I am starting to review this stock as I have read some good reports on it lately. They on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
When I look at the Insider Trading reporting, I find a little bit of Insider Buying over the past year and no Insider Selling. The negatives are that insiders except directors, have more options than shares. The other negative is that the company’s dividends were not raised this year. They have already announced the last dividend of this year and it is at the old rate. They will probably come off the dividend lists next year because of this.
When I look at the P/E ratio, I get a 5 year low median ratio of 5.9 and a high median ratio of 14.7. So, the current one based on earnings estimates at 29.5 is rather high. However, the forward P/E is just 10.8. P/E ratios based on last 12 months earnings come in at 26.9, a little lower than mine. In this instant, the forward P/E is worth looking at because the current P/E ratio is high because this company is not expected to earn much this year. Earnings are not expected to start to recover until 2011.
I get a Graham Price of $17.92 for 2011, but of $29.57 for 2012. The stock price is almost 70% above this year’s Graham Price, but just 3% above next years. When I look at the Price/Book Value Ratio, I get a current ratio of 2.19. The 10 year average is just 1.59. However, the P/B Ratio has often been above 2.19, as it tends to vary a great deal from less than 1.00 to 2.40. A P/B ratio of 2.19 is rather reasonable.
The last thing to look at is the dividend yield. At 2 %, it is lower than the 5 year average of 2.9%. They probably did not raise the dividend in 2010 as the payout ratio on both earnings and cash flow was too high at about 61% and 26% respectively. For 2011, it is expected that the payout ratio will be much better at 23% and 14%, respectively. However, these better payout ratios are based on the current dividend rate. So, there may not be a dividend increase in 2011 either. However, as the economy improves, there will probably be increases down the road.
When I look at analysts’ recommendations, I find lots of Strong Buy and Hold recommendations. There are fewer Buy recommendations and at least one Underperform recommendation. The consensus would be a Hold. (See my site for information on analyst ratings.) The thing is if you are interested in this company for the long term, I can see why some analysts think this is a strong buy. However, if you expect to get capital gains on this stock any time soon, you will probably be disappointed.
Analysts generally like the management of this company. The analysts’ saying this stock is a buy think that there will be a big future global demand for methanol. Even analysts with a Hold recommendation, think the company has a great future, only it will not get any traction until at least 2011. This is often the way with recommendations. It depends on why are buying a stock and also on whether you are a short term or long term buyer.
This looks like an interesting stock and will continue to track it.
Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Its web site is here Methanex. See my spreadsheet at mx.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.
Tuesday, November 30, 2010
Monday, November 29, 2010
Methanex Corp
I am starting to review this stock (TSX-MX; NASDAQ-MEOH) as I have read some good reports on it lately. It is also got a solid “C” grade in the recent money sense review of stocks. You might be interested in this link to Money Sense. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.
The problem for a Canadian investing in this company is that, not only does the company report in US$, but it also pays dividends in US$. That means that if you invest in this stock in a Canadian currency account your dividends will fluctuate with the US-CDN currency exchange. One way around that is to have a US account to hold this stock in. The stock is traded on the TSX and the NASDAQ exchanges. As with a lot of companies reporting in US$, this stock has done better in US$ terms than in CDN$ terms. This is because of the relative strength of our currency recently to US currency.
As far as dividends go, they only started to pay them in 2002 and they have a good record of increases, so that, in Canadian Terms they have increased at an average of just over 16% per year. If they continue with this record, you could be getting a 4.5% return on today’s investment in this stock in 5 years time or a 9.5% return on today’s investment in this stock in 10 years time. The payout ratio for both earnings and cash flow is just over 20%, so that continuation of these dividends should not be a problem for this company.
A lot of the growth figures are low (or non-existent) because the company has been hit hard with the latest recession. This is not unusual with an industrial type stock. For example, revenue has been hit. This company had revenue per share of $30.78 in 2008 and it dropped to $13.66 in 2009. However, if you look at revenue for the last 12 month, the company has $19.66 of revenue per share.
Where this company has not done badly is the growth in Book Value. This has increase by 5.7% per year over the past 10 year and 8.1% per year over the past 5 years. The 10 year rate is a little low, but the 5 year rate of increase is good.
One very good thing about this stock is the Liquidity Ratio, which is at 2.41. Its 5 year average is 2.35 The Asset/Liability ratio is also quite good at 1.71. The A/L Ratio has a 5 year average of 1.85. What you want is debt ratios of at least 1.50 and therefore the ratios for this company are very good. When looking at Return on Equity, this company has not done well over the past two years. The ROE for 2009 was just 1%. The ROE for the first 3 quarters of this year is a better 7.9%.
In total returns, a long term investment of 10 years would get you a 15% to 20% annual return with some 3 – 4% of this return in dividend. However, the total return over the past 5 years might get you 0% to 2% per year with 3 to 4% of the return in dividends. Considering how hard this stock was hit in this recession, this is not bad at all. The dividends paid on this stock turn its return over the past 5 years from a loss to a small gain. This is often why people like to invest in dividend paying stock.
They on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Tomorrow, I will take a look at what the analysts are currently saying about this stock.
Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Its web site is here Methanex. See my spreadsheet at mx.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.
The problem for a Canadian investing in this company is that, not only does the company report in US$, but it also pays dividends in US$. That means that if you invest in this stock in a Canadian currency account your dividends will fluctuate with the US-CDN currency exchange. One way around that is to have a US account to hold this stock in. The stock is traded on the TSX and the NASDAQ exchanges. As with a lot of companies reporting in US$, this stock has done better in US$ terms than in CDN$ terms. This is because of the relative strength of our currency recently to US currency.
As far as dividends go, they only started to pay them in 2002 and they have a good record of increases, so that, in Canadian Terms they have increased at an average of just over 16% per year. If they continue with this record, you could be getting a 4.5% return on today’s investment in this stock in 5 years time or a 9.5% return on today’s investment in this stock in 10 years time. The payout ratio for both earnings and cash flow is just over 20%, so that continuation of these dividends should not be a problem for this company.
A lot of the growth figures are low (or non-existent) because the company has been hit hard with the latest recession. This is not unusual with an industrial type stock. For example, revenue has been hit. This company had revenue per share of $30.78 in 2008 and it dropped to $13.66 in 2009. However, if you look at revenue for the last 12 month, the company has $19.66 of revenue per share.
Where this company has not done badly is the growth in Book Value. This has increase by 5.7% per year over the past 10 year and 8.1% per year over the past 5 years. The 10 year rate is a little low, but the 5 year rate of increase is good.
One very good thing about this stock is the Liquidity Ratio, which is at 2.41. Its 5 year average is 2.35 The Asset/Liability ratio is also quite good at 1.71. The A/L Ratio has a 5 year average of 1.85. What you want is debt ratios of at least 1.50 and therefore the ratios for this company are very good. When looking at Return on Equity, this company has not done well over the past two years. The ROE for 2009 was just 1%. The ROE for the first 3 quarters of this year is a better 7.9%.
In total returns, a long term investment of 10 years would get you a 15% to 20% annual return with some 3 – 4% of this return in dividend. However, the total return over the past 5 years might get you 0% to 2% per year with 3 to 4% of the return in dividends. Considering how hard this stock was hit in this recession, this is not bad at all. The dividends paid on this stock turn its return over the past 5 years from a loss to a small gain. This is often why people like to invest in dividend paying stock.
They on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Tomorrow, I will take a look at what the analysts are currently saying about this stock.
Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Its web site is here Methanex. See my spreadsheet at mx.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.
Saturday, November 27, 2010
Adventures with Global Credit
This company has been phoning me for the last 2 years looking for a Suzi C Brunner and Jeff Brunner. It does not matter that I tell them I do not know these people. They insist that I must be Suzi Brunner. They say, is that Suzi and I ask who is calling and I get a name like “Jason”. Next, I get “this item has just crossed my desk. It is an important matter, but first I must ensure I am talking to the right person”. Then they ask for my birthdate or SIN.
Like, I am going to tell a perfect stranger this sort of information. Do they think I am an idiot? Do people really fall for this? Just how incompetent are these people? I ask again, who is this calling and I get Global Credit. This is probably a legal thing that they cannot totally lie (or total misrepresent themselves). I usually get some information from these people like the address of these people, their postal code, or the age of the person they are looking for. Doesn’t matter that I say information is incorrect for me. They then blather on about something and then this is usually when I usually hang up the phone.
Sometimes they threat to keep calling me until I “co-operate” with them. Like, more spam phone calls, I guess! It is not as if I do not already get spam phone calls! (What it is with the guy, when you say hello says “press 1”.) Does Global Credit really think that any of this is going to change my attitude any? How incompetent is this?
I do wonder what they think “co-operating” with them is. I would guess it is me telling them some information about myself? They have to be kidding. Are people that stupid that they would give them any information? They start off a conversation being deceitful and they expect me to trust them. Maybe my standards are too high. I expect legitimate calls to be where the person identifies him or herself (first and last name); say the name of their company or organization they are connected with and then they tell me what the phone call is about.
I never had any debt or at least unpaid debt. Is this really all that happens to people who do not pay their bills? They get spam calls. And, you get them among a number of spam calls about all sorts of things. I mean really, this is all they do to collect debt? Does this really work?
Of course, I must admit that every time Global Credit personal get mad at me for “not co-operating” I get several phone calls in a row that are recorded messages. Then there is nothing for months and then they start again. Oh, the other thing that they do is leave a message on my phone. Someone says that they are looking for Suzi Brunner (sometimes it is Susan Brunner, I must admit) and that I must call them at this phone number about a very important matter within the next 24 hours. Do they really expect me to do this? I mean, really!
Like, I am going to tell a perfect stranger this sort of information. Do they think I am an idiot? Do people really fall for this? Just how incompetent are these people? I ask again, who is this calling and I get Global Credit. This is probably a legal thing that they cannot totally lie (or total misrepresent themselves). I usually get some information from these people like the address of these people, their postal code, or the age of the person they are looking for. Doesn’t matter that I say information is incorrect for me. They then blather on about something and then this is usually when I usually hang up the phone.
Sometimes they threat to keep calling me until I “co-operate” with them. Like, more spam phone calls, I guess! It is not as if I do not already get spam phone calls! (What it is with the guy, when you say hello says “press 1”.) Does Global Credit really think that any of this is going to change my attitude any? How incompetent is this?
I do wonder what they think “co-operating” with them is. I would guess it is me telling them some information about myself? They have to be kidding. Are people that stupid that they would give them any information? They start off a conversation being deceitful and they expect me to trust them. Maybe my standards are too high. I expect legitimate calls to be where the person identifies him or herself (first and last name); say the name of their company or organization they are connected with and then they tell me what the phone call is about.
I never had any debt or at least unpaid debt. Is this really all that happens to people who do not pay their bills? They get spam calls. And, you get them among a number of spam calls about all sorts of things. I mean really, this is all they do to collect debt? Does this really work?
Of course, I must admit that every time Global Credit personal get mad at me for “not co-operating” I get several phone calls in a row that are recorded messages. Then there is nothing for months and then they start again. Oh, the other thing that they do is leave a message on my phone. Someone says that they are looking for Suzi Brunner (sometimes it is Susan Brunner, I must admit) and that I must call them at this phone number about a very important matter within the next 24 hours. Do they really expect me to do this? I mean, really!
Friday, November 26, 2010
Goodfellow Inc. 2
I am reviewing this stock (TSX-GDL) today because I have not done so for a year. I started to look at this stock when I was searching for small cap stocks that paid dividends. It looked like an interesting stock, although it was not the one I decided to buy. Their financial year end is 31st of August of each year.
When I look at the insider trading report, over the past year there have been a bit of insider buying and a bit of insider selling. There is net selling of $.4M and it has all been done by directors of the company. This tells us little. What might be more telling is the handling of dividends. They issued a special dividend of $.30 in April of 2010. This is the same rate as the semi-annual dividend payment. They have not increased the dividend for this year yet and the first one has been declared at $.30. Are they being cautious or do they not think that the financial year ending in August 2011 will be more profitable than the prior year?
When I look at the P/E Ratio, I find the 5 year median low to be 5.4 and the 5 year median high to be 9.2. These are both quite low, where any P/E ratio below 10 is low. I get a current P/E ratio, based on earnings estimates for 2011 at 6.5. Sites that use a P/E ratio based on last 12 months of earnings get a P/E Ratio of 7.7. These ratios are all low; however, this is a small cap with a heavy insider ownership. The best way of getting an idea on what the P/E Ratios are like for this stock (or any stock) is just eye balling the section of my spreadsheet on stock prices and P/E Ratios. See my spreadsheet at gdl.htm.
For this year, I get a Graham Price of $23.02. The current stock price of $11.37 is some 51% lower. However, the Graham Price has on average, been some 44% lower than the stock price. So, on a relative basis the stock price is low. Next, I shall move on to the Price/Book Value Ratio. I get a current P/B Ratio of .0.84. This is some 90% below the 10 year average of 0.93. However, it also means that the stock price is below the theoretical breakup value of this stock. The current yield is 5.3%. The 5 year average yield is 5.1%. The current yield is good, but the high yield for this stock has often been around 5.3%. So, this shows a good, but not great, current price.
Another blogger follows this stock, see Canadian Ben Graham blog. A blogger posted a list of what he thinks is the current best dividend paying stocks and in this list was Goodfellow Inc. See The Dividend Guy Blog. It was also listed as one of the 50 best Canadian Dividend paying stock under The Financial Blogger.
I cannot find any analysts following this stock, but I did find a recent investment letter report that said that the stock was a good buy at $11.40. It also said that it expects Goodfellow to have near-term challenges because of the current weak economic environment. Nevertheless, they thought that the stock was a good buy for long term capital gains and dividend income.
Goodfellow is a wholesaler and distributor of wood and wood by-products with headquarters located in Delson, Québec. We have wood treating facilities and offer a full inventory of exterior siding, flooring, plywood, treated wood and prefabricated products as well as a broad range of hardwood, softwood and exotic woods. It has distributions centers in Canada and US. It is about 60% owned by insiders. Its web site is here Goodfellow. See my spreadsheet at gdl.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.
When I look at the insider trading report, over the past year there have been a bit of insider buying and a bit of insider selling. There is net selling of $.4M and it has all been done by directors of the company. This tells us little. What might be more telling is the handling of dividends. They issued a special dividend of $.30 in April of 2010. This is the same rate as the semi-annual dividend payment. They have not increased the dividend for this year yet and the first one has been declared at $.30. Are they being cautious or do they not think that the financial year ending in August 2011 will be more profitable than the prior year?
When I look at the P/E Ratio, I find the 5 year median low to be 5.4 and the 5 year median high to be 9.2. These are both quite low, where any P/E ratio below 10 is low. I get a current P/E ratio, based on earnings estimates for 2011 at 6.5. Sites that use a P/E ratio based on last 12 months of earnings get a P/E Ratio of 7.7. These ratios are all low; however, this is a small cap with a heavy insider ownership. The best way of getting an idea on what the P/E Ratios are like for this stock (or any stock) is just eye balling the section of my spreadsheet on stock prices and P/E Ratios. See my spreadsheet at gdl.htm.
For this year, I get a Graham Price of $23.02. The current stock price of $11.37 is some 51% lower. However, the Graham Price has on average, been some 44% lower than the stock price. So, on a relative basis the stock price is low. Next, I shall move on to the Price/Book Value Ratio. I get a current P/B Ratio of .0.84. This is some 90% below the 10 year average of 0.93. However, it also means that the stock price is below the theoretical breakup value of this stock. The current yield is 5.3%. The 5 year average yield is 5.1%. The current yield is good, but the high yield for this stock has often been around 5.3%. So, this shows a good, but not great, current price.
Another blogger follows this stock, see Canadian Ben Graham blog. A blogger posted a list of what he thinks is the current best dividend paying stocks and in this list was Goodfellow Inc. See The Dividend Guy Blog. It was also listed as one of the 50 best Canadian Dividend paying stock under The Financial Blogger.
I cannot find any analysts following this stock, but I did find a recent investment letter report that said that the stock was a good buy at $11.40. It also said that it expects Goodfellow to have near-term challenges because of the current weak economic environment. Nevertheless, they thought that the stock was a good buy for long term capital gains and dividend income.
Goodfellow is a wholesaler and distributor of wood and wood by-products with headquarters located in Delson, Québec. We have wood treating facilities and offer a full inventory of exterior siding, flooring, plywood, treated wood and prefabricated products as well as a broad range of hardwood, softwood and exotic woods. It has distributions centers in Canada and US. It is about 60% owned by insiders. Its web site is here Goodfellow. See my spreadsheet at gdl.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.
Thursday, November 25, 2010
Goodfellow Inc.
I am reviewing this stock (TSX-GDL) today because I have not done so for a year. I started to look at this stock when I was searching for small cap stocks that paid dividends. It looked like an interesting stock, although it was not the one I decided to buy at that time.
In regards to dividends, this company basically pays what they can afford to pay. It has also paid special dividends when they thought this was appropriate. Sometimes, as far as dividends are concerned, stockholders can do very well with a company with this sort of dividend policy. Their dividends have increased over time, but the increase has been uneven. With this sort of policy, stockholder can sometimes make more dividend income than from companies that increase their dividends over time, but will only increase them if they are very sure that the increased dividends can be maintained.
Another way of looking at dividends for this stock is that total return has been for the last 5 and 10 years at 3.7% and 14.5% per year, respectively. About 5.5% of the yearly total returns can be attributed to dividends. This is a very good showing. Also, the current dividend yield of about 5.3% is very good.
This company got hit very hard in 2008 and 2009, so there is little or not growth in revenues or cash flow, especially for the last 5 years and very mediocre grow at that over the last 10 years. However, for the financial year ending in August 2010, revenue, cash flow and earnings have all picked up substantially. What you can do to get an idea on how well this stock is doing on various levels is just eyeball the spreadsheet I have online. This can quickly give you an idea of how well the stock is doing, perhaps even a better idea than just looking at averages. See my spreadsheet at gdl.htm.
This company is about 60% owned by insiders. In other small cap, largely insider owned companies like Leon’s and Reitmans, what you find is very strong balance sheets. This allows a company to weather a problematic economic situation and these occur from time to time. The Liquidity Ratio is 2.27 and the 5 year average is 3.09. The Asset/Liability Ratio is 2.71 with a 5 year average of 2.89. I am happy when both these figures are around 1.50. Of course, low debt or leverage is very good thing to have in a company.
I guess that last thing to look at is the Return on Equity. The 5 year average ROE is 10.8% and the ROE at the end of the August 2010 financial year is 10.9%. Their history of ROE is quite good.
Tomorrow I will talk about how good the current price is and what analysts have to say about this stock.
Goodfellow is a wholesaler and distributor of wood and wood by-products with headquarters located in Delson, Québec. We have wood treating facilities and offer a full inventory of exterior siding, flooring, plywood, treated wood and prefabricated products as well as a broad range of hardwood, softwood and exotic woods. It has distributions centers in Canada and US. It is about 60% owned by insiders. Its web site is here Goodfellow. See my spreadsheet at gdl.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.
In regards to dividends, this company basically pays what they can afford to pay. It has also paid special dividends when they thought this was appropriate. Sometimes, as far as dividends are concerned, stockholders can do very well with a company with this sort of dividend policy. Their dividends have increased over time, but the increase has been uneven. With this sort of policy, stockholder can sometimes make more dividend income than from companies that increase their dividends over time, but will only increase them if they are very sure that the increased dividends can be maintained.
Another way of looking at dividends for this stock is that total return has been for the last 5 and 10 years at 3.7% and 14.5% per year, respectively. About 5.5% of the yearly total returns can be attributed to dividends. This is a very good showing. Also, the current dividend yield of about 5.3% is very good.
This company got hit very hard in 2008 and 2009, so there is little or not growth in revenues or cash flow, especially for the last 5 years and very mediocre grow at that over the last 10 years. However, for the financial year ending in August 2010, revenue, cash flow and earnings have all picked up substantially. What you can do to get an idea on how well this stock is doing on various levels is just eyeball the spreadsheet I have online. This can quickly give you an idea of how well the stock is doing, perhaps even a better idea than just looking at averages. See my spreadsheet at gdl.htm.
This company is about 60% owned by insiders. In other small cap, largely insider owned companies like Leon’s and Reitmans, what you find is very strong balance sheets. This allows a company to weather a problematic economic situation and these occur from time to time. The Liquidity Ratio is 2.27 and the 5 year average is 3.09. The Asset/Liability Ratio is 2.71 with a 5 year average of 2.89. I am happy when both these figures are around 1.50. Of course, low debt or leverage is very good thing to have in a company.
I guess that last thing to look at is the Return on Equity. The 5 year average ROE is 10.8% and the ROE at the end of the August 2010 financial year is 10.9%. Their history of ROE is quite good.
Tomorrow I will talk about how good the current price is and what analysts have to say about this stock.
Goodfellow is a wholesaler and distributor of wood and wood by-products with headquarters located in Delson, Québec. We have wood treating facilities and offer a full inventory of exterior siding, flooring, plywood, treated wood and prefabricated products as well as a broad range of hardwood, softwood and exotic woods. It has distributions centers in Canada and US. It is about 60% owned by insiders. Its web site is here Goodfellow. See my spreadsheet at gdl.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.
Wednesday, November 24, 2010
Great West Lifeco 2
I am finishing my review on this stock (TSX-GWO) today as I forgot to finish this off on Monday. I had been reading about how it is a good dividend growth stock. It was mentioned because of its good combination of dividend yield and dividend growth over the past 5 years. (This was in the same report as I read on Home Capital Group.)
What I noticed is that there was insider selling to the tune of $28M, mostly done in the early part of this year. Often when you get such a large amount of insider selling you can find some reason for it on the internet, but I could find nothing. The thing is you never know why anyone sells, so even though it is a lot of selling, it does not tell us much. In the past year there has been insider buying (by an officer and director) of $1.4M of this stock.
When I look at the P/E ratio, I find that the 5 year median low is 13 and the 5 year median high is 16.3. The current P/E ratio, based on estimated earnings for 2010, is 13.5. This is relatively low. Sites that base current P/E on last 12 months earnings get about the same at 13.8. For 2010, I get a Graham Price of $24.55. The current stock price of $25.68 is only 4.6% higher. The 10 year median difference is 18%, so this is relatively good.
For the Price/Book Value Ratio, I get a 10 year average of 2.62 and a current P/B ratio of 1.82. Since the current P/B ratio is only 70% of the 10 year average, this points to a good current stock price. The current dividend yield of 4.8% is quite good for this stock. The 5 year average is 3.8% and the 10 year average high is 4%. The dividend growth potential of a stock is what potential return you would get in dividends on the purchase of this stock at today’s price. If you bought this stock at today’s price, you could be earnings 10% to 12% on this investment in 10 years time.
When I look at analysts recommendations, I find they are all over the place at Strong Buy, Buy, Hold and Underperform. There are almost as many Strong Buy recommendations as there are Hold recommendations. The consensus could be a Hold. (See my site for information on analyst ratings.) Many analysts think this stock is more stable than either Manulife or Sun Life. They also think that Great-West Life might be the first to restart dividend increases.
The 12 month target price for Hold recommendations is around $28 and for the Buy recommendations is around $31, so they are not far apart. If this is a long term buy, it is probably a good time to buy. You can get a very good dividend yields at 4.8%. In this market and for insurance companies, it is hard to say when you might get capital gains. However, this would be the sort of company to buy for increasing dividends and long term capital gains.
Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great West. See my spreadsheet at gwo.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.
What I noticed is that there was insider selling to the tune of $28M, mostly done in the early part of this year. Often when you get such a large amount of insider selling you can find some reason for it on the internet, but I could find nothing. The thing is you never know why anyone sells, so even though it is a lot of selling, it does not tell us much. In the past year there has been insider buying (by an officer and director) of $1.4M of this stock.
When I look at the P/E ratio, I find that the 5 year median low is 13 and the 5 year median high is 16.3. The current P/E ratio, based on estimated earnings for 2010, is 13.5. This is relatively low. Sites that base current P/E on last 12 months earnings get about the same at 13.8. For 2010, I get a Graham Price of $24.55. The current stock price of $25.68 is only 4.6% higher. The 10 year median difference is 18%, so this is relatively good.
For the Price/Book Value Ratio, I get a 10 year average of 2.62 and a current P/B ratio of 1.82. Since the current P/B ratio is only 70% of the 10 year average, this points to a good current stock price. The current dividend yield of 4.8% is quite good for this stock. The 5 year average is 3.8% and the 10 year average high is 4%. The dividend growth potential of a stock is what potential return you would get in dividends on the purchase of this stock at today’s price. If you bought this stock at today’s price, you could be earnings 10% to 12% on this investment in 10 years time.
When I look at analysts recommendations, I find they are all over the place at Strong Buy, Buy, Hold and Underperform. There are almost as many Strong Buy recommendations as there are Hold recommendations. The consensus could be a Hold. (See my site for information on analyst ratings.) Many analysts think this stock is more stable than either Manulife or Sun Life. They also think that Great-West Life might be the first to restart dividend increases.
The 12 month target price for Hold recommendations is around $28 and for the Buy recommendations is around $31, so they are not far apart. If this is a long term buy, it is probably a good time to buy. You can get a very good dividend yields at 4.8%. In this market and for insurance companies, it is hard to say when you might get capital gains. However, this would be the sort of company to buy for increasing dividends and long term capital gains.
Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great West. See my spreadsheet at gwo.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.
Tuesday, November 23, 2010
Direct Cash Income Fund 2
I am reviewing this stock (TSX-DCI.UN) today because I have not done so for a year. I picked up this stock from the Money Show I attended in 2009. It was an income trust company that was recommended as one that will do well when income trusts had to convert to corporations. This stock has done well over the past year. The question today, is it a good stock to buy at the present moment?
When you look at Insider Trading, I find that there was $6.6M in insider selling and $1.2M in insider buying. The majority of the selling seems to be by Jeffrey J. Smith, the CEO via Atlantis Financial Corp., a company wholly owned by Jeffrey J. Smith. I see no reason for this sale; so, it is not telling us anything. The hint that the company has confidence, at least in the short term is the special dividend of $.25 to be paid in early 2010.
The company had previously said that they would not decrease the dividends on conversion to a corporation. They are sticking to this. However, they seem to be inclined to give special dividends out rather than increase the dividend payments. This generally points to management having cash now for an extra dividend, but them also being unsure if the future will provide for an increase in dividend payments. Also, analysts are predicting that the earnings on this stock will decrease in 2011 from estimates given for 2010.
The 5 year median P/E ratios for this stock are so high (at 76 and 94) that it provides no guidance on a good relative P/E ratio. However, the current P/E ratio, based on the estimated earnings for 2010, at 11.7 is not a bad P/E ratio. Generally speaking, a P/E of 10 or less is good. The Graham price for 2011 is $16.93 and the current stock price of $20.98 is some24% above this. However, in the past the stock price and Graham Price have not even been close. In recent years, the Graham Price and the Stock Price has been getting closer.
When I look at the Price/Book Value ratio, I get a current one of 2.96 and a 5 year average of 2.17. This does not point to a good current price, as the current ratio is almost 40% above the 5 year average. The last measure to look at is the dividend year. The 5 year average is 10.34%, which is very high. The current yield at 6.7% is still a good yield, but it is lower than the 5 year average.
So, it is only on the basis of P/E that this stock price looks good. On sites that use the last 12 months earnings, the P/E is even lower at 10.3. This company’s 12 months earnings equal $2.03. Also, you should be aware that yields are expected to come down on Income Trust as they convert to corporations. So, a current yield of 6.7% is still good.
There are few analysts that follow this stock. What recommendations I can find are Strong Buy and Buy. The consensus is probably a Strong Buy. (See my site for information on analyst ratings.) A lot of analysts seem to like the management. It is felt that this company is well managed and it will continue to grow their share of ATM machines.
I will continue to track this stock.
DirectCash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. Direct Cash operates in Canada, the United States and Mexico. Over 40% owned by Gallacher family. Its web site is here Direct Cash. See my spreadsheet at dci.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.
When you look at Insider Trading, I find that there was $6.6M in insider selling and $1.2M in insider buying. The majority of the selling seems to be by Jeffrey J. Smith, the CEO via Atlantis Financial Corp., a company wholly owned by Jeffrey J. Smith. I see no reason for this sale; so, it is not telling us anything. The hint that the company has confidence, at least in the short term is the special dividend of $.25 to be paid in early 2010.
The company had previously said that they would not decrease the dividends on conversion to a corporation. They are sticking to this. However, they seem to be inclined to give special dividends out rather than increase the dividend payments. This generally points to management having cash now for an extra dividend, but them also being unsure if the future will provide for an increase in dividend payments. Also, analysts are predicting that the earnings on this stock will decrease in 2011 from estimates given for 2010.
The 5 year median P/E ratios for this stock are so high (at 76 and 94) that it provides no guidance on a good relative P/E ratio. However, the current P/E ratio, based on the estimated earnings for 2010, at 11.7 is not a bad P/E ratio. Generally speaking, a P/E of 10 or less is good. The Graham price for 2011 is $16.93 and the current stock price of $20.98 is some24% above this. However, in the past the stock price and Graham Price have not even been close. In recent years, the Graham Price and the Stock Price has been getting closer.
When I look at the Price/Book Value ratio, I get a current one of 2.96 and a 5 year average of 2.17. This does not point to a good current price, as the current ratio is almost 40% above the 5 year average. The last measure to look at is the dividend year. The 5 year average is 10.34%, which is very high. The current yield at 6.7% is still a good yield, but it is lower than the 5 year average.
So, it is only on the basis of P/E that this stock price looks good. On sites that use the last 12 months earnings, the P/E is even lower at 10.3. This company’s 12 months earnings equal $2.03. Also, you should be aware that yields are expected to come down on Income Trust as they convert to corporations. So, a current yield of 6.7% is still good.
There are few analysts that follow this stock. What recommendations I can find are Strong Buy and Buy. The consensus is probably a Strong Buy. (See my site for information on analyst ratings.) A lot of analysts seem to like the management. It is felt that this company is well managed and it will continue to grow their share of ATM machines.
I will continue to track this stock.
DirectCash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. Direct Cash operates in Canada, the United States and Mexico. Over 40% owned by Gallacher family. Its web site is here Direct Cash. See my spreadsheet at dci.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.
Monday, November 22, 2010
Direct Cash Income Fund
I am reviewing this stock (TSX-DCI.UN) today because I have not done so for a year. I picked up this stock from the Money Show I attended in 2009. It was an income trust company that was recommended as one that will do well when income trusts had to convert to corporations. The company has announced that they will become a corporation on 1 January 2011.
So, how has this income trust done over the past year? First of all, in dividends, these have been maintained. The second thing to mention is that the company will pay a special dividend of $.25 a share early in 2011. This is equal to about 18% of the current dividend. They also made special dividend payments in 2009 of $.12 and this year of $.10. In this respect, this company has certainly lived up to expectation.
Earnings also have been very good. Earnings for 2008 were only $.16, but earnings for 2009 were $1.20 and 2010 is expected to be even better at $1.80. However, earnings are expected to decline in 2011 to $1.45. Revenue increases have not been as good, but they have moved up 9% each year over the past 2 years. Revenues are expected to be up more than 10% in 2010. You get the same story with cash flow. This was up some 23% in 2009 and so far this years, the 12 month cash flow is up by 10% over last years cash flow.
The negatives I find is that, as usually with lots of income trust stock, the book value has been declining since this stock was issued. The decline is at the rate of about 9% per year. The positive thing is that the book value increased so far this year by 50%. The book value at $7.08 is not as high as it was in 2006 at $7.58, but it has started to go in the right direction.
When looking at the Liquidity Ratio, it is quite low with a value of just 0.71 in 2009. This since has moved to 0.91, but it means that the current assets cannot cover current liabilities. The Asset/Liability ratio is much better 2.37. The average leverage ratio is not bad at 1.74; however, this ratio has been increasing from steadily over the years from 1.52 in 2005 to a high of 2.02 at the end of 2009. This has come down for the 3rd quarter of 2010 to a better ratio of 1.73.
I will look and see what the analysts are saying about this stock and how good the current price is tomorrow.
Direct Cash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. Direct Cash operates in Canada, the United States and Mexico. Over 40% owned by Gallacher family. Its web site is here Direct Cash. See my spreadsheet at dci.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.
So, how has this income trust done over the past year? First of all, in dividends, these have been maintained. The second thing to mention is that the company will pay a special dividend of $.25 a share early in 2011. This is equal to about 18% of the current dividend. They also made special dividend payments in 2009 of $.12 and this year of $.10. In this respect, this company has certainly lived up to expectation.
Earnings also have been very good. Earnings for 2008 were only $.16, but earnings for 2009 were $1.20 and 2010 is expected to be even better at $1.80. However, earnings are expected to decline in 2011 to $1.45. Revenue increases have not been as good, but they have moved up 9% each year over the past 2 years. Revenues are expected to be up more than 10% in 2010. You get the same story with cash flow. This was up some 23% in 2009 and so far this years, the 12 month cash flow is up by 10% over last years cash flow.
The negatives I find is that, as usually with lots of income trust stock, the book value has been declining since this stock was issued. The decline is at the rate of about 9% per year. The positive thing is that the book value increased so far this year by 50%. The book value at $7.08 is not as high as it was in 2006 at $7.58, but it has started to go in the right direction.
When looking at the Liquidity Ratio, it is quite low with a value of just 0.71 in 2009. This since has moved to 0.91, but it means that the current assets cannot cover current liabilities. The Asset/Liability ratio is much better 2.37. The average leverage ratio is not bad at 1.74; however, this ratio has been increasing from steadily over the years from 1.52 in 2005 to a high of 2.02 at the end of 2009. This has come down for the 3rd quarter of 2010 to a better ratio of 1.73.
I will look and see what the analysts are saying about this stock and how good the current price is tomorrow.
Direct Cash is the leading provider of ATMs, debit terminals, prepaid phone cards and prepaid cash cards in Canada. They have built a substantial technological, sales and service infrastructure that enables them to offer convenient and secure revenue streams for businesses across the country. Direct Cash operates in Canada, the United States and Mexico. Over 40% owned by Gallacher family. Its web site is here Direct Cash. See my spreadsheet at dci.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.
Friday, November 19, 2010
Great West Lifeco
I am reviewing this stock (TSX-GWO) today as I was just reading about how it is a good dividend growth stock. It was mentioned because of its good combination of dividend yield and dividend growth over the past 5 years. (This was in the same report as on Home Capital Group.) I do not own this stock as I have Power Financial. Power Financial owes 65% of this company.
First, I want to talk about dividends, my favorite subject when talking about stocks. Dividend growth up until 2008 was very good, averaging about 16% per year. Dividends only grew 2.5% in 2009 and they have not raised the dividends for 2010. The declared dividend for December 2010 is also at the same rate. Probably because a lot of financials, like insurance companies, were hit hard by the latest recession.
Even though the yield on this stock has been higher in 2008 and 2009, the current yield of 4.7% is high by historical standards for this stock with a 10 year average high of 3.9%. The dividends have grown at the rate of 12.4% and 17% per year for the past 5 and 10 years to the end of 2009. However if you look at the 5 year growth to date it is lower at 8.7% per year. The company has not said when they will raise the dividends next yet.
If you look at the dividend growth potential of this stock, the dividend would only have to grow at the average rate of 7.7% a year over the next 10 years for you to have a 10% return, in 10 years time on the money you invested today. This is probably not asking too much from this stock as the company and Power Corp has a habit of very nice dividend increases. Sure, we will get another recession, but it will not be occur because of the same factors as this one and therefore will not affect insurance companies in the same way.
You might be interested in this link to Money Sense. Money Sense rated the top 100 Canadian Dividend Paying stocks and gave this stock a solid rating of “C” as of September 10, 2010. Money Sense was looking for stocks that provided generous income at reasonable prices. People have different ideas about what makes a good dividend paying stock. I found this stock on a much shorter list of good dividend paying stocks than the one from Money Sense, which includes some 100 stocks.
The growth figures for this stock are generally not bad. Where it falls down is in two categories. The first is the total return. The 5 year total return is around 4%, which is almost all dividend returns. The 10 year total return is much better at 13%, with over 4% of this return in dividends. This is the sort of split you want between capital gains and dividends for a long term stock investment.
The other growth figures that are not so great are in earnings. The 5 year growth in earnings is 0% per year. The 10 year growth is better at 9.2% per year. However, analysts feel that earnings will grow 10% this year and by 17% in 2011. It is expected that the company will fully recover its earnings by 2011.
I will not be buying this stock as I already have Power Financial. However, it has often been recommended as a great dividend paying stock, so I follow it and will continue to do so. Tomorrow, I will look at the current price for value and see what analysts are saying about this stock.
Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great West. See my spreadsheet at gwo.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.
First, I want to talk about dividends, my favorite subject when talking about stocks. Dividend growth up until 2008 was very good, averaging about 16% per year. Dividends only grew 2.5% in 2009 and they have not raised the dividends for 2010. The declared dividend for December 2010 is also at the same rate. Probably because a lot of financials, like insurance companies, were hit hard by the latest recession.
Even though the yield on this stock has been higher in 2008 and 2009, the current yield of 4.7% is high by historical standards for this stock with a 10 year average high of 3.9%. The dividends have grown at the rate of 12.4% and 17% per year for the past 5 and 10 years to the end of 2009. However if you look at the 5 year growth to date it is lower at 8.7% per year. The company has not said when they will raise the dividends next yet.
If you look at the dividend growth potential of this stock, the dividend would only have to grow at the average rate of 7.7% a year over the next 10 years for you to have a 10% return, in 10 years time on the money you invested today. This is probably not asking too much from this stock as the company and Power Corp has a habit of very nice dividend increases. Sure, we will get another recession, but it will not be occur because of the same factors as this one and therefore will not affect insurance companies in the same way.
You might be interested in this link to Money Sense. Money Sense rated the top 100 Canadian Dividend Paying stocks and gave this stock a solid rating of “C” as of September 10, 2010. Money Sense was looking for stocks that provided generous income at reasonable prices. People have different ideas about what makes a good dividend paying stock. I found this stock on a much shorter list of good dividend paying stocks than the one from Money Sense, which includes some 100 stocks.
The growth figures for this stock are generally not bad. Where it falls down is in two categories. The first is the total return. The 5 year total return is around 4%, which is almost all dividend returns. The 10 year total return is much better at 13%, with over 4% of this return in dividends. This is the sort of split you want between capital gains and dividends for a long term stock investment.
The other growth figures that are not so great are in earnings. The 5 year growth in earnings is 0% per year. The 10 year growth is better at 9.2% per year. However, analysts feel that earnings will grow 10% this year and by 17% in 2011. It is expected that the company will fully recover its earnings by 2011.
I will not be buying this stock as I already have Power Financial. However, it has often been recommended as a great dividend paying stock, so I follow it and will continue to do so. Tomorrow, I will look at the current price for value and see what analysts are saying about this stock.
Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great West. See my spreadsheet at gwo.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.
Thursday, November 18, 2010
Home Capital Group 2
I am reviewing this stock (TSX-HCG) today as I was just reading about how it is a good dividend growth stock. It was mentioned because of its good combination of dividend yield and dividend growth over the past 5 years. This company is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
As usual, I first looked at the Insider Trading report. The thing to note is that there was some $12.6M of Insider Selling over the past year. It was spread out over the year and spread out over the insiders. That is there was selling by CEO, CFO, Officers and Directors. There was a tiny bit, too small to almost mention, of Insider Buying by a Director over the past year. Home Capital Group has been busy buying back its shares. The other thing is that employees have been buying small number of shares through their employees’ company plan.
At least for this company, insiders own more shares than they have of stock options. None of this tells us much about how insiders feel about the future of the company. I guess the one clue we have is the recent increase in dividends shows some confidence in the company. The dividend increase was at 12.5%, which is a decent increase. The last thing to note is that of the studies I read about company buy backs of shares is that no one has ever accused a company of buying back shares when they are underpriced (which you would think would be the time to do so). That is why I think buy backs do not tell us very much, except perhaps that, the company has some money to spend.
The 5 year median low P/E ratio for this stock is 12.6 and the 5 year median high P/E is 16.2. For this stock, I get a current P/E of 9.5. Sites that look at the P/E ratio based on the last 12 months of earnings get the same P/E ratio of 9.5. This would point to a current good stock price. For the Graham Price, I get a current one of $47.03. The stock price is just slightly lower than this. This also points to a good current stock price.
I get a Price/Book Value ratio of 2.32 and a 10 year P/B ratio of 3.60. This makes the current P/B ratio only 65% of the 10 year ratio. This shows a good relatively P/B ratio and so a relatively good stock price. The last thing to look at is the yield. I get a current one of 1.4% with a 5 year average yield of just 1.2%. However, the yield has been better as this stock has a 10 year average high of 1.8%. This is mainly due to the yield reaching up to over 3% in 2008 and 2009.
So what do the analysts recommend? What I find are lots of Strong Buy and Buy recommendations. There is also a Hold recommendation, which seems to be quite a recent one. The consensus would be a Buy. (See my site for information on analyst ratings.) Every one seems to feel that this is a well managed company. Analysts quote a 12 month stock price between $58 and $65. It is obvious that analysts think that you should buy this stock for future capital gains. However, one did mention the recent 12.5% dividend increase.
I am not currently buying anything at the moment. I had been hoping for a fall in the markets this fall and with today’s rally, this is looking increasing unlikely. I will continue to follow this stock.
Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages.
Its stock is widely held. Its web site is here Home Capital. See my spreadsheet at hcg.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.
As usual, I first looked at the Insider Trading report. The thing to note is that there was some $12.6M of Insider Selling over the past year. It was spread out over the year and spread out over the insiders. That is there was selling by CEO, CFO, Officers and Directors. There was a tiny bit, too small to almost mention, of Insider Buying by a Director over the past year. Home Capital Group has been busy buying back its shares. The other thing is that employees have been buying small number of shares through their employees’ company plan.
At least for this company, insiders own more shares than they have of stock options. None of this tells us much about how insiders feel about the future of the company. I guess the one clue we have is the recent increase in dividends shows some confidence in the company. The dividend increase was at 12.5%, which is a decent increase. The last thing to note is that of the studies I read about company buy backs of shares is that no one has ever accused a company of buying back shares when they are underpriced (which you would think would be the time to do so). That is why I think buy backs do not tell us very much, except perhaps that, the company has some money to spend.
The 5 year median low P/E ratio for this stock is 12.6 and the 5 year median high P/E is 16.2. For this stock, I get a current P/E of 9.5. Sites that look at the P/E ratio based on the last 12 months of earnings get the same P/E ratio of 9.5. This would point to a current good stock price. For the Graham Price, I get a current one of $47.03. The stock price is just slightly lower than this. This also points to a good current stock price.
I get a Price/Book Value ratio of 2.32 and a 10 year P/B ratio of 3.60. This makes the current P/B ratio only 65% of the 10 year ratio. This shows a good relatively P/B ratio and so a relatively good stock price. The last thing to look at is the yield. I get a current one of 1.4% with a 5 year average yield of just 1.2%. However, the yield has been better as this stock has a 10 year average high of 1.8%. This is mainly due to the yield reaching up to over 3% in 2008 and 2009.
So what do the analysts recommend? What I find are lots of Strong Buy and Buy recommendations. There is also a Hold recommendation, which seems to be quite a recent one. The consensus would be a Buy. (See my site for information on analyst ratings.) Every one seems to feel that this is a well managed company. Analysts quote a 12 month stock price between $58 and $65. It is obvious that analysts think that you should buy this stock for future capital gains. However, one did mention the recent 12.5% dividend increase.
I am not currently buying anything at the moment. I had been hoping for a fall in the markets this fall and with today’s rally, this is looking increasing unlikely. I will continue to follow this stock.
Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages.
Its stock is widely held. Its web site is here Home Capital. See my spreadsheet at hcg.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.
Wednesday, November 17, 2010
Home Capital Group
I am reviewing this stock (TSX-HCG) today as I was just reading about how it is a good dividend growth stock. It was mentioned because of its good combination of dividend yield and dividend growth over the past 5 years. The current dividend is 1.6%, which I do not find that good. However, the growth in dividend yield over the past 5 and 10 years has been very good at 38% and 37% per year, respectively.
What the article I was reading was referring to was dividend growth potential. That is what you will earn in 5 or 10 years time on your investment if you bought this stock today. If dividends continued to grow at 37% per year, your yield on a current investment would be 7.5% and 36% in 5 and 10 years time.
However, the dividend increases have been much lower over the last few years, so if they grew by say 16% per year instead, you will be earning on your investment today, 3.25% and 6.8% in 5 and 10 years time. The problem is, we can see what has been happening in the past, but we cannot know what will happen in the future. You can only guess at that.
The thing is that the increases in dividends have come from a higher percentage of earnings and cash flow going to dividends. However, the 5 year average payouts were only about 14% for both earnings and cash flow. The top payouts were only 17% and 18% for earnings and cash flow. These are moderate figures.
Most of the growth figures for this stock are very good. For example, the book value growth for the last 5 and 10 years is about 28% per year. This is very good. The worse growth figures are for 5 year total returns. The total returns for the last 5 years would be only about 5 to 6% per year. However, the 10 year total returns are much higher at about 35% per year. The dividends do not add much to the total returns at close to only 1.5% per year. This is because the yield has been low, with the 5 year average being only 1.5%.
This stock lost a fair bit of value in 2008, going as low as $15.65; however, it has recovered nicely and is now at $46.50. This is a high for this stock. It would seem that this stock has over the past done very well for its shareholders over the long term This company is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages.
Its stock is widely held. Its web site is here Home Capital. See my spreadsheet at hcg.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.
What the article I was reading was referring to was dividend growth potential. That is what you will earn in 5 or 10 years time on your investment if you bought this stock today. If dividends continued to grow at 37% per year, your yield on a current investment would be 7.5% and 36% in 5 and 10 years time.
However, the dividend increases have been much lower over the last few years, so if they grew by say 16% per year instead, you will be earning on your investment today, 3.25% and 6.8% in 5 and 10 years time. The problem is, we can see what has been happening in the past, but we cannot know what will happen in the future. You can only guess at that.
The thing is that the increases in dividends have come from a higher percentage of earnings and cash flow going to dividends. However, the 5 year average payouts were only about 14% for both earnings and cash flow. The top payouts were only 17% and 18% for earnings and cash flow. These are moderate figures.
Most of the growth figures for this stock are very good. For example, the book value growth for the last 5 and 10 years is about 28% per year. This is very good. The worse growth figures are for 5 year total returns. The total returns for the last 5 years would be only about 5 to 6% per year. However, the 10 year total returns are much higher at about 35% per year. The dividends do not add much to the total returns at close to only 1.5% per year. This is because the yield has been low, with the 5 year average being only 1.5%.
This stock lost a fair bit of value in 2008, going as low as $15.65; however, it has recovered nicely and is now at $46.50. This is a high for this stock. It would seem that this stock has over the past done very well for its shareholders over the long term This company is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages.
Its stock is widely held. Its web site is here Home Capital. See my spreadsheet at hcg.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.
Tuesday, November 16, 2010
Suncor Energy Inc 2
The stock I had been following was Petro-Can. Petro-Can, this was recently (2009) bought out by Suncor Energy Inc (TSX-SU). Petro-Can makes up 40% of the current Suncor company and the old Suncor company makes up the other 60%.
First, I looked at the Insider Trading report. What I find is that there has been $2.1M of Insider Buying and $7.7M of Insider Selling, for a net of Insider Selling of $5.6M. Quite a lot of selling, but this does not tell us much. The other thing that I noticed is that Insider (expect for directors) have lots more stock options than share. This is not great, but unfortunately is typical of a lot of companies.
When I look at the P/E ratio, I get a current one of 22.8, which is a little high. However, the 5 year median low P/E ratio is 18.2 and the 5 year median high is 37.2. On a relative basis, the P/E is not high. When I look at the Graham Price, I get one of $27.96 for 2010. The current stock price of $34.67 is some 24% higher than the Graham Price. Over the 3 past years, the Graham price has been at or below the Graham price. However, this has not been the case this year. I also note that since February, the stock has been trading in a fairly narrow band between $30 and $35.
When I look at the dividend yield, I note that the current one of 1.2% is better than the 5 year average of just .6%. If the dividends grow at the current 10 year growth rate of 18.9%, you would be earning 6.5% on a current investment in stock in 10 years time. This is the dividend growth potential of a stock and it is another way of assessing the dividend yield on a stock. This company is on one of the dividend lists that I follow of Dividend Achievers .
When I look at the Price/Book Value ratio, I find that it is current at 1.52. This is a low ratio and it is also only 77% of the 10 year average of 1.97. So, on a relative basis, the stock price seems good when looking at the P/E ratio, the dividend yield and the P/B Ratio. However, it is higher than the Graham price.
When I look at analysts recommendations, I find ones of Strong Buy, Buy and Hold. Analysts seem pretty evenly split overall on these recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The recommendations of Buy come with a 12 months stock price of $40.
The analysts that like this stock think that the merger with Petro-Can was a great idea. Analysts with a hold recommendation think that the company has underperformed in the latest stock market recovery. Everyone thinks it will do well in the long term. This company has a Wikipedia page at Suncor Energy. There is an interest video on the oil business at Bob Harrison.
Suncor Energy Inc. is an integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Suncor is also developing a growing renewable energy portfolio. Their international and offshore business includes operations in the North Sea (United Kingdom, Netherlands and Norway) and the East Coast of Canada. They are also in Libya, Syria and Trinidad and Tobago. Its web site is here Suncor. See my spreadsheet at su.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.
First, I looked at the Insider Trading report. What I find is that there has been $2.1M of Insider Buying and $7.7M of Insider Selling, for a net of Insider Selling of $5.6M. Quite a lot of selling, but this does not tell us much. The other thing that I noticed is that Insider (expect for directors) have lots more stock options than share. This is not great, but unfortunately is typical of a lot of companies.
When I look at the P/E ratio, I get a current one of 22.8, which is a little high. However, the 5 year median low P/E ratio is 18.2 and the 5 year median high is 37.2. On a relative basis, the P/E is not high. When I look at the Graham Price, I get one of $27.96 for 2010. The current stock price of $34.67 is some 24% higher than the Graham Price. Over the 3 past years, the Graham price has been at or below the Graham price. However, this has not been the case this year. I also note that since February, the stock has been trading in a fairly narrow band between $30 and $35.
When I look at the dividend yield, I note that the current one of 1.2% is better than the 5 year average of just .6%. If the dividends grow at the current 10 year growth rate of 18.9%, you would be earning 6.5% on a current investment in stock in 10 years time. This is the dividend growth potential of a stock and it is another way of assessing the dividend yield on a stock. This company is on one of the dividend lists that I follow of Dividend Achievers .
When I look at the Price/Book Value ratio, I find that it is current at 1.52. This is a low ratio and it is also only 77% of the 10 year average of 1.97. So, on a relative basis, the stock price seems good when looking at the P/E ratio, the dividend yield and the P/B Ratio. However, it is higher than the Graham price.
When I look at analysts recommendations, I find ones of Strong Buy, Buy and Hold. Analysts seem pretty evenly split overall on these recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The recommendations of Buy come with a 12 months stock price of $40.
The analysts that like this stock think that the merger with Petro-Can was a great idea. Analysts with a hold recommendation think that the company has underperformed in the latest stock market recovery. Everyone thinks it will do well in the long term. This company has a Wikipedia page at Suncor Energy. There is an interest video on the oil business at Bob Harrison.
Suncor Energy Inc. is an integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Suncor is also developing a growing renewable energy portfolio. Their international and offshore business includes operations in the North Sea (United Kingdom, Netherlands and Norway) and the East Coast of Canada. They are also in Libya, Syria and Trinidad and Tobago. Its web site is here Suncor. See my spreadsheet at su.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.
Monday, November 15, 2010
Suncor Energy Inc
The stock I had been following was Petro-Can. Petro-Can, this was recently (2009) bought out by Suncor Energy Inc (TSX-SU). Petro-Can makes up 40% of the current Suncor company and the old Suncor company makes up the other 60%. At the recent Money Show, a number of people mentioned that Canadians should be buying Suncor for their portfolios. It was felt that the Suncor stock was a great way for us to get exposure to the Canadian Oil Sands in particular and oil in general.
By and large, my spreadsheet shows the past history for Petro-Can. However, it was hard to reconcile revenue as reported by past Petro-Can reports and the current Suncor report for 2009. I have added what I can of Suncor Revenue. However, no matter how I look at Revenue, there was a big drop in it for the year ending 2009. Petro-Can seems to have a big drop in revenue for 2009 as measured by Suncor statements. It could be that Suncor and Petro-Can measure revenue differently, but I could find no definite answer in the annual reports I read.
Not only was there a big decline in Revenues for this company in 2009, there also seemed to be a big decline in cash flow and earnings. When looking at the estimates for cash flow and earnings, these are expected to increase substantially in both 2010 and 2011. Also, for revenue, the revenues for the last 12 months have increase by some 27% over those of 2009.
For Petro-Can shareholders, if they had held their stock for the last 5 years, they should have made some money. Certainly, if they had held their stock for 10 years they would have made money. However, since the dividend payments on Petro-Can was quite low, the amount of total return from dividends each year would have been quite low at just over ½ of 1%.
The Liquidity Ratio has not been great on this stock, which has a 5 year average of just 1.03. However, the Liquidity Ratio for 2009 was a little better at 1.06 and is better again for the 3rd quarter of 2010 at 1.14. I would prefer to see this ratio at 1.50. The Asset/Liability Ratio has been better with a 5 year average of 1.94 and a current one of 2.09.
There is couple of good things to mention about this stock. The first thing is that there has been good growth in the Book Value and this has increased at the rate of just over 10% per year over the past 5 years. The other good thing is the growth in dividends. The yield was below 1% for most the life of Petro-Can and only broke through this level in 2008. The current dividend yield of 1.2% is nothing to write home about, but is better than it has been. The growth in dividends started to be good in 2006 and the growth in dividends over the past 5 years is at the rate of just over 26% per year.
I must admit that I do not invest much in resource stock, let alone oil companies. However, I do track a few. Tomorrow, I will look at what the analysts say about this stock.
Suncor Energy Inc. is an integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Suncor is also developing a growing renewable energy portfolio. Their international and offshore business includes operations in the North Sea (United Kingdom, Netherlands and Norway) and the East Coast of Canada. They are also in Libya, Syria and Trinidad and Tobago. Its web site is here Suncor. See my spreadsheet at su.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.
By and large, my spreadsheet shows the past history for Petro-Can. However, it was hard to reconcile revenue as reported by past Petro-Can reports and the current Suncor report for 2009. I have added what I can of Suncor Revenue. However, no matter how I look at Revenue, there was a big drop in it for the year ending 2009. Petro-Can seems to have a big drop in revenue for 2009 as measured by Suncor statements. It could be that Suncor and Petro-Can measure revenue differently, but I could find no definite answer in the annual reports I read.
Not only was there a big decline in Revenues for this company in 2009, there also seemed to be a big decline in cash flow and earnings. When looking at the estimates for cash flow and earnings, these are expected to increase substantially in both 2010 and 2011. Also, for revenue, the revenues for the last 12 months have increase by some 27% over those of 2009.
For Petro-Can shareholders, if they had held their stock for the last 5 years, they should have made some money. Certainly, if they had held their stock for 10 years they would have made money. However, since the dividend payments on Petro-Can was quite low, the amount of total return from dividends each year would have been quite low at just over ½ of 1%.
The Liquidity Ratio has not been great on this stock, which has a 5 year average of just 1.03. However, the Liquidity Ratio for 2009 was a little better at 1.06 and is better again for the 3rd quarter of 2010 at 1.14. I would prefer to see this ratio at 1.50. The Asset/Liability Ratio has been better with a 5 year average of 1.94 and a current one of 2.09.
There is couple of good things to mention about this stock. The first thing is that there has been good growth in the Book Value and this has increased at the rate of just over 10% per year over the past 5 years. The other good thing is the growth in dividends. The yield was below 1% for most the life of Petro-Can and only broke through this level in 2008. The current dividend yield of 1.2% is nothing to write home about, but is better than it has been. The growth in dividends started to be good in 2006 and the growth in dividends over the past 5 years is at the rate of just over 26% per year.
I must admit that I do not invest much in resource stock, let alone oil companies. However, I do track a few. Tomorrow, I will look at what the analysts say about this stock.
Suncor Energy Inc. is an integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Suncor is also developing a growing renewable energy portfolio. Their international and offshore business includes operations in the North Sea (United Kingdom, Netherlands and Norway) and the East Coast of Canada. They are also in Libya, Syria and Trinidad and Tobago. Its web site is here Suncor. See my spreadsheet at su.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.
Friday, November 12, 2010
Magna International Inc 2
Magna (TSX-MG) is a stock I track. I have always liked Frank Stronach, the entrepreneur who ran this company. Now that he has been bought out, it would be interesting to see where this firm will go. I do not really look at this company as a good dividend paying company, so I am not interested in buying this stock.
I guess the first thing to note is that this company will be split 2 for 1 share on the TSX today, November 12th, 2010 and on the NYSE on November 26th, 2010. When I look at Insider Trading, I find that there is far more insider selling at $18.2M than insider buying at $1.1M. The CEO and CFO both have far more options than shares. None of this is any good but it does not tell us much about how insiders feel. The one thing that shows that insider have some faith is the recent increase in dividends, which is an increase of some 66%. However, the dividends are not yet back to what they were in 2006.
When I look at the P/E ratios, I find I get a median high P/E of 16.8 and a median low P/E of 13.9. The current P/E therefore looks good at just 12.2. When looking at the Graham Price, you can see that it is much higher than recently. This is because of the expected increase in earnings for 2010. A good sign is that the current stock price is below the Graham Price by 11.7%. However, please note that both the current P/E ratio and the Graham Price are based on expected earnings for this stock.
When I look at the Price/Book Value, I get a 10 year average of 1.06. The P/B ratio has often been quite low for this stock. The current P/B ratio of 1.43 is about 35% higher than the 10 year average. What you want is to see the current P/B ratio lower than the 10 year average. When the current P/B ratio is 80% of the 10 year average, this shows a good relative stock price. However, on an absolute basis, a P/B ratio of 1.43 is not high; in fact, it is quite good.
The last thing to look at is the dividend yield. At 1.2%, it is quite low. It is also lower than the 5 year average of 1.7%. One way of looking at dividends is to ask what will be my return on my investment in dividends 5 or 10 years out. The problem with this stock is that, even in US$ the dividends have fluctuated and they have no history of annual increases. I would not think that you would buy this stock for dividends.
When I look at what the analysts are recommending, I find lots of Strong Buy and Buy recommendations and a number of Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) This stock has risen strongly lately. I notice that the 12 month stock price for Magna is $100, or $50 with the split. Since the price is close to this, I do not see much upside to the stock. Most analysts remark on the recent great growth in earnings.
At this point, I sort of wonder why it is still considered a buy. It is just below the 12 month expected stock price, so there is not much upside as far as capital gains go. I cannot imagine people buying it for its dividends. So, why else would it be considered a buy? I do not know the answer to this.
Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.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.
I guess the first thing to note is that this company will be split 2 for 1 share on the TSX today, November 12th, 2010 and on the NYSE on November 26th, 2010. When I look at Insider Trading, I find that there is far more insider selling at $18.2M than insider buying at $1.1M. The CEO and CFO both have far more options than shares. None of this is any good but it does not tell us much about how insiders feel. The one thing that shows that insider have some faith is the recent increase in dividends, which is an increase of some 66%. However, the dividends are not yet back to what they were in 2006.
When I look at the P/E ratios, I find I get a median high P/E of 16.8 and a median low P/E of 13.9. The current P/E therefore looks good at just 12.2. When looking at the Graham Price, you can see that it is much higher than recently. This is because of the expected increase in earnings for 2010. A good sign is that the current stock price is below the Graham Price by 11.7%. However, please note that both the current P/E ratio and the Graham Price are based on expected earnings for this stock.
When I look at the Price/Book Value, I get a 10 year average of 1.06. The P/B ratio has often been quite low for this stock. The current P/B ratio of 1.43 is about 35% higher than the 10 year average. What you want is to see the current P/B ratio lower than the 10 year average. When the current P/B ratio is 80% of the 10 year average, this shows a good relative stock price. However, on an absolute basis, a P/B ratio of 1.43 is not high; in fact, it is quite good.
The last thing to look at is the dividend yield. At 1.2%, it is quite low. It is also lower than the 5 year average of 1.7%. One way of looking at dividends is to ask what will be my return on my investment in dividends 5 or 10 years out. The problem with this stock is that, even in US$ the dividends have fluctuated and they have no history of annual increases. I would not think that you would buy this stock for dividends.
When I look at what the analysts are recommending, I find lots of Strong Buy and Buy recommendations and a number of Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) This stock has risen strongly lately. I notice that the 12 month stock price for Magna is $100, or $50 with the split. Since the price is close to this, I do not see much upside to the stock. Most analysts remark on the recent great growth in earnings.
At this point, I sort of wonder why it is still considered a buy. It is just below the 12 month expected stock price, so there is not much upside as far as capital gains go. I cannot imagine people buying it for its dividends. So, why else would it be considered a buy? I do not know the answer to this.
Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, November 11, 2010
Magna International Inc
Magna (TSX-MG) is a stock I track. I have always liked Frank Stronach, the entrepreneur who ran this company. I held this company between September 2002 and September 2006 and earned 5% return per year including dividends. There were some rumors that it might be bought out in 2006, so I sold. Also, manufacturing firms are fairly risky and it is not the sort of company I usually buy.
The other thing is that the company reports in US$ and has heavy exposure to the US. For Canadians, we have not done well in US investments over the past while because of the strengthening of our currency. However, this company has not done well for any investors over the past 10 years. The US$ figures are better than the CDN$ figures, but even the US$ figures are nothing to write home about. Since the stock price is currently on a tear, investment in this stock would have given you a modest return to date in CDN$ Terms and perhaps not a bad return in US$ terms.
A problem for Canadian investors is that the dividends were paid in US$, so the dividends payments would fluctuate. In US$ terms, the dividends mostly went up until 2007 and have since that time fluctuated. However, the yield on this stock has never been great. Even with the current increase in dividends, the current yield is about 1.2%. This is not the worst I have seen, but it is not the best. I prefer stock that has an average yield at 2% to 2.5% at a minimum. This stock has 5 year average yield of just 1.7%.
For revenue, they seem to be on target to have a nice increase this year, but the 10 year increase will be less than 10% per year in US$ terms and even lower in CDN$ terms. Cash flow is expected to have a good increase in 2010 over 2009. However, there will still probably not be any growth in cash flow over the past 5 years and perhaps modest growth over the past 10 years. However, this is just looking at estimates. Analysts’ estimates are often off the mark.
Even when you look at book value, either in US$ or CDN$, there is no 5 or 10 year growth. Total book value has grown a bit, but when you look at Book Value per share this is not the case. There has been an increase in shares outstanding (almost an average of 4% increase per year). The increase in shares negates any growth in book value per share. The book value per share has also gone down slightly in 2010. The Return on Equity was not bad on this stock until 2008 when ROE turned negative. However, for the first part of 2010, the ROE comes in at 13.9% and this is not bad.
This review does not paint a pretty picture of this stock. However, tomorrow, I will look at what analysts’ are saying about investing in this stock. I think an investment in this stock would be for growth in stock price rather than for income.
Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
The other thing is that the company reports in US$ and has heavy exposure to the US. For Canadians, we have not done well in US investments over the past while because of the strengthening of our currency. However, this company has not done well for any investors over the past 10 years. The US$ figures are better than the CDN$ figures, but even the US$ figures are nothing to write home about. Since the stock price is currently on a tear, investment in this stock would have given you a modest return to date in CDN$ Terms and perhaps not a bad return in US$ terms.
A problem for Canadian investors is that the dividends were paid in US$, so the dividends payments would fluctuate. In US$ terms, the dividends mostly went up until 2007 and have since that time fluctuated. However, the yield on this stock has never been great. Even with the current increase in dividends, the current yield is about 1.2%. This is not the worst I have seen, but it is not the best. I prefer stock that has an average yield at 2% to 2.5% at a minimum. This stock has 5 year average yield of just 1.7%.
For revenue, they seem to be on target to have a nice increase this year, but the 10 year increase will be less than 10% per year in US$ terms and even lower in CDN$ terms. Cash flow is expected to have a good increase in 2010 over 2009. However, there will still probably not be any growth in cash flow over the past 5 years and perhaps modest growth over the past 10 years. However, this is just looking at estimates. Analysts’ estimates are often off the mark.
Even when you look at book value, either in US$ or CDN$, there is no 5 or 10 year growth. Total book value has grown a bit, but when you look at Book Value per share this is not the case. There has been an increase in shares outstanding (almost an average of 4% increase per year). The increase in shares negates any growth in book value per share. The book value per share has also gone down slightly in 2010. The Return on Equity was not bad on this stock until 2008 when ROE turned negative. However, for the first part of 2010, the ROE comes in at 13.9% and this is not bad.
This review does not paint a pretty picture of this stock. However, tomorrow, I will look at what analysts’ are saying about investing in this stock. I think an investment in this stock would be for growth in stock price rather than for income.
Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna. See my spreadsheet at mg.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.
Wednesday, November 10, 2010
Forzani Group Ltd 2
I have been following this stock (TSX-FGL) since 2008, because it has been recommended as a good dividend paying stock. They started to pay dividends in 2008. I think that this would be a more interesting stock when (and if) it starts to increase their dividends.
The first thing I like to look at is Insider Trading. Over the past 12 months, there has been $1.4M of Insider Selling and a little bit of Insider Buying. None of this tells us much. On the stock, it is only the CEO that has a lot more options than stock. The other thing to mention is that Forzani is buying back stock for cancellation. Some people like this, but I would rather that extra money be spent on dividends than buy backs, but this is just a personal opinion.
When I look at historical P/E ratios, I get a 5 year median low of 10 and a 5 year median high of 17.9. The current P/E ratio of 13.4 is not bad from an historical point of view. The next thing to look at is the Graham Price. I get a current one of $17.42. It is higher than the Graham Price for the end of the financial year of January 2010 of $15.66 because this company is expected to have earnings growth of 30% this year over last year. The Graham price is 5% higher than the stock price and this is good.
When looking at the Price/Book Value, I get a 10 year average of 1.75 and a current P/B of 1.51. The current ratio is less than 80% of the 10 year average and so this points also to a good current stock price. Really, the only thing that does not point to a good current price is the dividend yield. It is just 1.8%. The 3 year average is 2.9%. The problem is the dividend has remained flat since this stock has starting paying dividends. It is expected that they will be paying out only some 24% of earnings in dividend, so they could improve it. There have been US studies that show the best long term returns are from dividend paying stock that have yields between 2.5% and 4.5%.
So what do the analysts say? The only recommendations I find are Strong Buy, Buy. The consensus is probably a Buy; however, there are a lot of Strong Buy recommendations on this stock. (See my site for information on analyst ratings.) I cannot find much written about this stock, but a few analysts think that it is riskier than other consumer stocks.
It is expected that over the next 12 months, the stock price will go to $19, and that together with a dividend of 1.8%, this stock will give you just under 17% return over the next 12 months. As I have said before, I like dividend stocks that increase their dividends. So far, this stock has not, so it is not something I am interested in at the moment. I will continue to track it.
The Forzani Group is a Canadian retailer of sporting goods, offering an assortment of brand-name and private-brand products through stores under corporate and franchise banners. Their corporate banners include Sport Chek, Sport Mart, Coast Mountain Sports, National Sports, Athletes World and Hockey Experts. The franchise banners include Sports Experts, Intersport, Atmosphere, Nevada Bob’s Golf, Hockey Experts, Fitness Source, Pegasus, RnR, S3, Tech Shop and Econosports. Its web site is here Forzani. See my spreadsheet at fgl.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.
The first thing I like to look at is Insider Trading. Over the past 12 months, there has been $1.4M of Insider Selling and a little bit of Insider Buying. None of this tells us much. On the stock, it is only the CEO that has a lot more options than stock. The other thing to mention is that Forzani is buying back stock for cancellation. Some people like this, but I would rather that extra money be spent on dividends than buy backs, but this is just a personal opinion.
When I look at historical P/E ratios, I get a 5 year median low of 10 and a 5 year median high of 17.9. The current P/E ratio of 13.4 is not bad from an historical point of view. The next thing to look at is the Graham Price. I get a current one of $17.42. It is higher than the Graham Price for the end of the financial year of January 2010 of $15.66 because this company is expected to have earnings growth of 30% this year over last year. The Graham price is 5% higher than the stock price and this is good.
When looking at the Price/Book Value, I get a 10 year average of 1.75 and a current P/B of 1.51. The current ratio is less than 80% of the 10 year average and so this points also to a good current stock price. Really, the only thing that does not point to a good current price is the dividend yield. It is just 1.8%. The 3 year average is 2.9%. The problem is the dividend has remained flat since this stock has starting paying dividends. It is expected that they will be paying out only some 24% of earnings in dividend, so they could improve it. There have been US studies that show the best long term returns are from dividend paying stock that have yields between 2.5% and 4.5%.
So what do the analysts say? The only recommendations I find are Strong Buy, Buy. The consensus is probably a Buy; however, there are a lot of Strong Buy recommendations on this stock. (See my site for information on analyst ratings.) I cannot find much written about this stock, but a few analysts think that it is riskier than other consumer stocks.
It is expected that over the next 12 months, the stock price will go to $19, and that together with a dividend of 1.8%, this stock will give you just under 17% return over the next 12 months. As I have said before, I like dividend stocks that increase their dividends. So far, this stock has not, so it is not something I am interested in at the moment. I will continue to track it.
The Forzani Group is a Canadian retailer of sporting goods, offering an assortment of brand-name and private-brand products through stores under corporate and franchise banners. Their corporate banners include Sport Chek, Sport Mart, Coast Mountain Sports, National Sports, Athletes World and Hockey Experts. The franchise banners include Sports Experts, Intersport, Atmosphere, Nevada Bob’s Golf, Hockey Experts, Fitness Source, Pegasus, RnR, S3, Tech Shop and Econosports. Its web site is here Forzani. See my spreadsheet at fgl.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.
Tuesday, November 9, 2010
Forzani Group Ltd
I have been following this stock (TSX-FGL) since 2008, because it has been recommended as a good dividend paying stock. They started to pay dividends in 2008. It was recommended along with Reitmans. However, I like Reitmans better because it has a much stronger balance sheet (little debt) and it increases it dividends on a regular basis. Please note that I do not own Reitmans either, but I am considering it. I think that this would be a more interesting stock when (and if) it starts to increase their dividends.
In regards to dividends, I understand that we are just coming out of a recession where consumer stocks have been hit hard and that a lot of companies did not increase their dividends in 2009 and this year. So, what I am saying is that it would be a good idea to be patient with this stock and give it a chance. I will continue to follow it.
With this stock, the Liquidity ratio is a bit low at 1.15. However, the Asset/Liability Ratio is good at 1.83. Another difference with this stock compared to Reitmans is that it is widely held, whereas Reitmans is 50% owned by the Reitmans family. This stock has made no earnings in the first two quarters of the 2011 reporting year. However, this is normal for this stock and it is expected to do well in the last two quarters of the 2011 reporting year. The financial year for this company ends at January 31 of each year.
For this stock, the growth figures for the last 10 years are better than for the last 5 years. (We are in a recession.) If you had invested in this company for the last 5 years, you would have earned a return of about 5% with just under 1.5% of the return in dividends. Over the past 10 years, the return is better at around 12%. Dividends would not have amounted to much as they just started them in 2008.
A much better growth story is in revenue, and the growth in revenue per share for the last 5 and 10 years is 8.3% and 10.2% per year respectively. Growth in cash flow is not as good, but it is respectable. The growth in cash flow for the last 5 and 10 years is 7.3% and 9.3% per year, respectively.
The return on equity for this company is also respectable, with the 5 year average of 9.4%. As I had mentioned previously there has been a lost in earnings for the first 2 quarters of the current reporting year. However, this will change over the next to quarters. In fact, earnings for this year are expected to grow some 30%, year over year.
There are a number of analysts who follow this stock and tomorrow, I will talk about what they are saying about this stock.
The Forzani Group is a Canadian retailer of sporting goods, offering an assortment of brand-name and private-brand products through stores under corporate and franchise banners. Their corporate banners include Sport Chek, Sport Mart, Coast Mountain Sports, National Sports, Athletes World and Hockey Experts. The franchise banners include Sports Experts, Intersport, Atmosphere, Nevada Bob’s Golf, Hockey Experts, Fitness Source, Pegasus, RnR, S3, Tech Shop and Econosports. Its web site is here Forzani. See my spreadsheet at fgl.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.
In regards to dividends, I understand that we are just coming out of a recession where consumer stocks have been hit hard and that a lot of companies did not increase their dividends in 2009 and this year. So, what I am saying is that it would be a good idea to be patient with this stock and give it a chance. I will continue to follow it.
With this stock, the Liquidity ratio is a bit low at 1.15. However, the Asset/Liability Ratio is good at 1.83. Another difference with this stock compared to Reitmans is that it is widely held, whereas Reitmans is 50% owned by the Reitmans family. This stock has made no earnings in the first two quarters of the 2011 reporting year. However, this is normal for this stock and it is expected to do well in the last two quarters of the 2011 reporting year. The financial year for this company ends at January 31 of each year.
For this stock, the growth figures for the last 10 years are better than for the last 5 years. (We are in a recession.) If you had invested in this company for the last 5 years, you would have earned a return of about 5% with just under 1.5% of the return in dividends. Over the past 10 years, the return is better at around 12%. Dividends would not have amounted to much as they just started them in 2008.
A much better growth story is in revenue, and the growth in revenue per share for the last 5 and 10 years is 8.3% and 10.2% per year respectively. Growth in cash flow is not as good, but it is respectable. The growth in cash flow for the last 5 and 10 years is 7.3% and 9.3% per year, respectively.
The return on equity for this company is also respectable, with the 5 year average of 9.4%. As I had mentioned previously there has been a lost in earnings for the first 2 quarters of the current reporting year. However, this will change over the next to quarters. In fact, earnings for this year are expected to grow some 30%, year over year.
There are a number of analysts who follow this stock and tomorrow, I will talk about what they are saying about this stock.
The Forzani Group is a Canadian retailer of sporting goods, offering an assortment of brand-name and private-brand products through stores under corporate and franchise banners. Their corporate banners include Sport Chek, Sport Mart, Coast Mountain Sports, National Sports, Athletes World and Hockey Experts. The franchise banners include Sports Experts, Intersport, Atmosphere, Nevada Bob’s Golf, Hockey Experts, Fitness Source, Pegasus, RnR, S3, Tech Shop and Econosports. Its web site is here Forzani. See my spreadsheet at fgl.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.
Monday, November 8, 2010
Organic Resources Management
The performance of this stock is less bad than it used to be. I bought this stock (TSXV-ORI) in 1997 as part of a basket of small cap stocks. It was barely recovering from the last recession, when it hit this one. I have not bothered to sell this stock because it is worth so little. The good thing I guess is that it has started to recover from the current recession. My average loss per year on this stock is running at about 20%. It is a good job I never invest much.
I guess the worse thing to happen to this stock is that there was a reverse split of 20 to 1. That is for every 20 shares you owned you got 1 new one. Reverse splits are always negative. They usually result in a stock getting even more hammered in the market. This, of course, happened to this stock. However, it has been recovering since then.
For this company, from 1998 to 2008, it made no profits. 1998 was a terrible year for the company, revenues declined about 70% and stock prices fell almost as much. Although total revenue has been increasing since 1998, the revenue per share has been dropping because of the increase in the number of shares between 1998 and 2007.
Between 1998 and 2007, shares increased on average at the rate of just over 23% per year. However, the biggest increases occurred in 2002 when the shares increased by 50% and in 2007 when they increased by about 120%. The big increase in 2007 was because a lot of preferred shares were changed into common shares. I guess the other thing to note about ownership is that Charles Buehler, the CEO, owns about 45% of this company. A director owns another 22%, so some 67% is owned by two insiders.
The first year of profit was in 2009, when the company had earnings of $.34 a share. However, in 2010 the earnings decreased over 50% to just $.15 a share. (Please note that the financial year for this company ends at June 30 each year, so they have reported for the financial year of 2010.) However, one good point is that the company has, in most years, have had a positive cash flow. The cash flow has been a bit erratic, but it has been positive.
Another positive note is that the Liquidity Ratio has been steadily increasing from below 1.00 to a current 1.68, a very good Liquidity Ratio. The Asset/Liability Ratio has mostly been quite good and at the moment at 2.56 is very good. Another good thing to point out on this stock is that the Graham Price is at $2.42 that is almost 40% above the current price of $1.50. Maybe another positive thing to say is that there has been some Insider Buying over the past year. This does not amount to much, just $40K, but it is something. There has been no Insider Selling over the past year.
My basket of small cap stocks did not do well and most we hammered in the last recession. I only have a couple of them left and this is one that I have left. It was an interesting experience though. When this stock initially fell, it seems senseless to sell, as it was not worth much. Currently, the value of my shares has gone up but I have decided to hold on to the shares to see how well they will do in the future. I have no intentions currently to buy more.
The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resources. See my spreadsheet at ori.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.
I guess the worse thing to happen to this stock is that there was a reverse split of 20 to 1. That is for every 20 shares you owned you got 1 new one. Reverse splits are always negative. They usually result in a stock getting even more hammered in the market. This, of course, happened to this stock. However, it has been recovering since then.
For this company, from 1998 to 2008, it made no profits. 1998 was a terrible year for the company, revenues declined about 70% and stock prices fell almost as much. Although total revenue has been increasing since 1998, the revenue per share has been dropping because of the increase in the number of shares between 1998 and 2007.
Between 1998 and 2007, shares increased on average at the rate of just over 23% per year. However, the biggest increases occurred in 2002 when the shares increased by 50% and in 2007 when they increased by about 120%. The big increase in 2007 was because a lot of preferred shares were changed into common shares. I guess the other thing to note about ownership is that Charles Buehler, the CEO, owns about 45% of this company. A director owns another 22%, so some 67% is owned by two insiders.
The first year of profit was in 2009, when the company had earnings of $.34 a share. However, in 2010 the earnings decreased over 50% to just $.15 a share. (Please note that the financial year for this company ends at June 30 each year, so they have reported for the financial year of 2010.) However, one good point is that the company has, in most years, have had a positive cash flow. The cash flow has been a bit erratic, but it has been positive.
Another positive note is that the Liquidity Ratio has been steadily increasing from below 1.00 to a current 1.68, a very good Liquidity Ratio. The Asset/Liability Ratio has mostly been quite good and at the moment at 2.56 is very good. Another good thing to point out on this stock is that the Graham Price is at $2.42 that is almost 40% above the current price of $1.50. Maybe another positive thing to say is that there has been some Insider Buying over the past year. This does not amount to much, just $40K, but it is something. There has been no Insider Selling over the past year.
My basket of small cap stocks did not do well and most we hammered in the last recession. I only have a couple of them left and this is one that I have left. It was an interesting experience though. When this stock initially fell, it seems senseless to sell, as it was not worth much. Currently, the value of my shares has gone up but I have decided to hold on to the shares to see how well they will do in the future. I have no intentions currently to buy more.
The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resources. See my spreadsheet at ori.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.
Friday, November 5, 2010
Ensign Energy Services 2
If you want to invest in Canadian oil and gas without the volatility and risk of investing in an oil or gas company, this may be the company (TSX-ESI) for you. It is also a good dividend payer. This stock did have dividend increases in 2009 and 2010, but only at a much lower than usual rate of around 3%. At least, the increases are better than the current rate of inflation. A lot of stocks have not done dividend increases in 2009 and 2010, although, I must admit that 2010 is not over yet.
I always first look at the Insider Trading report. For this stock, there was a wee bit of buying in the first part of this year, but it is such a small amount it means nothing. A good thing is that there has been no Insider Selling. Another good thing is that this company has a staff stock buying program and staff has been buying under this program. Also, recent stock options given out have been retained. These show important confidence of the company’s staff in their company.
So, what does my spreadsheet say about the current stock price of $12.87? When looking at P/E ratios, I find that the 5 year median low is just 8.6 and the 5 year median high is 14.8. The current P/E ratio, although in absolute terms is not high at 17.4, it is still higher than the median high. However, the P/E ratio had reached as high as 22 in both 2009 and 2009, but the high has usually been below 17.
The stock price is just below the current Graham Price I get of $13.03. It is always a good sign to see the price at or below the Graham Price, but it has often been quite a bit below the Graham Price. The one ratio that shows a very good current price is the Price/Book Value. I get a 10 year P/B of 2.64 and a current ratio of 1.26. This means that the current ratio is less than 50% of the 10 year average. In absolute terms, a P/B ratio of 1.26 is a very good ratio.
The last thing to look at is the dividend yield. The current yield of 2.7% is higher than the 5 year average of 1.7% and is also higher than the 10 year average low of 2%. So if you look at the yield it shows a good current price, as does the P/B ratio. The good thing about both of these ratios is that they are not based on estimates. I should also note that sites that give a P/E ratio based on the last 4 quarters earnings give this stock a P/E ratio of 22, which is even higher than my ratio of 17.4.
When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. I have also found one Sell recommendation. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Some analyst give recommendations based on what they think will happen in the short term and some give recommendations based on what they think will happen in the long term. Certainly, this stock will recover, but it might not been in the short term and this is why you get a variety of recommendations.
This is the sort of stock you would buy for increasing dividends and long term gains. A negative might be that in 2010 it is expected that they will pay out just under 50% of earnings in dividends. However, this would be a short term spike in this payout ratio. It is expected that less than 35% of earnings for 2011 will be paid in dividends. Another important Payout Ratio is the payout from cash flow. This payout ratio is not expected to go above 20% and this is good.
With headquarters in Calgary, Alberta, Ensign is an industry leader in the delivery of oilfield services worldwide to the oil and gas industry. They operate in North and South American, Middle East, South East Asia, Africa, Australia and New Zealand. Its web site is here Ensign Energy. See my spreadsheet at esi.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.
I always first look at the Insider Trading report. For this stock, there was a wee bit of buying in the first part of this year, but it is such a small amount it means nothing. A good thing is that there has been no Insider Selling. Another good thing is that this company has a staff stock buying program and staff has been buying under this program. Also, recent stock options given out have been retained. These show important confidence of the company’s staff in their company.
So, what does my spreadsheet say about the current stock price of $12.87? When looking at P/E ratios, I find that the 5 year median low is just 8.6 and the 5 year median high is 14.8. The current P/E ratio, although in absolute terms is not high at 17.4, it is still higher than the median high. However, the P/E ratio had reached as high as 22 in both 2009 and 2009, but the high has usually been below 17.
The stock price is just below the current Graham Price I get of $13.03. It is always a good sign to see the price at or below the Graham Price, but it has often been quite a bit below the Graham Price. The one ratio that shows a very good current price is the Price/Book Value. I get a 10 year P/B of 2.64 and a current ratio of 1.26. This means that the current ratio is less than 50% of the 10 year average. In absolute terms, a P/B ratio of 1.26 is a very good ratio.
The last thing to look at is the dividend yield. The current yield of 2.7% is higher than the 5 year average of 1.7% and is also higher than the 10 year average low of 2%. So if you look at the yield it shows a good current price, as does the P/B ratio. The good thing about both of these ratios is that they are not based on estimates. I should also note that sites that give a P/E ratio based on the last 4 quarters earnings give this stock a P/E ratio of 22, which is even higher than my ratio of 17.4.
When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. I have also found one Sell recommendation. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Some analyst give recommendations based on what they think will happen in the short term and some give recommendations based on what they think will happen in the long term. Certainly, this stock will recover, but it might not been in the short term and this is why you get a variety of recommendations.
This is the sort of stock you would buy for increasing dividends and long term gains. A negative might be that in 2010 it is expected that they will pay out just under 50% of earnings in dividends. However, this would be a short term spike in this payout ratio. It is expected that less than 35% of earnings for 2011 will be paid in dividends. Another important Payout Ratio is the payout from cash flow. This payout ratio is not expected to go above 20% and this is good.
With headquarters in Calgary, Alberta, Ensign is an industry leader in the delivery of oilfield services worldwide to the oil and gas industry. They operate in North and South American, Middle East, South East Asia, Africa, Australia and New Zealand. Its web site is here Ensign Energy. See my spreadsheet at esi.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.
Thursday, November 4, 2010
Ensign Energy Services
If you want to invest in Canadian oil and gas without the volatility and risk of investing in an oil or gas company, this may be the company TSX-ESI) for you. It is also a good dividend payer. However, the 5 year growth in dividends of 18% masks the fact that the 2008 and 2009 the dividend increase were a lot lower, at around 3% and this year’s increase is not much better.
The total return on this stock for the last 5 and 10 years is in the range of 5.7% and 14% per year, respectively. The dividend portion of this total return is around 2 to 2.5%. Both the revenue and earnings for this company took a hit in 2007 and in 2009. This means the 5 year growth in both is under 2%. However, the 10 year growth figures are much better at 11% and 15% respectively.
This company is also very nicely growing the book value per share at a high clip of 18% for both the last 5 and 10 years. The cash flow growth is not bad either, but the 10 year growth of 14.5% per year is higher than the 5 year growth of between 6% and 10% per year.
The Liquidity Ratio on this stock is improving of late. It has a low 5 year average of 1.18, but for 2009 it was 1.39 and the current one from the 2nd quarter is higher at 1.40. The Asset/Liability Ratio has always been solid, with a 5 year average of 2.98 and a current ratio even higher at 3.67. When we turn out attention to the Return on Equity, I find the 5 year average at 16% to be very good. However, the ROE for 2009 was just 8.2% and for the first two quarters, it is even lower at 6.3%.
This company has a number of analysts that follow it and tomorrow, I will talk about what they are currently saying about this company. Also, if you have noticed, the TSX has been trading up and down for most of October in a very tight band. Today, the TSX made a big brake out and gained 1.8% so far today. It is beginning to look very doubtful we will have a nice correction and a buying opportunity this fall.
The Dow had a big upswing to day gaining just over 2% or far today, although it was not trading in such a tight band as the TSX was trading. The S&P 500, traded more like the Dow and it also had a run up of 1.9%, so far today.
With headquarters in Calgary, Alberta, Ensign is an industry leader in the delivery of oilfield services worldwide to the oil and gas industry. They operate in North and South American, Middle East, South East Asia, Africa, Australia and New Zealand. Its web site is here http://www.ensignenergy.com" target="_top">Ensign Energy. See my spreadsheet at http://www.spbrunner.com/stocks/esi.htm" target="_top" >esi.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 http://www.spbrunner.com/stocks.html" target="_top">stocks followed and http://www.spbrunner.com/investing.html" target="_top">investment notes. Follow me on http://twitter.com/spbrunner" target="_top">twitter.
Wednesday, November 3, 2010
Cenovus Energy Inc 2
This oil company, Cenovus Energy Inc (TSX-CVE, NYSE-CVE) and Suncor Energy (TSX-SU, TYSE-SU) were talked about at the recent Money Show in Toronto as companies Canadians should be investing in. I do not own this company, but since I will be selling Penn West Energy Trust (TSX-PWT.UN), this and Suncor would be a likely replacement. This company was split off from EnCana. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split.
When I look at Insider Trading, I find that there is almost $3M net in Insider Buying. There has been no buying over the last couple of months and only some selling. However, all the selling seems to have been selling of stock options and it is a very small amount of selling. This stock’s price has mostly just gone up and down over the past year and has not made much progress. Also, $3M is a very small portion of a $22B company. Management also holds more stock options than shares.
The 5 year median low P/E ratio is 7.3 and the 5 year median high P/E is 13.8. This makes the current P/E ratio, based on earnings estimates, at 21.6 look a little high. Except for 2009, the P/E ratios on this stock have been quite low lately. The low P/E ratio for 2009 was 19.9 and the high was 29.1. I get a Graham Price, for 2010, of $20.27 for this stock. This is some 44% below the current stock price. Except for 2009, the stock price was at or below the Graham Price at some time during the year. The Stock Price also has not been below the Graham Price during 2010.
I get a current Price/Book Value Ratio of 2.16 and a 10 year average P/B ratio of 1.96. This makes the current P/B ratio about 10% higher than the 10 year average. Also, I get an average 5 year yield of 1.7% and a current yield of 2.7%. This is the only measure that points to a good current stock price. (Also, note that dividends have not changed in 2010 from that paid in 2009).
There are quite a number of analysts following this stock. The recommendations that I find are Strong Buy, Buy and Hold. There are no other. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) One analysis complains that this company is not a pure oil play as it has natural gas assets. (This is true). He also likes Canadian Natural Resources (TSX-CNQ) better. However, another analysts likes the fact that they have some gas assets.
I find it interesting that this company still has some gas assets. I already have enough investment in Natural Gas, so this may not be the company I will buy.
Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and
Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus. See my spreadsheet at cve.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.
When I look at Insider Trading, I find that there is almost $3M net in Insider Buying. There has been no buying over the last couple of months and only some selling. However, all the selling seems to have been selling of stock options and it is a very small amount of selling. This stock’s price has mostly just gone up and down over the past year and has not made much progress. Also, $3M is a very small portion of a $22B company. Management also holds more stock options than shares.
The 5 year median low P/E ratio is 7.3 and the 5 year median high P/E is 13.8. This makes the current P/E ratio, based on earnings estimates, at 21.6 look a little high. Except for 2009, the P/E ratios on this stock have been quite low lately. The low P/E ratio for 2009 was 19.9 and the high was 29.1. I get a Graham Price, for 2010, of $20.27 for this stock. This is some 44% below the current stock price. Except for 2009, the stock price was at or below the Graham Price at some time during the year. The Stock Price also has not been below the Graham Price during 2010.
I get a current Price/Book Value Ratio of 2.16 and a 10 year average P/B ratio of 1.96. This makes the current P/B ratio about 10% higher than the 10 year average. Also, I get an average 5 year yield of 1.7% and a current yield of 2.7%. This is the only measure that points to a good current stock price. (Also, note that dividends have not changed in 2010 from that paid in 2009).
There are quite a number of analysts following this stock. The recommendations that I find are Strong Buy, Buy and Hold. There are no other. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) One analysis complains that this company is not a pure oil play as it has natural gas assets. (This is true). He also likes Canadian Natural Resources (TSX-CNQ) better. However, another analysts likes the fact that they have some gas assets.
I find it interesting that this company still has some gas assets. I already have enough investment in Natural Gas, so this may not be the company I will buy.
Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and
Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus. See my spreadsheet at cve.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.
Tuesday, November 2, 2010
Cenovus Energy Inc
This is another stock that was talked about at the recent Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc (TSX-SU) and Cenovus Energy Inc (TSX-CVE). I do not own this company, but since I will be selling Penn West Energy Trust (TSX-PWT.UN), this and Suncor would be a likely replacement. This company was split off from EnCana. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split.
As part of EnCana, this company had a good record of increasing their dividends. However, as with all resource stocks that pays more than just a nominal dividend, their dividend payments fluctuated with the price of oil and gas. Since separating in November 2009 from EnCana, this company has left the dividends at the same rate of $.20 a quarter. Dividends are now paid in CDN$, not US$.
Most of the growth rates for this company are great. The best is the increase in revenue, which has grown over the past 5 and 10 years at the rate of 18% and 10.8% per year, respectively. The worse growth is in earnings, which for the last 5 years have a negative growth of 5.6% per year. The 10 year growth for earnings is positive at 16.8% per year. For this company, the earnings came in at $1.09 in December 2009. EnCana did better with earnings at December 2009 of $2.60.
It is all fine and well to separate past earnings and revenue etc between the two companies. However, we will not really know how well either will do separately until we have a few more years of data. The reason I used old EnCana data and split it for these new companies is because they are not really new; they do have a past joint history. However, do not forget that the past history of a company can only tell you so much. Past history gives you an idea of where a company has come from. This will color the company’s future, but cannot really predict where it is going.
When I look at the Liquidity Ratio, I can see that it has improved since the end of 2009 when it was at 1.24. The current Liquidity Ratio is better at 1.38. (The Liquidity Ratio shows whether or not current assets can cover current liability and a ratio of 1.00 shows equal current assets and liabilities. I rather have it at 1.50, but 1.38 is acceptable.) The Asset/Liability Ratio at 1.84 is better than the Liquidity Ratio and is a very good one.
The Return on Equity for the end of 2009 at 8.5% was low for this company, which has a 5 year average ROE of 10.4%. The one for the 3rd quarter of 2010 is better at 12%. Another point to make on this stock is that if it was held over the past 5 years, investors would have made between 10% and 15% return, with the dividends being just over 2.4% of this return.
A lot of analysts are saying that we should have Canadian resource companies in our portfolios, and especially some oil companies. Certainly, resources are currently on the upswing and will probably be for sometime because of the development going on in China and India. I also have a spreadsheet on Suncor, which I will talk about at a future date.
Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus. See my spreadsheet at cve.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.
As part of EnCana, this company had a good record of increasing their dividends. However, as with all resource stocks that pays more than just a nominal dividend, their dividend payments fluctuated with the price of oil and gas. Since separating in November 2009 from EnCana, this company has left the dividends at the same rate of $.20 a quarter. Dividends are now paid in CDN$, not US$.
Most of the growth rates for this company are great. The best is the increase in revenue, which has grown over the past 5 and 10 years at the rate of 18% and 10.8% per year, respectively. The worse growth is in earnings, which for the last 5 years have a negative growth of 5.6% per year. The 10 year growth for earnings is positive at 16.8% per year. For this company, the earnings came in at $1.09 in December 2009. EnCana did better with earnings at December 2009 of $2.60.
It is all fine and well to separate past earnings and revenue etc between the two companies. However, we will not really know how well either will do separately until we have a few more years of data. The reason I used old EnCana data and split it for these new companies is because they are not really new; they do have a past joint history. However, do not forget that the past history of a company can only tell you so much. Past history gives you an idea of where a company has come from. This will color the company’s future, but cannot really predict where it is going.
When I look at the Liquidity Ratio, I can see that it has improved since the end of 2009 when it was at 1.24. The current Liquidity Ratio is better at 1.38. (The Liquidity Ratio shows whether or not current assets can cover current liability and a ratio of 1.00 shows equal current assets and liabilities. I rather have it at 1.50, but 1.38 is acceptable.) The Asset/Liability Ratio at 1.84 is better than the Liquidity Ratio and is a very good one.
The Return on Equity for the end of 2009 at 8.5% was low for this company, which has a 5 year average ROE of 10.4%. The one for the 3rd quarter of 2010 is better at 12%. Another point to make on this stock is that if it was held over the past 5 years, investors would have made between 10% and 15% return, with the dividends being just over 2.4% of this return.
A lot of analysts are saying that we should have Canadian resource companies in our portfolios, and especially some oil companies. Certainly, resources are currently on the upswing and will probably be for sometime because of the development going on in China and India. I also have a spreadsheet on Suncor, which I will talk about at a future date.
Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus. See my spreadsheet at cve.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.
Monday, November 1, 2010
Ron Meisels, Toronto Money Show 2010
This is the last session I went to and it is the end of my articles on the Money Show. This talk by Ron Meisels was called “Phases and Cycles, Market Outlook 2010”. He has an investment letter that is available at his site na-marketletter.com. Investment Letter. Meisels was just hired in June of 2010 by Caldwell as a consultant. See Caldwell. Meisels opened with saying that technical analysis is all about cycles, sentiment, price patterns and fear, greed and hope. He says the market creates supply and demand. Supply and demand creates cycles and cycles create patterns.
Meisels says that our stock market is a series of 40 year secular cycles. The first part is the secular bull market and the last part is a secular bear market. A cycle is consists of a cyclical bull market followed by a cyclical bear market. The secular bull part consists of cycles where the cyclical bear market does not go to take us back to the beginning of the cyclical bull market. That is, you get ever higher cyclical bull markets highs and ever higher cyclical bear market lows.
The last two cycles that form the top of the secular cycles you get two cycles where the cyclical bear markets pull the stock market back to the beginning of (or even lower) than the beginning of the initial cyclical bull markets. Usually one of last cyclical bear markets is much bigger than the other one. The problem with the second cyclical bear market is that it brings bankruptcies with it. This is similar to but not exactly that same as what Meisers published in 2008 at phases and cycles 2008 paper. See the 40 year cycle or Meisels cycle 1894 – 2014 picture. The new cycle patterns seem to eliminate the first two cycles and the last cycle of this picture.
Meisers says that the Canadian market usually does better than the American market because we have so many resource stocks. In the above picture, the dotted line is for resource rich markets like our Canadian market. However, the paper of 2008 was produced 2 years ago and people change their minds about how things work all the time. However, if you send an email to info@na-marketletter.com and say you want the hand out for Ron Meisels speech about Phases & Cycles at Money Show in Toronto on Friday, October 22nd, 2010, you will be sent one.
The market is up 75% since the last cyclical bull market started. Is this bull market over with? He gave 5 reasons why it is not. The first reason is that this bull has only lasted 14 months. The shortest bull cyclical market was 7 months, and the longest was 113 months. The average cyclical bull market lasts 45 months. He did not think it has run its course. The second reason is that the 40 day moving average (MA) is rising and it has just crossed the 200 day or 40 week MA. His third reason is that the there is a 2:1 ratio of the advances versus the declines on a 10 day average basis. (That is there are more stocks going up (advances) than going down (declines).) This has happened twice. It happened in 2009 and it just happened again.
His fourth reason to think that the bull market will last is that both the Dow Jones Industrials and the Dow Jones Transports indexes are rising. The last one is where we are emotionally in this market. We are somewhere between thinking that this is another fake bear market rally and being hesitate about whether we should be buying stock or not. There has also bee a rise in the volume of trading on the stock markets from a low volume. This is usual for the start of a bull market. (Sometimes a very high volume of buying is at the top of the market.)
We have had a bull rally from the March 2009 lows. In July 2010, the market was over brought and we had a correction. However, July 2010 the market has been rising. In the intermediate term, we might have some weakness or a correction at the end of October or first of November, but we are in a secular bull market. He thinks that we are in the same sort of period as we were in 1982 and that this secular bull market will last for about 20 years.
So, what stocks does Meisers suggest we buy? His suggestions are Shaw Communication (TSX-SJR.A); Veterra Inc (TSX-VT); Wi-Lan Inc (TSX-Win); Bristol Myers Squibb (NYSE-BMY); Home Depot (NYSE-HD); Arch Coal (NYSE-ACI); Denbury Resources (NYSE-DNR); USEC Inc (NYSE-USU); Mag Silver Corp (TSX-MAG); Mega Uranium (TSX-MGA); and Vista Gold (TSX-VGZ).
Meisers feels that a price breakout is due for both Denbury Resources and USEC Inc. The last thing he said was that people are often reluctant to buy a stock when it hits a 52 week high. However, he says, that might be the best time to buy a stock.
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.
Meisels says that our stock market is a series of 40 year secular cycles. The first part is the secular bull market and the last part is a secular bear market. A cycle is consists of a cyclical bull market followed by a cyclical bear market. The secular bull part consists of cycles where the cyclical bear market does not go to take us back to the beginning of the cyclical bull market. That is, you get ever higher cyclical bull markets highs and ever higher cyclical bear market lows.
The last two cycles that form the top of the secular cycles you get two cycles where the cyclical bear markets pull the stock market back to the beginning of (or even lower) than the beginning of the initial cyclical bull markets. Usually one of last cyclical bear markets is much bigger than the other one. The problem with the second cyclical bear market is that it brings bankruptcies with it. This is similar to but not exactly that same as what Meisers published in 2008 at phases and cycles 2008 paper. See the 40 year cycle or Meisels cycle 1894 – 2014 picture. The new cycle patterns seem to eliminate the first two cycles and the last cycle of this picture.
Meisers says that the Canadian market usually does better than the American market because we have so many resource stocks. In the above picture, the dotted line is for resource rich markets like our Canadian market. However, the paper of 2008 was produced 2 years ago and people change their minds about how things work all the time. However, if you send an email to info@na-marketletter.com and say you want the hand out for Ron Meisels speech about Phases & Cycles at Money Show in Toronto on Friday, October 22nd, 2010, you will be sent one.
The market is up 75% since the last cyclical bull market started. Is this bull market over with? He gave 5 reasons why it is not. The first reason is that this bull has only lasted 14 months. The shortest bull cyclical market was 7 months, and the longest was 113 months. The average cyclical bull market lasts 45 months. He did not think it has run its course. The second reason is that the 40 day moving average (MA) is rising and it has just crossed the 200 day or 40 week MA. His third reason is that the there is a 2:1 ratio of the advances versus the declines on a 10 day average basis. (That is there are more stocks going up (advances) than going down (declines).) This has happened twice. It happened in 2009 and it just happened again.
His fourth reason to think that the bull market will last is that both the Dow Jones Industrials and the Dow Jones Transports indexes are rising. The last one is where we are emotionally in this market. We are somewhere between thinking that this is another fake bear market rally and being hesitate about whether we should be buying stock or not. There has also bee a rise in the volume of trading on the stock markets from a low volume. This is usual for the start of a bull market. (Sometimes a very high volume of buying is at the top of the market.)
We have had a bull rally from the March 2009 lows. In July 2010, the market was over brought and we had a correction. However, July 2010 the market has been rising. In the intermediate term, we might have some weakness or a correction at the end of October or first of November, but we are in a secular bull market. He thinks that we are in the same sort of period as we were in 1982 and that this secular bull market will last for about 20 years.
So, what stocks does Meisers suggest we buy? His suggestions are Shaw Communication (TSX-SJR.A); Veterra Inc (TSX-VT); Wi-Lan Inc (TSX-Win); Bristol Myers Squibb (NYSE-BMY); Home Depot (NYSE-HD); Arch Coal (NYSE-ACI); Denbury Resources (NYSE-DNR); USEC Inc (NYSE-USU); Mag Silver Corp (TSX-MAG); Mega Uranium (TSX-MGA); and Vista Gold (TSX-VGZ).
Meisers feels that a price breakout is due for both Denbury Resources and USEC Inc. The last thing he said was that people are often reluctant to buy a stock when it hits a 52 week high. However, he says, that might be the best time to buy a stock.
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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