Tuesday, October 21, 2008

Power Corp

This stock (TSX-POW) is on the Dividend Achievers at www.dividendachievers.com/, the Dividend Aristocrats lists and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm. It is a stock that I notice has been recommended lately as good value. It is hard to know what to buy in such volatile markets, so I am featuring ones who have recently been recommended in this tough market.

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.

Over the 5 year period to December 2007, which is the last annual report, this stock has done well. Over this period, the revenues have increase by 9%, the Earnings per Share (EPS) by 17.5%, the dividends by 18% and the closing price by 20%. The Graham Price at 31 December 2007 was $39.27 while the closing price was $40.13, which is quite close.

For this stock, the Return on Equity (ROE) is at 14.6% for the year ending December 2007. The Accrual Ratio is 2%, which is not bad. The only real negatives I have are that Power Corp. tends to have a heavy debt compared to assets and the Asset/Book Value ratio is high at 13. Although financial stocks do tend to have a much higher Asset/Book Value than other stocks.

This stock has done was well as the TSX, but not quite as well as the TSX Financial Index over the past year. Over the past 3, 5 and 10 years, this stock has done as well as the TSX and TSX Financial Index. Do not forget that this stock pays dividends, and charts do not take dividends into account.

Tomorrow, I will update my spreadsheet with the latest quarterly report and look at what a variety of analyst think of this stock.

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 www.powercorporation.com. See my spreadsheet at www.spbrunner.com/stocks/pow.htm.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

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