Friday, March 25, 2011

RioCan Real Estate 2

I first bought this stock (TSX-REI.UN) for my RRSP account in January 1998 then I bought some for my Trading account in April 2000 and some more in January 2002. In June 2006, and in December 2010, I bought this stock for the Locked-in Pension account. I have made a total return on this stock of 17.1% per year.

When I look at Insider Trading, I find $10m of Insider Selling and $.5M of Insider Buying for a net Insider Selling of $9.5M. Insider selling seems to be of options and some gifting. Insiders’ own some shares, but have far more options than shares. The number of shares owned by insiders really hasn’t changed at all over the past year. No insider owns a significant number of shares.

The 5 year median low Price/Earnings Ratio is 21.1 and the 5 year median high P/E Ratio is 31.5. The current P/E Ratio of 18.1 is relatively low, but not low on an absolute basis. I get a Graham Price of $15.62. The current stock price of $23.69 is 52% above this. On average, the stock price has been some 40% above the Graham Price. On average, the high stock prices have been some 62% above the Graham Price. So this shows a relatively big difference, but not an extreme one for this stock.

I get a 5 and 10 year average Price/Book Value Ratio of 2.55 and 2.20, respectively. The current P/B Ratio at 2.86 is some 12% higher than the 5 year average and 30% higher than the 10 year average. This is unsurprising, as the Book Value has not grown over the past 5 and 10 years. The current yield is 5.83%. The 5 year average yield is 6.9%. The 5 year average low yield is 5.75%. So this points to a higher than average price, but not quite to a relatively high stock price.

When I look at the Price/Funds from Operation Ratio, I get a current one of 15.59, a 5 year average of 14.20 and a 5 year average high of 16.83. Here again, it shows that the current price is higher than average, but not quite to a relatively high price.

When I looked at analysts recommendations, I find Strong Buy, Buy and Hold. The consensus is probably a Buy. There are, however, lots of Hold recommendations. (See my site for information on analyst ratings.)

It would seem that analysts with a Hold rating feel that this stock is overpriced. A number of analysts, no matter what their recommendations, feel that this company has excellent manager. They also feel that the company will benefit from Target coming to Canada. The advantages to REITs are the high tax efficient yield and the ability of the REITS to grow distributions, at minimum, in line with inflation.

I have done very well in this stock. The stock I bought in 1998 is giving me a current 13% yield on my original money and stock I bought in 2000, some 11 years ago, is giving me a current return on my original investment of 17.2%. This stock has a Beta of .742 (according to the Globe and Mail). This means that the stock is less volatile that the market (TSX). I feel that this stock has given me a nice income over the years and has also given me some portfolio diversification.

I know that this stock had a rough year in 2009, but overall, I am pleased with my investment.

For a blog entry talking about this company and Target see Iewy News. For a blog talking about this stock in connection with technical analysis see Trade

RioCan is Canada's largest real estate investment trust. It owns and manages Canada's largest portfolio of shopping centers. RioCan owns an 80% interest in 31 grocery anchored and new format retail centers in the United States through various joint venture arrangements. In addition, RioCan owns a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centers and drug store-anchored convenience centers located predominantly in the Northeastern United States. This stock is rated STA-2M by DBRS. Its web site is here RioCan. See my spreadsheet at rei.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.

No comments:

Post a Comment