Wednesday, April 8, 2009

TransCanada Corp

I am reviewing this stock (TSX-TRP) today as I have received its annual report for December 2008. I first bought this stock in 2000 for my Trading Account. I bought some more in 2006. To date I have made a return of 11.4% per year. I also bought this stock for my RRSP Accounts in 2006. Since the price of this stock is back to where it was in 2006, I have not make any money on this stock in those accounts. This is not surprising as we are in a severe bear market.

The first thing to mention is that this stock is on a couple of the dividend paying stock lists I talk about. This stock is on the Dividend Achievers list at and also on Mike Higgs’ list at

This is one of my favorite stocks and it comprises almost 5% of my portfolio. When I looked at last in July 2008, the EPS estimate for 2008 was given as $2.25. The Earnings came in at $2.52. I note that the earnings estimates are still low for 2009 and 2010. This stock will probably not pick up in value until earnings estimates are higher.

I consider this stock one of my solid utility stocks and I expect over the long term to make about 8% per year on it. The dividend on this stock has already been raised by 5.6% this year, which is in line with the 5 year average of 5.9% per year. Both the revenue and the earnings have been increasing, but not strongly. What is of some concern is that the cash flow decreased for the year ending in 2008 and the lower than average Asset/Liability Ratio. However, this ratio at 1.11 is still above 1.00, that means that the Assets and cover the Liabilities.

The Return on Equity (ROE) is not bad for either 2008 and the 5 year average. These figures are, respectively, 11.2% and 12.7%. The Accrual Ratio is rather high at over 13%, however, if you also include the Financial Cash Flow is comes down to a more reasonable 1.9%. Tomorrow, I will look and see what the analysts are saying about this stock.

TransCanada Corp have two business sections of pipelines and energy. TransCanada's pipelines are in Canada, the United States and Mexico. Power operations, natural gas storage and liquefied natural gas (LNG) is the energy part of their business. They have an interest in nuclear power plants (Bruce) in Ontario. Its web site is See my spreadsheet on this company 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.

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