Tuesday, December 30, 2008

Fort Chicago Energy 2

Yesterday I looked at Fort Chicago Energy (TSX-FCE.UN) and put up a spreadsheet on this stock. Today, I will look at what people are saying about this stock and if it is a good buy. First, I must say that, even though this stock is rated as a low risk, all stocks are currently risky. We are in a bear market and a liquidity crisis. Most companies need credit to function on a daily basis and this can be a problem in a liquidity crisis.

Analysts are putting ratings on this stock from a Strong Buy, to a Buy, to a Hold, with the average being a buy. (See my site for information on analyst ratings.) This next thing I looked at was insider buy and selling. There is a lot of insider buying, especially since the stock price went below $11. There was one recent sell by a director, but the problem with insider selling; the insider could be selling for lots of reason. However, insiders only buy for one reason and that is because they have faith in the stock. There is also a lot more insiders’ buying.

No one expects this stock to do better in year ending in December 2008, than it did for the year ending December 2007, and some expect it will do worse in December 2008. One positive thing is that the distributions are higher in 2008 than for 2007. A few other things to note is that the P/E at present is less than 11 and this is lower than the 5 year average of 17; the current yield is 14% compared to the 5 year average of just under 8%; the Current Asset/Current Liability Ratio as of September 2008 is 92 compared to 61 at the end of December 2007; the Accrual Ratio is now negative at “-1.9% “; and the Graham Price at $9.40 is higher than the current price of $7.10.

The Globe gives this stock a 3 stars rating out of a possible 5 stars. The S&P stability rating is SR-2 and the Dominion Bond Rating is STA-2L (low). These stability ratings are from 1 to 7, where 1 is the highest rating. Most of the pipelines and utilities have stability ratings in the 2 range, with a few with ratings 3 and above. None have a rating higher than 2.

So, in closing, there are high distributions to be made from this stock and possible capital gains in the future. As I point out at the beginning, we are in a time of economic problems and therefore, all stocks are risky. However, if you have money to invest, you might want to gently start investing again.

Fort Chicago owns and operates energy infrastructure assets across North America with three principal businesses of Pipeline Transportation, natural gas liquids and power. The company operates in Canada and US. Its web site is www.fortchicago.com. See my spreadsheet at www.spbrunner.com/stocks/fce.htm. I will reload my spreadsheet with information from the latest 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 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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