Wednesday, August 13, 2008

EnCana Corp

I have had EnCana Corp since February 2006 and to date I have had an average annual return of 21%. In the last 12 months, I have had a return of 15%. This is the second time I have held this stock. I had held it previous as Alberta Energy Company from April 2000 until August 2002 and made some 18% return per annum. As you can see I do not look on oil companies as a long term buy. Although, I must admit, that we are probably in a long term bull market for all resources because India and China. However, I will still keep an eye on this stock; I might sell if I feel that there are no further gains available in the future.

Since this stock is an amalgamation of two stocks, I have charted it from the Alberta Energy Company into EnCana at present. The other problem with charting this stock is that since 2002, the annual statements have been in US Dollars, not Canadian Dollars. What you need to ensure that when comparing figures you are comparing with using only one currency.

As you can see from my spreadsheet, the revenues have been increasing well at some 20.7% a year over the last 5 years. The Earnings per Share (EPS) has not done as well at 5.2% (but has done better in US$ than CDN$). While this EPS is not awful, it is great either. The Dividends have been increasing at 38% per year over the last 5 years. As you can see from the spreadsheet, they were level at $.14 a share between 1996 and 2000. Oil stocks only really do well when the price of oil is high.

At December 2007, the Graham price at $56.04 and the Closing Price of $67.50 are not that far off for an oil company. The Current Asset/Current Liability ratio at .70 is low, but the Asset/Liability ratio of 1.79 is very good. For 2007, the Return on Equity (ROE) at 19.3% is not bad, but not quite up to the 5 year average of 23%. Also, the Accrual Ratio is a bit high at 7.9%.

However, this has been a good stock for me lately and at the moment I will continue to hold it. Tomorrow, I will look more closely at how it is doing currently.

This company is involved in the acquisition, exploration and development of natural gas, crude oil and natural gas liquids. It is a merger of Alberta Energy Company Ltd. (AEC) and PanCanadian Energy Corporation (PanCanadian) companies. It is a world-class independent oil and gas company.

Its web site is
See my spreadsheets on this company at

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. See my website at for a list of the stocks for which I have put up spreadsheets on web site.

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