flat ever since. The problem is that they had quite a few years of earnings losses and only started to have positive earnings in 2011. The Dividend Payout Ratio for 2013 was 95% for EPS and 72% for CFPS. They are expected to be even higher in 2014 at 140% and 186% respectively.

Analysts do not expect them to raise their dividends anytime soon. I do not invest in companies that do not raise their dividends and so I would not invest in this company. For REIT I expect dividends to go up around the rate of inflation as dividend yield are generally quite high. A lot of REITs do not rise dividends every year, but they do increase them. For this REIT the dividend yield is currently at 6.83%.

Of course because they are a REIT, analysts look at Dividend Payout Ratios for Adjusted Funds from Operations (AFFO) and Funds from Operations (FFO). The DPR for AFFO for 2013 was at 86% and for FFO was at 74%.

Investors have been earning money from this stock. The 5 and 10 year total return to date is 15.25% and 21.80% per year. The portion of this total return attributable to distributions is at 8.44% and 11.89% per year. The portion of this total return attributable to capital gains is at 6.81% and 9.91% per year. A problem is that the stock price has currently stalled and earnings are expected to drop this year by over 30%.

Outstanding shares have increased by 31% and 70% per year over the past 5 and 9 years. Revenues have grown nicely, but Revenue per Share has not. Cash Flow has grown, but CFPS has not. You cannot measure growth in earnings when earnings are negative (or you have earning losses).

Revenues have grown at 27% and 111% per year over the past 5 and 10 years. Revenue per Share has decreased by 4% and increased by 24% per year over the past 5 and 10 years. If you look at 5 year running averages for RPS, you get growth over the past 5 years at 5% per year.

AFFO has grown at 7.6% per year over the past 3 years. The AFFO has only been used for a few years. The FFO has declined by 2.4% and increased by 12% per year over the past 5 and 8 years. If you look at 5 year running averages over the past 4 years, the increase in FFO is up 1% per year.

Cash Flow has grown at 37% per year over the past 5 and 9 years. CFPS has grown at 4.2% and 32% per year over the past 5 and 9 years. If you look at 5 year running averages over the past 5 years, CFPS has grown at 10% per year.

There has not been much in the way of Return on Equity because of earnings losses. The ROE for 2013 was just 7.7%. The ROE on comprehensive income was a bit better at 8.8%. So what earnings they have seem to be solid.

Another place where this company falls short is with debt ratios, specifically, the Liquidity Ratio which for 2013 was at 0.21. When this ratio is less than 1.00, it means that the current assets cannot cover the current liabilities. If you take off the current portion of the longer term debt the Liquidity Ratio is 0.82. If you add in the cash flow after distributions, the ratio is 1.42. The Debt Ratio is good at 1.97. The Leverage and Debt/Equity Ratios are fine at 2.03 and 1.03.

Sound bit for Twitter and StockTwits is: REIT, but not dividend growth stock. See my spreadsheet at ax.htm.

This is the first of two parts. The second part will be posted on Monday, July 21, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Artis REIT's portfolio is comprised of industrial, retail, and office space in Canada and the United States. Its web site is here Artis REIT.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, July 17, 2014

Atlantic Power Corp.

I do not own this stock of Atlantic Power Corp. (TSX-ATP, NYSE-AT). Because I like utility companies and in 2010, I have read two columns that recommended this particular utility company (TSX-ATP), I decided to investigate it. This company is in the TSX Utility Index and this is perhaps this is why it is recommended?

This stock was an issued on the TSX as an income trust in 2004. However in 2009, it changed its structure to a corporation. Dividends were increased until 2012. In 2013, dividends were decreased by 65% after the company had 4 years of losses. The financial year of 2013 also resulted in a loss. A number of analysts believe that the dividends will be cut again in 2014.

For Dividend Payout Ratios, we can only look at them from a cash flow per share perspective because this company is has negative EPS. The 5 year median PDR for CFPS is 90%. The DPR for CFPS for 2013 was 63%.

I know that some analysts are still looking at DPR in regards to Distributable Cash and Adjusted Funds from Operations (AFFO). For Distributable Cash the 2013 DPR is 53%. For AFFO, the DPR is 60.7%. Some analysts are quoting AFFO for 2014 and they expect it to be around a negative $0.05. I do not like using these measurements as this company is no longer an income trust. Even at that, there would seem to be no analyst that thinks this company can cover distributions in 2014.

Outstanding shares have increased by 14.5% and 14.1% per year over the past 5 and 10 years. Shares have increased due to Share Issues, Stock Options and DRIP. Growth is good in Revenue, but not in Revenue per Share over the past 5 years. Growth is good for cash flow over the past 10 years, but not over the past 5 years. This is the same pattern for growth cash flow per share. There is no growth in earnings as earnings have been negative for the last 5 years.

The Revenue has grown at 11% and 46% per year over the past 5 and 10 years. Revenue per Share has declined at 3.5% and grown at 28% per year over the past 5 and 10 years. Cash Flow has grown at 2% and 40% per year over the past 5 and 10 years. CFPS has declined by 11% and grown by 22% per year over the past 5 and 10 years. These figures are in US$ as the company reports in US$.

The debt ratios are fine. The Liquidity Ratio for 2013 is 0.96. If you include cash flow after dividends, this ratio is 1.18. There is the current portion of the long term debt included in the Liquidity Ratio and if this is subtracted for 2013, the ratio is 2.16. The Debt Ratio for 2013 is 1.48. The Leverage and Debt/Equity Ratios for 2013 are 2.91 and 1.97, respectively.

As far as testing the current stock price, I cannot use the Price/Earnings per Share Ratios as the company has no profits. This is the same reason I cannot use the Graham Price. If you look at Price/Book Value per Share, the 10 year median value is 2.15 and the current P/B Ratio is some 61% lower at 0.85. This stock test says that the stock price is relatively cheap. On an absolute basis, a P/B Ratio of 0.85 is very low and shows a cheap price.

The Price/Cash Flow per Share 10 year median ratio is 9.61. The current P/CF Ratio is 5.31 a value some 45% lower. This stock test says that the stock price is relatively cheap. On an absolute basis, a P/CF Ratio of 5.31 is low and shows a cheap price.

The 10 year median Price/Revenue per Share or P/S Ratio is 2.68 and the current P/S Ratio is 0.87 a value 68% lower. This stock test says that the stock price is relatively cheap. On an absolute basis, a P/S Ratio of 0.85 is very low and shows a cheap price.

When I look at the analysts' recommendations, I find Buy, Hold, Underperform and Sell recommendations. The consensus recommendation is Underperform. The 12 month stock price consensus is $3.53. This implies a total loss of 6.21%. The capital loss would be 15.75% and the dividends are at 9.55%. However, I do not think you can count on getting the dividends, so loss could be larger.

The Investing Daily site has put out an article on this company called "Atlantic Power Dividend in Jeopardy Again". It is dated November 2013, but I do not think things have changed much. The site Mideast Time talks about analysts' ratings on Atlantic Power. The loss for the first quarter at $0.16 and lower than the analysts' consensus loss of $0.25.

Sound bit for Twitter and StockTwits is: company is struggling but possibly cheap. See my spreadsheet at atp.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Atlantic Power Corporation is an independent power producer that owns interests in a diversified fleet of power generation and transmission projects located in the United States. This company has a collection of gas-fired plants in the US and is generally in the lower cost quadrant of generation in its region. ATP owns interests in a diversified portfolio of independent, non-utility power generation projects and one transmission line situated in major U.S. markets. Its web site is here Atlantic Power.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, July 16, 2014

Computer Modelling Group Ltd. 2

On my other blog I am today writing about making big returns continue...

I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). I first bought this stock in July 2008. I was looking for something to buy. This company is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. Insiders are currently buying this stock. It has great growth and it is in information technology, a favourite sector of mine.

When I look at insider trading, I find some $5.7M of insider selling and some $5.6M of net insider selling. There is a small amount of insider buying. Net insider selling is one half of one percent of the market cap. That is a low amount.

Last year the outstanding shares where increased for stock options by 1.08M shares (or around 1.38%) with a book value of $14.4M. This number of shares was worth $15.7M at the end of March 2014. The prior year had the outstanding shares increased for stock options by 0.9M shares (or 1.2%) with a book value of $10M and this number of shares was worth $9.6M at the end of March 2013.

For insiders, the stock options are very good and much higher than most companies give out. Generally, outstanding shares are only increased less than one half of one percent for stock options. On the other hand shareholders have also made a lot of money on this stock.

There is insider ownership with the CEO having shares worth around $56.3M (and up from last year when he owned $11.9M). Also the CFO owns shares worth $1.3M, a director owns shares worth around $2.9M and the Chairman owns shares worth around $6.5M.

The 5 year low, median and high median Price/Earnings Ratios are 21.31, 22.78 and 27.91. These are a lot higher than the corresponding 10 year values of 12.60, 17.09 and 21.11. The current P/E Ratio is 35.71 based on a stock price of $14.64 and 2014 EPS of $0.41. By this stock price test, the current stock price is relatively expensive. (Although this is a tech and valuations for such stocks can get very high.)

I get a Graham Price of $2.73. The 10 year Price/Graham Price Ratios are 1.78, 2.33 and 2.89. The current P/GP Ratio is 5.37 based on a stock price of $14.64. By this stock price test, the current stock price is relatively expensive. (It is also quite expensive on an absolute basis.)

The 10 year Price/Book Value per Share Ratio is 7.20. The current P/B Ratio is 18.17 a value some 152% higher. I get a current BVPS of $0.81. A P/B Ratio of 18.17 is very high on an absolute basis. By this stock price test, the current stock price is relatively expensive.

I get a current dividend yield of 2.73%. The 5 year median dividend yield is 3.63% a value some 24% higher. The historical average dividend yield and historical median dividend yields are 4.93% and 3.52%, values some 45% and 24% higher than the current dividend yield. By this stock price tests, the current stock price is relatively expensive.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $16.00. This implies a total return of 12.02% with 2.73% from dividends and 9.29% from capital gains. This is not much a return from capital gains for a buy on a stock that already has high valuations. (A few analysts are concerned about the company's current high valuations.)

There is a good review of this stock on a blog calledInternational Growth Stocks. The Times Colonist talks about the company increasing its dividends and doing a 2 for 1 stock split.

Sound bit for Twitter and StockTwits is: Company is overbought. I still think that this is a great company and that I will earn good money from it still, but the current valuations are too high. See my spreadsheet at hse.htm.

This is the second of two parts. The first part was posted on Tuesday, July 15, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, July 15, 2014

Computer Modelling Group Ltd.

I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). I first bought this stock in July 2008. I was looking for something to buy. This company is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. Insiders are currently buying this stock. It has great growth and it is in information technology, a favourite sector of mine.

Not only has this stock given out special dividends each year, usually around $0.03 per share, they have also increased their dividends over the past 5 and 9 years at the rate of 23% and 38% per year. They are also paying out over 100% of the earnings and 100% of the cash flow between the regular and special dividends.

The thing is they are selling software. Once the software is built they can sell it over and over again to different companies. They are basically given out in dividends all that they can.

Since I initially bought this stock I have made a return of 38.92% per year with 33.13% per year from capital gains and 5.79% per year from dividends. The total return over the past 5 and 10 years is at 36.44% per year and 46.52% per year. The portion of these returns attributable to dividends is at 5.20% and 8.17% per year and the portion of these returns attributable to capital gains is at 31.24% and 38.35% per year.

The outstanding shares have increased by 2.6% and 2.3% per year over the past 5 and 10 years. Shares have increased due to Stock Options and they have decreased due to Buy Backs. Growth in revenue, earnings and cash flow has been good, especially over the past 10 years.

Revenue per Share is up by 8.34% and 16.96% per year over the past 5 and 10 years. EPS are up by 8.1% and 23.8% per year over the past 5 and 10 years. Cash Flow per Share has increased by 5.75% and 19.9% per year over the past 5 and 10 years.

The 5 year grown is low because exactly 5 years ago was a year of very good growth for the company. If you look at 5 year running averages, the 5 year growth is much better. For example, using 5 year running averages the Cash Flow per Share is at 19.4% and 25.8% per year over the past 5 and 10 years.

Ever since the company started to earn profits in 2001, the Return on Equity has been over 10% each year. The ROE for the financial year ending on March 31, 2014 is 43.7%. The 5 year median is 48%. The comprehensive income is the same as the net income.

All the debt ratios are very good. The Liquidity Ratio is 2.73. The Debt Ratios is 2.70. The Leverage and Debt/Equity Ratios are 1.59 and 0.59.

I have done very well in this stock. It has just recently done another 2 for 1 stock split. This is a tech stock, so I sold half my shares in 2011 to lock in my profit. Sound bit for Twitter and StockTwits is: Company is a dividend growth tech stock. See my spreadsheet at hse.htm.

This is the first of two parts. The second part will be posted on Wednesday, July 16, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, July 14, 2014

TMX Group Ltd.

On my other blog I am today writing about Kiva continue...

I do not own this stock of TMX Group Ltd. (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.

It may have been true that this company had strong dividend growth in 2008 as the median dividend growth to 2008 was at 50% per year. However, in 2008 the dividend did not grow at all. There was minor dividend growth in 2010 with a dividend increase of 5.3%. However, for all other years the dividend was flat. The 5 and 10 year growth in dividends is at 1 % and 16.4% per year. It makes you question for value of looking at stocks on such list!

The problem seems to be with earnings and earnings have fluctuated for this company. For example, the last 5 years of EPS are $1.41, $2.64, $3.17, $0.73 and $2.29. The Dividend Payout Ratio for EPS has a 5 year median value of 101%. For 2013, the DPR for EPS was 70%. However, it was 219% in 2012. It is expected to be around 46% in 2014. However, analysts are not suggesting any dividend increase over the next couple of years.

That said, investors have not done badly over the past 5 and 10 years. The 5 and 10 year total returns are at 15.30% and 11.72% per year. The portion of this return attributable to dividends is at 3.93% and 3.95% per year. The portion of this return attributable to capital gains is at 11.37% and 7.78% per year.

Outstanding Shares have decreased by 6% and 2% per year over the past 5 and 10 years. Shares have increased due to Stock Options and Share Issues and they have decreased due to Buy Backs. Revenues have grown well over the past 5 and 10 years. Earnings have grown nicely over the past 10 years, but not over the past 5 years. Cash Flow is the same as earnings.

Revenues are up by 5.6% and 11.60% per year over the past 5 and 10 years. Net Income is down by 7.6% and up by 4.9% per year over the past 5 and 10 years. Cash Flow is flat over the past 5 years and up by 10.3% per year over the past 10 years. Revenues, earnings and cash flows are more important than the corresponding per share values because of the decreasing number of outstanding shares.

The Return on Equity was under 10% on 2 of the last 5 years with the ROE for 2013 at 0.7%. The ROE on comprehensive income is better, but not great at 4.9% for 2013.

The debt ratios are not great. The Liquidity Ratio and Debt Ratios are too low and the Leverage and Debt/Equity Ratios are too high. The Liquidity Ratio is 1.02. Even with cash flow less dividends, this ratio only goes to 1.04. The Debt Ratio is just 1.22. The Leverage and Debt/Equity Ratios are 5.55 and 4.55.

The 5 year low, median and high median Price/Earnings Ratios are 18.45, 21.74 and 24.79. The current P/E Ratio is 16.41 based on a stock price of $56.77 and 2014 EPS of $3.46. The current P/B Ratio of 1.05 is some 68% lower than 10 year median P/B Ratio. The Price/Graham Price Ratio is 0.88. All these point to a rather cheap current stock price.

However, if you use the dividend yield as your metric, the stock price is relatively expensive. The current dividend yield is some 26% lower than the 5 year median of 3.81%. The current dividend yield is 27% lower than the historical average of 3.87%. I must admit that the current dividend yield is just 12% lower than the historical median dividend yield of 3.21%.

When I look at the analysts' recommendations I find Hold and Underperform recommendations. The consensus would be a Hold. The 12 month stock price is $59.50. This implies total return of 7.63% with 4.81% from capital gains and 2.82% from dividends.

Sound bit for Twitter and StockTwits is: Stock is no longer a dividend growth stock. They have just gone through reorganization. There might be regulatory development in Canada and we do not know how this will play out. I must admit I am not interested in this stock because it is not a dividend growth stock. See my spreadsheet at x.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

TMX Group Ltd. operates two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, a fixed income inter-dealer broker. Its web site is here TMX Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, July 11, 2014

Saputo Inc. 2

I own this stock of Saputo Inc. (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. When I sold RIM in 2006 I bought some Saputo. I had been following this stock and thought it was a strong Canadian Dividend paying stock.

When I look at the insider trading report, I find $12.1M of insider selling and $.8M of insider buying with net insider selling at $11.3M. This is just 0.11% of market cap. Insiders have stock options and also other option like vehicles called Performance Share Units and Deferred Share Units. There are some insiders with lots of options.

Last year the outstanding shares were increased by 1.7M shares with a book value of $41.9M. This number of shares would be worth some $94.8M at the end of 2014. There is also lots of insider ownership with the CEO having shares worth around $3.8M, a director having shares worth around $13.3M and the chairman having shares worth around $3.7B.

The 5 year low, median and high median Price/Earnings per Share Ratios were 16.8, 19.11 and 21.12. These are a bit higher than the corresponding 10 year P/E Ratios. The current P/E Ratio is 20.03 based on a stock price of $65.11 and 2014 EPS estimates of $3.25. This stock price test says that the stock price is within the relatively reasonable range, but it is close to the high end of this range.

I get a Graham Price of $32.26. The 10 year low, median and high median Price/Graham Price Ratios are 1.26, 1.58 and 1.83. The current P/GP Ratio is 2.02 based on a stock price of $65.11. This stock test says that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 3.00. The current P/B Ratio is 4.57 a value some 53% higher. This P/B Ratio is based on a BVPS of $14.23 and a stock price of $65.11. This stock test says that the stock price is relatively expensive.

The 5 year dividend yield is 1.76% and the current dividend yield is 1.41% a value some 19.5% lower. This historical median dividend yield is 1.74% a value some 19% higher than the current dividend yield. Both theses stock test says that the stock price is relatively expensive. The historical average dividend yield is lower at 1.51% and this is only 6% higher than the current dividend yield of 1.41%. This last test says that the stock price is relatively reasonable.

There is an interesting article on the CTV site which talks about Saputo refusing to buy milk from a B. C. farm after a video of workers abusing the cows was released. Good for them. This is the proper way to do business. Desjardins downgrades Saputo from a buy to a hold according to the InterCooler site. A Wall Street Journal article talks about Saputo launching seven new specialty cheese items this June.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus recommendations would be a Hold. The 12 month stock price is $62.20. This is a value below the current stock price so the total return would be a 3.06% loss with dividends at 1.41% and a capital loss of 4.47%.

This is a good company and I have done well with it and although the dividend yield is low, it does healthy dividend increases. However, I think that now would not be a good time to buy as it is rather expensive at present. See my spreadsheet at sap.htm.

This is the second of two parts. The first part was posted on Thursday, July 10, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Saputo produces, markets, and distributes a wide array of products of the utmost quality, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the twelfth largest dairy processor in the world; the largest in Canada; the third largest in Argentina and among the top three cheese producers in the United States. Our products are sold in more than 50 countries under well-known brand names. Its web site is here Saputo.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, July 10, 2014

Saputo Inc.

I own this stock of Saputo Inc. (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. When I sold RIM in 2006 I bought some Saputo. I had been following this stock and thought it was a strong Canadian Dividend paying stock.

In 2012, I sold some that I had in my RRSP account because I need more dividend income and dividend yield is low on this stock. In 2013, I need to raise more money in the RRSP account because of yearly withdrawals. I sold the stock with the lowest dividend yield. I still want to hold this stock, but it would be a better stock in a Trading account rather than in my RRSP accounts because of the low dividends. In 2013 and 2014 I bought some of this stock for my TFSA.

The dividend yield is rather low with a 5 year median of 1.76% and a current dividend yield of 1.42%. The 5 and 10 year dividend growth is at 10.8% and 24.2% per year. The last dividend increase was in 2014 and it was for 9.5%. On my 2006 investment, I am making a dividend yield of almost 5%.

It is young fast growing companies that can provide dividend increases in the 20% range. 10 years ago this company was worth around 3B and today it is worth some 13B. The last big dividend increase on this stock was in 2010. The last recession has been hard on a lot of companies. It is a balance sheet recession (i.e. debt problem) and these sorts of recessions tend to have long slow recoveries. So, in other words, I am not surprised by the slowdown in dividend growth.

I have made a return of $18.08% per year on this stock. Of this total return, 16.05% per year is attributable to capital gains and 2.03% per year to dividends. The 5 and 10 year total returns on this stock are at 18.10% and 15.51% per year. The portion of this return attributable to capital gains is at 16.19% and 13.63% per year. The portion of this return attributable to dividends is at 1.87% and 1.91% per year.

The outstanding shares have decreased by 1% per year over the past 5 and 10 years. Shares have increased due to Stock Options and Share Issues. Shares have decreased due to Buy Backs. There has been great growth in Revenue, Earnings and Cash Flow over the past 5 and 10 years.

Revenue has grown at 9.8% and 10% per year over the past 5 and 10 years. Revenue per Share has grown at 11% and 10.7% per year over the past 5 and 10 years. EPS has grown at 15% and 10% per year over the past 5 and 10 years. Cash Flow per Share has grown at 16% and 11% per year over the past 5 and 10 years.

The Return on Equity has been above 10%. The ROE for the 2014 financial year ending in March 2014 is at 18.8%. The 5 year median ROE is 18.9%. The ROE on Comprehensive Income for 2014 is higher at 26.1% and has a 5 year median ROE at 18.6%.

The Debt Ratios are fine. It would be nice if the Liquidity Ratio was a bit higher and the Leverage and Debt/Equity Ratios a bit lower. The Liquidity Ratio for 2014 is at 1.10. If you add in cash flow after dividends it becomes 1.38. A comfortable ratio would be at 1.50. The Debt Ratio at 1.81 is quite good.

Leverage and Debt/Equity Ratios are at 2.24 and 1.24. The 5 year median for these ratios is much better at 1.70 and 0.70.

This has been a very profitable dividend growth stock investment for me. It is interesting that a company that makes and markets cheese can be so profitable. See my spreadsheet at sap.htm.

This is the first of two parts. The second part will be posted on Friday, July 11, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Saputo produces, markets, and distributes a wide array of products of the utmost quality, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the twelfth largest dairy processor in the world; the largest in Canada; the third largest in Argentina and among the top three cheese producers in the United States. Our products are sold in more than 50 countries under well-known brand names. Its web site is here Saputo.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, July 9, 2014

Penn West Petroleum Ltd.

On my other blog I am today writing about possible cheap dividend stocks to buy continue...

I do not own this stock of Penn West Petroleum Ltd. (TSX-PWT, NYSE-PWE), but I used to. I bought this stock as Maximum Energy Trust (MXT.UN) in 1998. I sold this stock of Penn West in 2010 as it was changing to a corporation, but they are also getting back into exploration, rather than just selling oil from their wells. They also just reduced their dividends from $.15 per share per month to $.09 per share per month.

Dividends are not doing well. The Dividends on this stock have decreased by 25% per year over the past 5 years. Dividends have decreased every year since 2008, including in 2013. They so far have not decreased in 2014. However, if you are into dividend income like I am, you would like stocks that increase their dividends, not decrease them.

If you look at Dividend Payout Ratios using EPS you can see that they cannot afford to pay dividends. The company had an earnings loss in 2013 and one is also expected in 20014. Analysts do not expect that earnings in 2015 or 2016 will even come close to covering dividends. The DPR on CFPS is not as bad with the DPR for CFPS in 2014 at 47%.

The company uses Funds Flows to show dividends are affordable. However, the company is no longer an income trust and it will not be one again. They are a corporation and need to get to a place where the earnings can cover the dividends.

The total return over the past 5 and 10 years is a loss over the past 5 years at 4.78% per year and a gain over the past 10 years of 4.13% per year. The capital losses over the past 5 and 10 years are at 11.68% and 9.15% per year. The dividend portion of the total return is at 6.90% and 13.28% per year. Dividends are also now a lower at 5.62%.

The outstanding shares have increased by 4.8% and 27% per year over the past 10 years. Revenue is up but Revenue per Share is down over the past 5 and 10 years. Earnings are down over these periods. Cash Flow is up but Cash Flow per Share is down.

If you use the 5 year running averages, Revenue is up by 114% and 33% per year over the past 5 and 10 years. By the same measure, Revenue per Share is down by 3.5% and 1.3% per year. EPS using the 5 year running averages is down by 58% and 36% per year over the past 5 and 10 years.

The cash flow using the 5 year running average is up by 2.4% and 28% per year over the past 5 and 10 years. Cash Flow per Share by this measure is down by 14% and 5% per year over the same periods.

Some of the debt ratios are fine. The Liquidity Ratio is 0.57. When this value is less than 1.00, it means that current assets cannot cover current liabilities. If you add in cash flow after dividends it is better at 1.28, but this is still a low value. The Debt Ratio is quite good at 2.56 as is the Leverage and Debt/Equity Ratios at 1.64 and 0.64.

I get a Graham Price of $8.93. The 10 year low, median and high median Price/Graham Price Ratios are 0.76, 0.97 and 1.17. The current P/GP Ratio is 1.12 and this stock test suggests that the stock price is relatively reasonable. The current P/GP Ratio is based on a stock price of $9.97.

The 10 year Price/Book Value per Share Ratio is 1.15. The current P/B Ratio is 0.65 a value some 44% lower. This stock test suggests that the stock price is relatively cheap. The current P/B Ratio is based on a stock price of $9.97 and BVPS of $15.41. On an absolute basis, a P/B Ratio less than 1.00 says the stock price is cheap.

The 10 year Price/Cash Flow per Share Ratio is 5.83 and the current P/CF Ratio is 18% lower at 4.77. The P/CF Ratio is based on a stock price of $9.77 and CFPS of $2.09. This stock test suggests that the stock price is getting relatively cheap.

The 10 year Price/Sales Ratio is 2.84 and the current P/S Ratio is 2.06 a value some 27% lower. The P/S Ratio is based on current Revenue per Share of $4.84 and a stock price of $9.97. This stock test suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy, Hold and Reduce recommendations. The consensus recommendation would be a Hold. The 12 month stock price is $10.70. This implies total return from a stock price of $9.97 of 12.94% with 7.32% from capital gains and 5.62% from dividends. I do not think that the dividends are secure and I would think that this would be a very risky buy with not a great return in capital gains. That is, I do not think that the risk/reward balance is there.

The stock price would appear to rather cheap. However, I would not buy this company. Revenue, Earnings and Cash flows are all declining. See my spreadsheet at pwt.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

It is the largest conventional oil and natural gas producing trust in North America. They operate only in Alberta. Its web site is here Penn West.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.