Friday, April 9, 2010

Husky Energy

I would like today to talk this stock (TSX-HSE) as the 2009 annual report is in and I own this stock. I do not own much, as it is a resource 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.

This stock was briefly on one of the dividend lists that I follow of Dividend Achievers . Although, when I bought it, I knew it was a resource stock, and that the dividend will change with the price of oil. This also illustrates why you cannot just pick dividend stocks off these lists and expect to receive a dividend stock with increasing dividends.

Although this stock did not have a very good year in 2009, most of the growth figures a quite good. For example, the 5 and 10 year growth in Total Returns are 20% and 21% per year, respectively. I, however, should mention that this stock has only been paying dividends since 2001, so I have only 8 years of dividend information on this stock. This stock also has a habit of paying extra dividends when the company feels it can afford to.

The worse figures are from the growth in cash flow. The 5 and 10 year growth figures are -4% and 9% per year, respectively. This is because cash flow dropped some 70% in 2009 from the cash flow earned in 2008. Earnings did better and the 5 and 10 year growth in earnings are 7% and 42% per year, respectively. Earnings dropped in 2009 also. From 2008 to 2009, there was a 60% drop in earnings.

When I look at liquidity, I find that the 5 year average is just 0.97. However, the Liquidity Ratio for 2009 is better at 1.13. Also, they have enough cash flow to fund current liabilities. The Asset/Liability Ratio is much better, with a 5 year average of 2.13 and a Ratio of 2.21 for 2009. Any A/L Ratio at or over 1.50 is good. The Return on Equity Ratio also took a hit in 2009, coming in at 7.3%. The 5 year average at 23% is very good.

I plan to hold on to this stock and perhaps buy some more at a future point. All stocks are depressed at the moment. I believe that this stock will perform, over the long term, as I had expected when I first bought it.

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 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.

No comments:

Post a Comment