Tuesday, February 17, 2009

ATCO Ltd 2

Today I am going to look at what analysts are saying about this stock (TSX-ACO.X). Is it a good buy now? The first thing I looked at was insider buying and selling. There is quite of bit of insider buying and very little insider selling. Management has signaled that they have faith in the company by increasing the dividend from $.88 a share to $1.00, which is an increase of over 13%. I have updated my spreadsheet for the 3rd Quarterly Report on this stock.

In looking at earnings, everyone seems to expect that this company will earn less in 2008 than in 2007 and even a lower amount in 2009. However, there is a wide variance in what people expect this company to earn. Some analysts expect the cash flow to be lower in 2008 and 2009 than for 2007. However, some expect that it will be higher.

As far as the ratings go on this stock, there are Strong Buy ratings and Hold ratings on this stock and a few Buy ratings. This mean rating on this stock is tending towards a Hold. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 8.8 is lower than the 5 year average of 13 and this point to a current good price. Also, the current yield is 2.7% against the 5 year average of 2% so this also points to a good price. The last thing to mentions is that the Graham price of $52.42 is quite a bit above the current price of $36.29. This high Graham price also points to the stock being a good buy. The negatives for this stock and probably why it is rated a Hold is that the EPS are expect to go lower in the near term.

Looking at the charts, this stock has done better than the TSX and the TSX Utilities Index for all periods of except the 1 year period. For the one year period, it has done better than the TSX and about the same as the TSX Utilities index. This is a utilities stock and they tend to do better in bear markets than the general index. However, they do not do as well in bull markets as the general index. Utilities stocks add stability and dividend income to any portfolio. This is a great stock at a decent and this is probably the reason it is on so many “lists” as I said yesterday.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has a 52% stake in Canadian Utilities Ltd. The company utilizes a dual share structure and it is effectively controlled by R.D. Southern. Its web site is www.atco.com. See my spreadsheet on this company at www.spbrunner.com/stocks/aco.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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