Canadian Natural Resources 2

Even though this stock (TSX-CNQ) is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices) I do not consider it to be a good dividend stock. Dividend yield is very low, although they consistently raise them. If I buy resource stock, I rather get one with the fluctuating dividends as you get a much higher percentage of your return from dividends.

When I look at Insider Buying and Insider Selling, I find that there is a net of selling of $38.2M, with selling at $40.7M and buying at $2.5M. Most of the selling occurred in March and April of this year and in August of 2009. The problem with Insider Selling is that you never know why people are selling. Most of the insiders have been increasing their holding recently.

The 5 year average low P/E is 10 and the 5 year average high P/E is 20. The current P/E, based on earnings estimates for 2010, is not bad at 14. The earnings were low for 2009 and they are expected to increase significantly for 2010. Earnings for 2009 were $1.46 and they are expected to be $2.56 in 2010. I get a Graham Price of $32.81 for 2010 and the current stock price of $36.83 is 12% higher. In most years, the stock price has been much closer to or lower than the Graham Price at some time.

The 10 year Price/Book Value ratio is 2.08 and the current ratio is 1.97, just 5% less. Points to a relative good price by the measure, but a great price would be if the current ratio were 20% below the 10 year average. The 5 year average yield is just .6% and the current yield is better at .8% and this also points to a relatively good stock price.

The next thing is what do the analysts say? There are lots of analysts following this stock and most feel that it is a Strong Buy or Buy. There are a few that rate it a hold. The Buys come with a 12 month strong growth in the stock price. The consensus recommendation is a toss up between Strong Buy and Buy, but probably just into the Buy area. (See my site for information on analyst ratings.)

Analysts seem to like the management of this company. They also like the fact that this company is moving from a gas play to a more balanced play of oil and gas. Most feel this company is a long term hold.

Canadian Natural Resources Ltd. is a senior oil and natural gas exploration, development and production company. The Company's operations are focused in Western Canada, in the U.K. sector of the North Sea and in offshore West Africa. Its web site is here CDN Natural Resources. See my spreadsheet at cnq.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.