Wednesday, May 7, 2014

Canadian Natural Resources 2

On my other blog I am today writing about possible cheap dividend stocks to buy continue...

I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I started to follow this stock in 2008 because it was on the dividend growth lists that I followed. I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. I got it with a yield of 1.32%. In April 2013 I bought more shares of this stock because the yield was at 1.54%.

When I look at insider trading I find 87.8M of insider selling and 5.7M of insider buying. There was only officer buying, but selling was by CEO, CFO, officers and directors. Net selling was $82.1M. In 2013 outstanding shares were increased by 5.4M with a book value of $130M. This number of shares was worth $194M at the end of 2013 and was equal to one half of one percent of the outstanding shares.

There is lots of insider ownership with the CEO having shares worth around $79.5M, CFO having shares worth $5.4M and the Chairman having shares worth $819.5M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.82, 19.28 and 23.53. The current P/E Ratio is 13.35 based on a stock price of $44.98 and 2014 EPS estimate of $3.37. This stock price test suggests that the stock price is cheap.

I get a Graham Price of $42.39. The 10 year low, median and high Price/Graham Price Ratios are 0.87, 1.18 and 1.50. The current P/GP Ratio is 1.06. This stock price test suggests that the stock price is reasonable.

The 10 year Price/Book Value per Share Ratio is 1.95 and the current P/B Ratio at 1.90 with only 3% lower. This stock price test suggests that the stock price is reasonable.

The historical dividend yield high is 1.33% and the current dividend yield at 2.00% is some 50% higher. This stock price test suggests that the stock price is cheap. The current dividend is also some 128% higher than the 5 year median dividend yield of 0.88%.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The current consensus recommendation would be a Buy. The 12 month stock price consensus is $49.00. This implies a total return of 10.94% with 2% from dividends and 8.94% from capital gains.

At the end of 2013 John Heinzl in the Globe and Mail talked about 5 stocks to buy and hold. This stock was one that he mentioned. A recent article in the Wall Street Journal by Judy McKinnon said that CNQ is a Canadian stock to watch because of a new oil well in Cote d'Ivoire in West Africa.

The company does have some problems. The company has recently been charged because of a leak at Horizon site near Fort McMurray according to Global News. There is also the blowout at Cold Lake, Alberta as documented by Pembina Institute.

My all measures, this stock's price is reasonable. By some measures, it is still cheap. See my spreadsheet at cnq.htm.

This is the second of two parts. The first part was posted on Tuesday, May 6, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Canadian Natural Resources Ltd. is a senior oil and natural gas exploration, development and production company. The Company's operations are focused in Western Canada, in the U.K. sector of the North Sea and in offshore West Africa. Its web site is here Canadian Natural Resources.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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