Monday, November 12, 2012

Canadian Oil Sands 2

On my other blog I have written about current dividend growth...continue...

I do not own this stock of Canadian Oil Sands (TSX-COS). I started to follow it in 2010 because when anyone talks about investing in the Canadian Oil Sands sector, this is the stock that seems to be mentioned first. As with any other investment in oil companies, if the dividend is good, then it will vary according to the price of oil.

Looking at insider trading, I find that over the past year there is $3M in insider selling and $0.6M in insider buying for a net insider selling of $2.4M. Insiders not only have options, but Performance Units and Deferred Share Units.

There are a lot of options outstanding and some people with millions in shares. For example, the CEO has $26.6M in shares and $27M in options. An officer has $1.6M in shares and $3.7M in options. A director has 0.6M in shares and 0.2M in options.

It would seem that some 211 institutions hold shares in this company equal to 30% of the outstanding shares. Over the past 3 months they have reduced their holdings marginally (i.e. by less than 1%).

The 5 year low, median and high median Price/Earnings Ratios are 13.39, 15.50 and 17.61. The current P/E ratio is 10.24 based on 2012 earnings of $1.35 and current stock price of $20.59. This low P/E ratio suggests that the stock price is cheap.

I get a Graham Price of $20.41 and the 10 year low, median and high median Price/Graham Price Ratios are 0.86, 1.37 and 1.66. The current P/GP Ratio at 0.91 shows that the current stock price is reasonable.

I get a 10 year Price/Book Value per share Ratio of 2.96 and the current P/B Ratio at 2.24 shows that the current stock price is cheap. The current ratio is only 76% of the 10 year median ratio.

The current dividend yield is 6.8% and the 5 year median dividend yield is 5.16%. The current year is some 32% higher than the 5 year dividend yield is this shows that the current stock price is cheap.

The analysts' recommendations are Strong Buy, Hold and Underperform. (There is no Buy recommendation.) The consensus recommendation would be a Hold. The 12 month consensus stock price is $21.60. This suggests a total return of 11.7% with 6.8% from dividends and 4.9% from capital gains.

Analysts talk about their good dividend (6.8%). Also mentioned is the bottleneck of getting oil sands oil to refiners in Midwest US because of lack of pipeline capacity. There is a financial post article saying that all of Canada benefits from the oil sands development.

It would appear that this is a good company and the stock is relatively cheap. However, this statement also depends on the future price of oil.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 36.74% interest in the Syncrude Project. Syncrude is an experienced oil sands operator, producing a high-quality crude oil for the past 30 years. With large, bitumen-rich leases located in the sweet spot of the Athabasca oil sands deposit and a fully integrated upgrading facility that produces 100% light, sweet crude oil, the quality of their Syncrude asset is very good. Its web site is here CDN Oil Sands. See my spreadsheet at cos.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 or StockTwits.

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