Innergex Power Income Fund

What I want to review today is a stock (TSX-IEF.UN) I held for a short period of time from 2006 to 2008 and talk about how it is doing. I bought this stock in 2006 as it was highly rated and it was in the alternative energy field. I sold in 2008, as dividend increase was very low. I also notice that although it is still followed by some analysts, it is not as well followed, as it was when I bought this stock.

Since this stock was just started in 2003, we only have 5 years of data on it. The good things about this stock are that revenue and cash flow has been growing, at the rate of 11% and 15.5% per year, respectively. For good things to happen to a stock, you need good revenue and cash flow increases. For other growth figures, I follow; this stock has not gone anywhere. The Book Value has been eroded by about 6% per year, and both the stock price and the dividends have not changed much.

When I look at the Liquidity Ratio, I find that it is low and although the 5 year average is not too bad at 1.23, the current one at 0.99 and the one for the end of 2008 at 1.00 are low. This means that the current assets can barely cover the liabilities. The Asset/Liability Ratio at 1.59 is much better. This Ratio has a 5 year average of 1.96, which is even better.

The Return on Equity has always been very low on this stock, but the one for the 9 months ending in September is quite good at 13.5%. The accrual ratio is not bad being negative, although when you consider the Financial Cash Flow, this ratio is quite high at 4%.

Tomorrow I will talk about what the analysts say about this stock. One thing that does concern me is that they have not really said what they will do about becoming a corporation in 2011. The only thing I can find is that they mention that the tax changes will adversely affect the distributions.

Innergex Power Income Fund acquires and operates a portfolio of hydroelectric facilities and wind farms in North America that produce electricity exclusively from renewable energy sources. Its web site is www.innergex.com. See my spreadsheet at www.spbrunner.com/stocks/ief.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.