Monday, April 12, 2010

Husky Energy 2

I would like today to continue to talk about this stock (TSX-HSE) as the 2009 annual report is in and I own this stock. I bought this stock in July of 2008 and I have lost 21% annually on it. I guess I bought it at the wrong time, but you never know where the market will head. I bought it to try it out, as this is a stock with dividends that fluctuates with the price of the underlying resource. Even though the dividends fluctuate, you can still make great dividend returns on these resource stocks over the long term.

When looking at whether or not a stock is currently at a good buy price, I like to first look at Insider Buying and Insider Selling. This report, can, occasionally tell you something worthwhile. However, when I look at the report on this stock, I find a bit of insider buying. However, the amount is so small; it does not really tell us much. I think the one thing I should point out here is that this company is mostly foreign owned.

The next thing is the P/E ratio. The 5 year average low is 9.5 and the 5 year average high is 14.4. I get a current P/E of 13. This P/E is closer to the highs for this stock, than the lows. The sites that give a P/E based on last 12 months earnings get one even higher at 18. The other thing to point out is that the estimates for have been recently reduced. However, the Graham Price gives better news as I get a Graham Price of $29.69 for this stock and this is less than 2% lower than the current stock price.

The next thing to look at is the Price/Book Value. The current ratio is 1.78 and the 10 year average is 2.15. So the current ratio is some 83% lower than the long term average. A really good stock price is when the current ratio is 80% of the long term average, but this is close. The last thing to talk about is the Dividend Yield. The current yield is 4% and the 5 year average is 3.8%. These are close, but it is good to have the current one higher than the 5 year average. Also, the dividends have been coming down lately from a high that occurred in 2007.

When I look at analysts recommendations, I find that they range from Strong Buy all the way to Sell. However, the most common recommendation is Hold and there are an awful lot of Hold recommendations. The consensus would be a Hold. The analysts that give Strong Buy or Buy recommendations give higher stock price for the next 12 months and also give higher earnings and cash flows for 2010 and 2011. They also talk about a strong balance sheet and the current 4% dividend. Conversely, the analysts giving recommendations of Underperform and Sell have lower expectations as far a stock price and earnings. They also talk about the large amount of stock that is owned by Insiders.

I do not own a lot of this stock, but I do buy for the long term, and I will be holding on to what I currently own.

This company is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky works in Western Canada, in off-shore Eastern Canada and in off-shore China and Indonesia. Its web site is This company is mostly foreign owned. 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 for stocks followed and investment notes. Follow me on twitter.

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