Monday, June 21, 2010

Stantec Inc 2

I bought this stock (TSX-STN) in April 2008. I have lost some 4.7% per year on this stock. This is a small non dividend paying stock that is into infrastructure. I like to invest in a few odd non-dividend paying stocks for fun. The loss I got would be rather typical for investments in the last couple of years.

When you look at Insider Buying and Insider Selling, I find, as I did in July 2009 that there was quite a bit of selling by directors of the company, and some buying by the CEO and the CFO. Most of the selling was done in 2009 and most the buying in the first part of this year. The interesting thing is that the stock price has not changed significantly, but most of the selling was done at a higher price than the buying. I do not think we learn anything from Insider Trading.

When I look at the P/E ratios, I get a 5 year average low of 17 and a 5 year average high of 30.6. Both these ratios are rather high, but this is a growth type company. Using earnings estimates for 2010, I get a current P/E of 12.5, which is a rather good ratio. Using earnings estimates also, I get a current Graham Price of $23.23. This is only 7.7% off the current stock price of $25.01. This is also showing a rather good current price. It is hard to find growth stocks with stock prices even close to the Graham Price.

Next, I am looking at the Price/Book Value Ratio. I get a 20 year average of 2.47 and a current P/B ratio of 2.09. This current P/B ratio is just 84% of the 10 year average. It is better if the current P/B ratio is just 80% of the 10 year average, but this ratio, which does not depend on estimates, also shows a relatively good current price.

So, what do the analysts say about buying this stock? When I look at recommendations, I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The remarks of people who think this is a great pick talk about the company being a diversified North American infrastructure play. One analyst says the current price is historically attractive. There are a number of analysts following this stock and I do not find any negative comments.

I intend to hold on to my stock currently and to continue to track this stock. This stock has recently done worse than the TSX market, but over the long term, it has done much better than the TSX. I am always into stock for the long term, but since this is not a dividend paying stock, I will sell it at some point.

Stantec Inc is a profitable Construction & Engineering company that trades on the TSX. It provides professional services in planning, engineering, architecture, interior design, landscape architecture, surveying and geomatics, environmental sciences project management and project economics for clients, from initial concept and financial feasibility, to project completion and beyond. They work in North America, the Caribbean, United Kingdom, Australia, and New Zealand. Its web site is here Stantec. See my spreadsheet at stn.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 for stocks followed and investment notes. Follow me on twitter.

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