I will like to do something different again today. I started investing in the 1970’s. This was the time that oil and gas sky rockets up in price and then a few years later fell down heavily. I had always perceived that resource investing was very risky and have done very little investing in this section. I had held some resource stock at various times, but always held them for short periods. Basically make a profit and getting out. I never held any for more than a few years.
I know that a lot of the TSX market is in resources. So, I wanted to look at some resource companies and see how well they have done over the past while. The first one I have picked to review is Petro-Canada (TSX-PCA). What I have found out that over the past 5 or 10 years, an investment in this company would have done quite well. Today, I will look at what sort of profit you would have made on a 10 or 5 year investment to the last annual statement of December 2007. Tomorrow I will look at from the stand point of a current investment.
The 5 and 10 years to the last annual statement has seen the Revenue grow by 16% and 13% per year respectively, the Earnings per Share (EPS) grow by 25% and 26% per year respectively, the Closing Price grow by 18% and 16% per year, respectively, the Cash Flow grow by 12% and 13% % per year, respectively and the book value by 18% and 13% per year, respectively. This is all very good. Petro-Canada is also a dividend paying stock and, although the yield is low at .89% and 1.1% average for 5 and 10 years, the rate that the dividends have grown is quite health at 21% and 14% per year for the last 5 and 10 years.
The Return on Equity (ROE) has also been very good, with the ROE for December 2007 being at 23%. The negatives I see for this stock is the Current Asset/Current Liability Ratio is not as high as I would like to see it, although the Asset/Liability Ratio has always been a quite health position above 1.5. I also note that the Accrual Ratio for December 2007 is very high at 12.7%.
However, by and large, if you had invested in this stock over the past 5 or 10 years, you could have done very well.
Petro-Canada is one of Canada’s largest oil and gas company, operating in Canada and internationally. They operate in both upstream (explores and produces) and the downstream (refining and marketing) sectors of the oil and gas industry. Its web site is www.petro-canada.ca. See my spreadsheet at www.spbrunner.com/stocks/pca.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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