Wednesday, March 16, 2011

Algonquin Power & Utilities Corp 2

I recently read a report on this stock (TSX-AQN) saying it will do much better in the future and that Emera is interested in buying shares in this company after the company completes its buy of two New Hampshire power utilities. Emera is a stock I own and follow.

When I look at insider trading, I find a net of insider buying, but insider selling and insider buy are both very small and inconsequential. However, the company has announced an 8% increase to their dividends for the second dividend payable in 2011. This is a good indication of the confidence of management. This company has a relatively low payout ratio from cash flow relative to its peers.

For this stock, I have a 5 year median low Price/Earnings Ratio of 17.8 and a 5 year median high P/E Ratio of 24.1. I get a current P/E ratio of 21.3. The current P/E Ratio is about the 5 year median average P/E Ratio. For the Graham price, I get a current one of $4.35. The current stock price of $4.91 is some 8% higher. On average, the difference between the Graham Price and Stock Price has been 8%. So this points to a current average stock price.

I get a 10 year average Price/Book Value Ratio of 1.31 and a current P/B Ratio of 1.34. The current one is only 2% higher than the 10 year average. The current dividend yield is 5.3% and the 5 year average is 9.8%. However, this stock has just lowered its dividend when changing from an income trust. Most of the other comparisons say the price is about average. When buying stock, average is probably the best we can hope for. You do not want to pay a relatively high price, and it is hard to find relatively low prices.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. There is only 1 underperform recommendations. The consensus recommendations would be a Buy. (See my site for information on analyst ratings.) Analysts feel that this company will continue to develop and that it will have stronger fundamentals and improved valuations in the future. The 12 month stock price estimate is given from $5.50 to $6.00 by analysts feeling this stock is a buy.

Analysts are saying that this company is growing as they expect it to. What I had wanted to see on this stock was some dividend increase and this stock has now done that.

Also, I note that Dividend Ninja has an article on buying Uranium Stock. See Dividend Ninja. Larry MacDonald talks about buying Japanese stock at Canadian Business. The thing is stock market investors do seem to always overreact.

APUC owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Liberty Water Co., APUC's water utility subsidiary, provides regulated water utility services. Through its wholly owned subsidiary Liberty Energy Utilities Co., APUC provides regulated electricity and natural gas distribution services. Algonquin Power Co., APUC's electric generation subsidiary, includes renewable energy facilities and thermal energy facilities. Its web site is here Algonquin. See my spreadsheet at aqn.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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