Wednesday, October 22, 2008

Power Corp 2

As I said yesterday, stock (TSX-POW) is on the Dividend Achievers at, the Dividend Aristocrats lists and also on Mike Higgs’ list at I do not own this stock, as I have brought Power Financial. Power Financial is a subsidiary of Power Corp. I tend to like financial stocks, but Power Corp has its fans.

The real negative I see on this stock is that there is lots of insider selling, not only of Power Corp, but also of Power Financial. Insider selling is not the same strong signal as insider buying is. The heavy selling is by directors. People can sell for a variety of reasons that has nothing to do with a stock. The controlling shareholder of Power Corp of Canada is Paul Demarais. They have 30.1%, but have 64.6% voting control. There seems to be no selling by this family.

The other negative on this stock seems to be that everyone expects the EPS to be lower in 2008 from 2007. It is only by about 3% lower. It is expected the EPS will increase for 2009 by about 12%. This is therefore, not a long term negative. Power Corp has already raised their dividends this year by 26% and this is higher than the 5 year average. The P/E ratio at 9 is lower than the 5 year average of 12 and this is good. The accrual ratio is lower and it has turned negative. This is also good.

The average rating on this stock is a buy. The ratings range from strong buy to hold with the average being a buy. This stock would seem to be a great long term buy. But, please do your own research before making any decisions. Make sure you can deal with the volatility that will come with the current market conditions.

This company is an international management and holding company. It has as subsidiaries Power Financial Corp., Power Technology Investment Corp. and Gesca Ltee. Subsidiaries of Power Financial include Great-West Lifeco, IGM Financial, London Insurance Group, Canada Life Financial, Putnam Invest., LLC Investors Group, Mackenzie Financial Corporation, and its affiliate Pargesa Holding SA. The Pargesa Group holds significant positions in five large companies based in Europe of Total (energy), Suez (energy, water, waste services), Imerys (specialty minerals), Lafarge (cement and building materials and Pernod Ricard (Wines and Spirits). Gesca holds a 100% interest in the Montréal daily newspaper La Presse and six other daily newspapers in the provinces of Québec and Ontario. Gesca also produces television programming, publishes specialty magazines and books, and operates several Internet sites.

Its web site is See my spreadsheet at I have reloaded my spreadsheet for the June 2008 quarterly report.

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 my web site.

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