Enbridge Inc 2

On my other blog I am today writing about Gold Stocks ...continue...

I own this stock of Enbridge Inc. (TSX-ENB, NYSE-ENB). I had followed this stock for some time before I bought it in 2005. I also bought some more in 2008 and 2009. I have made a total return on this stock of 21.04% per year with 3.23% per year from dividends and 17.81% from capital gains.

When I look at insider trading, I find some 48.4M of insider selling and $47.7M of net insider selling. There is only $0.7M of insider buying. The CFO has some 14.6M of insider selling. There are lots and lots of options and options like vehicles outstanding. I cannot get a value on them as all the options come with a strike price.

There is some insider ownership, with the CEO owing $5.5M in shares, the CFO owing 14.2M in shares, an officer owning $04.M in shares and a director owning $2M in shares.

The 5 year low, median and high median Price/Earnings Ratios are 18.05, 20.27 and 22.50. The current P/E is 25.52 based on a stock price of $46.19 and 2013 earnings of $1.81. I get a Graham price of $18.54. The low, median and high median10 year Price/Graham Price Ratios are 1.39, 1.54 and 1.69. The current P/GP is 2.49.

I get a 10 year Price/Book Value per Share Ratio of 2.89. The current P/B Ratio is 5.47 a value some 89% high. The current dividend yield is 2.73% and the 5 year median dividend yield is 3.26% a value some 16% higher.

All my stock price tests suggest that the stock is overpriced. They all suggest that the current price is relatively high to relatively very high.

When I look at the analysts' recommendations I find Buy, Hold and Underperform. However, the vast majority of the recommendations are a Buy. The 12 month consensus stock price is $48.60. This implies a total return of 7.95% with 2.73% from dividends and 5.22% from capital gains.

There is an interesting article at Pipeline Observer is that hedge funds are selling Enbridge.

I get the thesis about investors buying safe and solid utility companies for their dividends. However, every utility company I have reviewed lately has been overbought (or has a relatively high stock price). Personally, I would stay away from this sector until the stock prices are more reasonable.

What are all the investors who bought utility stocks for the dividends going to do when the stock market has a correction? They would have had dividends, but will have lost capital. I think that they will bail.

I am going to hold on to my shares. I do not sell shares of good companies just because they have a relatively high stock price. The market tends to under and over price stocks and I buy for the long term. However, I do not think that now is the time to buy utility stocks. Buying at high prices will materially affect the long term return from every very good stock. See my spreadsheet at enb.htm.

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge.

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.