Thursday, January 22, 2009

Arc Energy Trust 2

Today I want to review Arc Energy Trust stock (TSX-AET.UN) to see what analysts are saying about it. First, I note that there has been lately a lot of insider selling. However, this selling is by a former Director, so this is probably not significant. There has been insider buying by current Directors and Officers of this company. I do not own any of this stock, but I find it an intriguing idea for the TFSA account. However, it is considered to be a high risk stock as it is in the oil business; however, it is not in the oil discovery, but in oil recovery. It would not be considered to be as high risk as oil exploration companies are.

I have today updated my spreadsheet for the latest quarterly report of September 2008. There are lots of Buy ratings on this stock, and a few Strong Buys and some Holds. The mean rating would be a Buy. (See my site for information on analyst ratings.) This stock is considered a good long term investment.

In looking at the charts, this stock, in the 1 year, 3 year, 5 year and 10 year periods has done better than the TSX Energy Trust Index. It also did better than the TSX index, except for the 3 year period. For the year to date (YTD) period, it has done worse than the TSX and the TSX Energy Trust Index.

Looking at the updates to the spreadsheet, I find that the yield at 9% is lower than the 5 year average of 11%. However, this is due to the recent decline in distributions. The Graham Price at $23.29 is higher than the current price of $16.34 by almost 20%. The current P/E at 7% is lower than the 5 year average of almost 11%. Both these indicators are good. The negative thing I find is that the Liquidity Ratio is has gone down a bit since December 2007 to .68. However, the Asset/Liability Ratio is very good at 2.34. The Accrual Ratio has gone down to 2.74% and this is good also. All in all, I can see why a number of analyst are recommending this stock.

Arc Energy Trust acquires and develops long-life low declining oil and gas properties in Western Canada. Its web site is See my spreadsheet 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 my web site.

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