Power Corp 2

I am continuing my review of this stock (TSX-POW) today as I have updated my spreadsheet because of its 2008 annual report. I do not own this stock, as I have Power Financial Corp stock. This stock is on everyone lists. It is on the Dividend Achievers list at www.dividendachievers.com, and the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list. Please note that Mike Higgs’ has discontinued his list.

What worries me currently about this stock is the large amount of insider selling with almost no insider buying. There has been an awful lot of insider selling since the end of February this year. The vast amount of this selling is by officers of the company, and there were a number of them selling. This has to make you wonder what they know that others do not. Of course, the problem with insider selling is that it is hard to know why people are selling.

When you look at analysts’ recommendations, they run the gamut from Strong Buy to Hold. There are no other ratings that I can see. The consensus seems to be a Buy that is very close to a Hold. (See my site for information on analyst ratings.)

I looked next at my spreadsheet to see if what the ratios are saying about the current price for this stock. First, I looked at the yield. The yield is currently about 4.8% and this is higher than the 5 year average of 2.7%. The current P/E of 9 is lower than the 5 year average of 13 and also lower than the 5 year average low of 11. Both of these ratios point to the price being relatively low.

The next thing I looked at is the Graham Price and the current stock price is substantially lower than the Graham Price. This points to the current stock price being a good entry point if you want to buy this stock. The last ratio that points to the current stock price being a good one is that the Price/Book Value ratio at 1.05 is quite a bit below the 5 year average of 1.75. On this stock, there is no ratio that does not point to the current stock price as being relatively low and at a good buying point.

In looking at the charts, the financials have not done as well as the TSX over any period of 5 years and less. You have to go out some 10 years to find the financials doing better than the TSX. This stock is no different. It has done as well as the financials over the last 5 years. It has not done as well as the TSX.

This stock has a great reputation as dividend paying stock. The dividends have traditionally been around 2% with a high rate of annual increases, especially in the last 10 years. Considering what the market has been like lately, the stock plus dividends has eked out a 5 year return of almost 2%. This, of course, will go up with the stock market recovery. It is no wonder this stock is on so many lists as a good dividend paying stock.

This company is an international management and holding company. It has as subsidiaries Power Financial Corp., Power Technology Investment Corp. and Gesca Ltee. Subsidiaries of Power Financial include Great-West Lifeco, IGM Financial, London Insurance Group, Canada Life Financial, Putnam Invest., LLC Investors Group, Mackenzie Financial Corporation, and its affiliate Pargesa Holding SA. Its web site is www.powercorporation.com. See my spreadsheet at www.spbrunner.com/stocks/pow.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.