Just Energy Income Fund 2

I started to review this company (TSX-JE.UN) yesterday. As I said, this is not your typical low risk utility company. However, the risk is probably not more than a medium one. I did a spreadsheet on this company as I have recently read a few articles suggesting this was a good stock to buy.

When I look at the Insider Trading information, I find that over the past year there was some Insider Selling to the tune of $2.6M, however, this all occurred at the end of 2009. There is no Insider Buying over the past year. There has been no insider buying or selling this year. There have been a number of Stock Option grants to insider this year; and they seemed to have all been retained. This is considered a good sign. Also, a number of insiders have gotten stock through their company’s plan, and this is also considered to be a good sign.

When I look at the P/E ratios, I find that the 5 year average low is 12 and the 5 year average high is 17. Using the earnings estimates I get a current P/E of 16, which is a bit on the high side. The problem being is that earnings are expected to drop for the year ending March 2011. I should note that distributable cash is expected to rise in both 2011 and 2012. However, the company has permission to change to a corporation and so why any one would still is distributable cash to value this company, I do not know.

I cannot determine a Graham Price as it is based on earnings and book value. This company has a negative book value so; this calculation cannot be done. I cannot get a fix on the Price/Book Value for the same reason. In connection with the dividend yield, I get a current one of 9.7%. The 5 year average yield is 8.2%. However, the 5 year average high is 11%.

When I look at analysts recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus would be a Buy recommendation. (See my site for information on analyst ratings.) A number of analysts talk about the great dividend. An analysts with a Hold rating thought the dividend was great, but that the company would not have any growth for a few years.

There is an interest website talking about Just Energy. It concerns problems its customers had in the US. Here is another blog talking investing in this company Passive Income Earner.

As I have said before, I have no intentions of buying shares in this company.

Just Energy’s business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The Fund also offers “green” products through its Just Green program. National Home Services, the Fund sells and rents high efficiency; and tankless water heaters; rental of air conditioners; and furnaces to Ontario residents. Through its subsidiary Terra Grain Fuels, the Fund produces and sells wheat-based ethanol. Its web site is here JE. See my spreadsheet at je.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.