On my new blog of Investing, Economics Mostly and I have today commented on the Where is retirement going?
I own this stock (NYSE:BCS, LSE-BARC). I bought this stock in March 2000. I have in a US$ account. My gain in US$ is 2.4% per year. I got 6.3% per year in dividends. If I look at US$ to CDN$ changes over the same period of time, I have lost 3.1% because of the differences in the exchange rate. So really I am down some 0.7% per year. So really I have not gained anything, but I really have not lost or not lost much.
A report dated April 12th says that there has been no insider selling or insider buying over past 6 months. One analyst said that institutions only hold 2.4% of the outstanding shares and the average institutional ownership of Regional Banks is 37.5%, which is also lower than S&P 500 as a whole which is 70.5% institutional ownership. It is hard to get institutional ownership information on this bank. The above seems to be only for NYSE ADRs for this bank.
I get 5 year median low and high Price/Earnings Ratios of 5.75 and 12.95. The current P/E Ratio is 6.47, which would suggest a low stock price. These P/E ratios are low and have been quite low lately.
I get a Graham Price of $36.53. The 10 year low median difference between the Graham Price and stock price is the stock price being 36% lower than the Graham Price. Currently the stock price is some 63% below the stock price. This would suggest a very low stock price.
However, the 5 year low difference between the Graham Price and stock price is the stock price being some 72% lower than the Graham Price. Between 2007 and 2009, the stock price fell some 70%, but the Graham Price fell only 45%. Since 2008, the stock price has been way below the Graham Price. This test shows a very low stock price, but because of what has been happening lately, maybe it is not as low as it first appears.
The book value has not gone down like to share price. The 10 year median Price/Book Value Ratio is 1.63 (although it used to be closer to 2.00). The current P/B Ratio is just 0.46. So it is low on an historical basis. Also the book value is higher than the stock price. This shows a very low stock price.
I get a 5 year dividend yield of 2.33% and the current one is 40% higher at 3.3%. However, before the latest crisis, dividend yield was between 3.5% and 4.5%. So, currently it is higher than it has been lately, but this stock has yet to recover from the latest crisis.
When I look at analysts’ recommendations, I get Strong Buy, Buy and Hold. The consensus recommendation would be a Strong Buy.
One Buy recommendations gives a 12 months stock price of $18 US$. He goes on to say that Barclays is in a challenging operating environment. A couple of Analysts say they prefer Standard Chartered Bank (LSE-STAN) to Barclays. One commented on the fact that it is weighted to investment banking so will probably trade at a discount to a good retail bank.
Most analysts think that the dividends are going to grow nicely over the next few years. They also think that earnings will grow nicely also. Revenue is expected to be lower in this year (2012), and then grow modestly. There is an interesting article about this bank and the CEO’s pay. See G&M article. Barclays bank had awarded the CEO, Bob Diamond, a £2.7M bonus for 2011 which was 80% of maximum. Because of the revolt of shareholders on pay to the CEO of Citibank, Barclays CEO agreed to forfeit half his 2011 bonus unless Barclays lifts its return on equity (which was a lowly 6.6 per cent last year) above its 11.5 per cent cost of equity. You can read all about this bank at Wikipedia.
Currently, I intend to hold on to my shares. I still believe it will recover.
Some of the US sites on BCS’s estimates are confusing. Part of the reason is London Stock Exchange reports in pence. That is share price of £2.12 is reported as 212 GBX or GBp.
One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays. See my spreadsheet at bcs.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.
Thursday, April 26, 2012
Wednesday, April 25, 2012
Barclays Bank PLC ADR
I own this stock (NYSE:BCS, LSE-BARC). I bought this stock in March 2000. I have in a US$ account. My gain in US$ is 2.4% per year. I got 6.3% per year in dividends. If I look at US$ to CDN$ changes over the same period of time, I have lost 3.1% because of the differences in the exchange rate. So really I am down some 0.7% per year. So really I have not gained anything, but I really have not lost or not lost much.
I still hope for a good future for this bank. The European Banks have been hit hard by the recent crisis and I do not see any quick turnaround. However, I still do hope for a turnaround. Until 2008, I was earning money on this bank. However, losing some 3% per year on currency really puts a dint in any possible gains. If I look at the difference in the exchange rate for UK pounds to Canadian dollars, I am losing 7% per year over the past 5 years. This is the problem with investing in foreign stock.
This stock is also hard to evaluate. The company reports in UK pounds and I hold it as an ADR from the NYSE. So looking at this stock I am dealing with UK pounds US dollars and Canadian dollars. By the way if you want a good site for currency exchange rates, I use x-rates. This site gives both current and historical exchange rates.
A couple of extra things you should know about investing in UK stocks is that the London exchange quotes stocks in pence. On my spreadsheet I am using pounds, but the stock would be quoted at 211 pence, not the £2.11 number I have quoted.
The other thing with this stock is that I get a big dividend in the first part of the year, which was declared at the end of the previous year. Other dividends paid during the year significantly lower. For example, the last dividend I got in 2011 was $0.062775 per shares. The first dividend I got in 2012 was at $0.187525. (This is a 66% difference.)
Because of difficulties, this bank cut dividends for part of 2009 and then restarted them. However, the new dividends were a lot less than the old ones. Dividends in 2009 were some 97% lower than for 2008. They started increasing the dividends again in 2010 with a very good 350% raise, but dividends in 2010 were still some 85% lower than for 2008. With another increase in 2011, dividends were down by 82% from 2008. It is expected that dividend increases over the next few years will be in the range of 20% per year.
The only good news in growth in the last 5 years is for book value. It has grown at the rate of 8.5% per year in UK£. The 10 year growth in book value is slightly lower at 7.7% per in UK£. (Over the past 10 years, I have only lost 3.7% per year in currency exchange between UK£ and CDN$.)
As far as growth over the past 5 years on this stock, there is none. However, there is some growth over the past 10 years. Revenue has growth at 5% per year in UK£. Earnings have grown at 3.8% per year in UK£. Cash Flow has grown at the rate of 5.9% per year in UK£.
As far as debt ratios goes, the current Debt Ratio is 1.10, which is good for a bank. However, the current Leverage and current Debt/Equity Ratios at 28.13 and 25.68 are rather high, even for a bank.
The Return on Equity Ratio for 2011 is decent at 7.1%. The 5 year median ROE is better at 14.4%. The ROE using comprehensive income is similar, with that ROE at 8.8% for 2011 and 14.4% as the 5 year median ROE.
At the moment I am holding on to the shares I have in this bank. This is about the only foreign shares that I own and I like to have at least something in foreign stocks.
One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays. See my spreadsheet at bcs.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.
I still hope for a good future for this bank. The European Banks have been hit hard by the recent crisis and I do not see any quick turnaround. However, I still do hope for a turnaround. Until 2008, I was earning money on this bank. However, losing some 3% per year on currency really puts a dint in any possible gains. If I look at the difference in the exchange rate for UK pounds to Canadian dollars, I am losing 7% per year over the past 5 years. This is the problem with investing in foreign stock.
This stock is also hard to evaluate. The company reports in UK pounds and I hold it as an ADR from the NYSE. So looking at this stock I am dealing with UK pounds US dollars and Canadian dollars. By the way if you want a good site for currency exchange rates, I use x-rates. This site gives both current and historical exchange rates.
A couple of extra things you should know about investing in UK stocks is that the London exchange quotes stocks in pence. On my spreadsheet I am using pounds, but the stock would be quoted at 211 pence, not the £2.11 number I have quoted.
The other thing with this stock is that I get a big dividend in the first part of the year, which was declared at the end of the previous year. Other dividends paid during the year significantly lower. For example, the last dividend I got in 2011 was $0.062775 per shares. The first dividend I got in 2012 was at $0.187525. (This is a 66% difference.)
Because of difficulties, this bank cut dividends for part of 2009 and then restarted them. However, the new dividends were a lot less than the old ones. Dividends in 2009 were some 97% lower than for 2008. They started increasing the dividends again in 2010 with a very good 350% raise, but dividends in 2010 were still some 85% lower than for 2008. With another increase in 2011, dividends were down by 82% from 2008. It is expected that dividend increases over the next few years will be in the range of 20% per year.
The only good news in growth in the last 5 years is for book value. It has grown at the rate of 8.5% per year in UK£. The 10 year growth in book value is slightly lower at 7.7% per in UK£. (Over the past 10 years, I have only lost 3.7% per year in currency exchange between UK£ and CDN$.)
As far as growth over the past 5 years on this stock, there is none. However, there is some growth over the past 10 years. Revenue has growth at 5% per year in UK£. Earnings have grown at 3.8% per year in UK£. Cash Flow has grown at the rate of 5.9% per year in UK£.
As far as debt ratios goes, the current Debt Ratio is 1.10, which is good for a bank. However, the current Leverage and current Debt/Equity Ratios at 28.13 and 25.68 are rather high, even for a bank.
The Return on Equity Ratio for 2011 is decent at 7.1%. The 5 year median ROE is better at 14.4%. The ROE using comprehensive income is similar, with that ROE at 8.8% for 2011 and 14.4% as the 5 year median ROE.
At the moment I am holding on to the shares I have in this bank. This is about the only foreign shares that I own and I like to have at least something in foreign stocks.
One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays. See my spreadsheet at bcs.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.
Tuesday, April 24, 2012
Bombardier Inc 2
I started a new blog for investment and economic comments at blogger and I have commented on the markets.
I own this stock (TSX-BBD.B). ). I first bought this stock in 1987 and I have made a return of 12.9% per year with 4.4% per year return due to dividends and 8.5% per year due to capital gain. I have certainly been though a lot of ups and downs with this stock.
When I look at insider trading, I find a small amount of insider selling and a small amount of insider buying with a net of insider selling. Insiders not only have options, but they have Deferred Stock Units and Performance Share Units. The CEO and CFO both have more options than shares. The majority of the officers do also, with a couple of exceptions for family members who own lots of shares. The Directors do have more Deferred Stock Units and Performance Share Units than shares.
As far as I can see there are very few institutional owners (some 13) who own 2.3% of the outstanding shares. The institutions have bought a sold a bit over the last 3 months; and have reduced their holdings marginally. Also, according to NASDAQ site, Mclean Budden Ltd sold some 75M shares of Bombardier in December 2011. However, this company buys and sells a lot of stocks. See NASDAQ. This is interesting, but does not tell us much.
I get 5 year median low and high Price/Earnings Ratios of 7.45 and 14.49, a rather low range. The current P/E of 8.54 on a price of $3.99 would suggest a low current stock price.
I get a Graham Price of $1.33. It is low because the book value has crashed. The low and high difference between the Graham Price and stock price is the stock price being 8.5% and $128% higher than the Graham Price. By this measure the stock price is high. However, before the book value crashed the Graham Price was $4.65, which is higher than the current stock price.
The Price/Book Value Ratio is also not going to tell us much either because of the crash in the Book Value. The 10 year P/B Ratio is 2.42 and the current ratio is 23.81
The 5 year median dividend yield is 1.88% and the current yield is 33% higher at 2.51%. If you do not know what measurement to believe on stock price, it is usually a good idea to go with the dividend yield test. In this case it says the stock price is low. (However, the crash of the book value is a bit worrying.)
When I look at analysts’ recommendations I find Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Buy. One Hold recommendation comes with a 12 months stock price of $5.00. A Strong Buy comes with a 12 month stock price of $6.95.
One analyst says that the company can burn through a lot of its cash flow. One analyst thinks it is a buy because the global economy will recover and there will be industrial boom. One analyst gave it a Don’t Buy because she felt there was no catalyst to drive the company forward even though the stock was cheap.
There is an article on G&M about the C Series aircraft which is upbeat. See G&M. There is also another article with a negative point of view on Bombardier’s Q400 plane. See G&M.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here AltaGas. See my spreadsheet at bbd.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.
I own this stock (TSX-BBD.B). ). I first bought this stock in 1987 and I have made a return of 12.9% per year with 4.4% per year return due to dividends and 8.5% per year due to capital gain. I have certainly been though a lot of ups and downs with this stock.
When I look at insider trading, I find a small amount of insider selling and a small amount of insider buying with a net of insider selling. Insiders not only have options, but they have Deferred Stock Units and Performance Share Units. The CEO and CFO both have more options than shares. The majority of the officers do also, with a couple of exceptions for family members who own lots of shares. The Directors do have more Deferred Stock Units and Performance Share Units than shares.
As far as I can see there are very few institutional owners (some 13) who own 2.3% of the outstanding shares. The institutions have bought a sold a bit over the last 3 months; and have reduced their holdings marginally. Also, according to NASDAQ site, Mclean Budden Ltd sold some 75M shares of Bombardier in December 2011. However, this company buys and sells a lot of stocks. See NASDAQ. This is interesting, but does not tell us much.
I get 5 year median low and high Price/Earnings Ratios of 7.45 and 14.49, a rather low range. The current P/E of 8.54 on a price of $3.99 would suggest a low current stock price.
I get a Graham Price of $1.33. It is low because the book value has crashed. The low and high difference between the Graham Price and stock price is the stock price being 8.5% and $128% higher than the Graham Price. By this measure the stock price is high. However, before the book value crashed the Graham Price was $4.65, which is higher than the current stock price.
The Price/Book Value Ratio is also not going to tell us much either because of the crash in the Book Value. The 10 year P/B Ratio is 2.42 and the current ratio is 23.81
The 5 year median dividend yield is 1.88% and the current yield is 33% higher at 2.51%. If you do not know what measurement to believe on stock price, it is usually a good idea to go with the dividend yield test. In this case it says the stock price is low. (However, the crash of the book value is a bit worrying.)
When I look at analysts’ recommendations I find Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Buy. One Hold recommendation comes with a 12 months stock price of $5.00. A Strong Buy comes with a 12 month stock price of $6.95.
One analyst says that the company can burn through a lot of its cash flow. One analyst thinks it is a buy because the global economy will recover and there will be industrial boom. One analyst gave it a Don’t Buy because she felt there was no catalyst to drive the company forward even though the stock was cheap.
There is an article on G&M about the C Series aircraft which is upbeat. See G&M. There is also another article with a negative point of view on Bombardier’s Q400 plane. See G&M.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here AltaGas. See my spreadsheet at bbd.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.
Monday, April 23, 2012
Bombardier Inc
Yes, I know the market is crashing. All of a sudden investors got worried about Europe and panicked. However, if you have good quality Canadian dividend paying stocks, the value of the company on the stock market may go down, but nothing much is changing for your companies. The vast majority of Canadian Dividend paying stocks will continue on to make money and pay you dividends.
Now, on to the stock I want to talk about today, which is Bombardier, a stock that I own this stock (TSX-BBD.B). I first bought this stock in 1987 and I have made a return of 12.9% per year with 4.4% per year return due to dividends and 8.5% per year due to capital gain. I have certainly been though a lot of ups and downs with this stock. It still has not fully recovered from the 2000 bear market, let alone the latest one.
Bombardier restored their dividend payments in 2009, but they are still some 44% lower than what they were when they were cancelled in 2003. They have not increased the dividends since they were restored. The Dividend Payout Ratios are good with 5 year ratios at 21% for earnings and 10% for cash flow. For 2011, the one for cash flow is high at 71%, but it is expected to be at 13% for 2012.
This is a stock you would buy more for capital gain than dividends as dividends as always been low. The stock has a 5 year median dividend of just 1.9%. The dividend yield on this stock is below 2% most of the time. This stock would be considered to be a dividend growth stock.
I have not done badly with stock, but this stock has not done much for its shareholders since it hit a high in 2001. However, I must admit that the family has been working hard to revive this company. This stock has two levels of shares, one voting and one non-voting. The Bombardier family has some 64% of the voting rates on the company.
Over the past 5 years I have broken even on my investment in this company. And over the past 10 years, I am down 11% per year. These figures include both dividends and capital gain.
This stock is reporting in US dollars. And, as all Canadian stocks reporting in US currency, this company has done better in US currency than in Canadian currency. The company was making progress before the latest bear market. Sales have dropped, but they continue to make progress in earnings. Cash flow has always varied a fair bit.
The book value is down considerable for 2011. Part of the reason is the change to the new accounting system, but mostly it has to do with the fact that comprehensive income is negative this year. Net income is positive, but a negative comprehensive income calls into questions the quality of the net income. That is it may not be a good as it looks.
The Return on Equity is high for 2011 at 286%. However, this is because the book value is so low, so this really does not tell us anything at all. As I have said above, because of the difference between the comprehensive income and net income (which ROE is based on), you probably cannot believe the net income and therefore the ROE is rather meaningless.
The debt ratios are low. The current Liquidity ratio is not bad at 1.11, but the Debt Ratios (which looks at Assets and Liabilities) is even lower 1.03. Because the book value has dropped so much the current Leverage and Debt/Equity Ratios are meaningless. The debt ratio on this stock has never been good. They have been sort of in the ok region.
I am holding on to my shares in this company. I still believe it will revive. However, I could be wrong on this.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
Now, on to the stock I want to talk about today, which is Bombardier, a stock that I own this stock (TSX-BBD.B). I first bought this stock in 1987 and I have made a return of 12.9% per year with 4.4% per year return due to dividends and 8.5% per year due to capital gain. I have certainly been though a lot of ups and downs with this stock. It still has not fully recovered from the 2000 bear market, let alone the latest one.
Bombardier restored their dividend payments in 2009, but they are still some 44% lower than what they were when they were cancelled in 2003. They have not increased the dividends since they were restored. The Dividend Payout Ratios are good with 5 year ratios at 21% for earnings and 10% for cash flow. For 2011, the one for cash flow is high at 71%, but it is expected to be at 13% for 2012.
This is a stock you would buy more for capital gain than dividends as dividends as always been low. The stock has a 5 year median dividend of just 1.9%. The dividend yield on this stock is below 2% most of the time. This stock would be considered to be a dividend growth stock.
I have not done badly with stock, but this stock has not done much for its shareholders since it hit a high in 2001. However, I must admit that the family has been working hard to revive this company. This stock has two levels of shares, one voting and one non-voting. The Bombardier family has some 64% of the voting rates on the company.
Over the past 5 years I have broken even on my investment in this company. And over the past 10 years, I am down 11% per year. These figures include both dividends and capital gain.
This stock is reporting in US dollars. And, as all Canadian stocks reporting in US currency, this company has done better in US currency than in Canadian currency. The company was making progress before the latest bear market. Sales have dropped, but they continue to make progress in earnings. Cash flow has always varied a fair bit.
The book value is down considerable for 2011. Part of the reason is the change to the new accounting system, but mostly it has to do with the fact that comprehensive income is negative this year. Net income is positive, but a negative comprehensive income calls into questions the quality of the net income. That is it may not be a good as it looks.
The Return on Equity is high for 2011 at 286%. However, this is because the book value is so low, so this really does not tell us anything at all. As I have said above, because of the difference between the comprehensive income and net income (which ROE is based on), you probably cannot believe the net income and therefore the ROE is rather meaningless.
The debt ratios are low. The current Liquidity ratio is not bad at 1.11, but the Debt Ratios (which looks at Assets and Liabilities) is even lower 1.03. Because the book value has dropped so much the current Leverage and Debt/Equity Ratios are meaningless. The debt ratio on this stock has never been good. They have been sort of in the ok region.
I am holding on to my shares in this company. I still believe it will revive. However, I could be wrong on this.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
Friday, April 20, 2012
AltaGas Ltd 2
I own this stock (TSX-ALA). I first bought this stock in May 2009 and then bought more in November 2009 and in June 2010. I have made a return of 36.5% per year. Dividends count for 8.8% per year of my return or 24% of my return. My capital gain return is 27.7% per year.
When I look at insider trading, I find insider selling of $1.7M and minimal insider buying with net insider selling of $1.6M. The insider selling looks like officers are cashing in options. This company also has more than just the standard options with Rights Performance Units, Rights Restricted Units and Subscription Rights.
The CEO has a substantial investment with shares own worth just under $38M. One of the directors has a similar investment in the company. The CFO and the officers of the company have more options than shares. Most of the directors do too, with some exceptions.
There are some 68 institutions that own around 34% of this company. They have bought and sold shares over the past 3 months with a net of sellers, but overall institutions have increased their holdings in the company very marginally.
I get 5 year median low and high Price/Earnings Ratios of 12.74 and 15.21. The current P/E ratio of 24.09 is showing a rather high stock price at $30.35. This stock is at basic a utility; so a P/E ratio of 24 is high.
I get a Graham Price of $19.22 and the current stock price is some 58% higher than the Graham Price. The 10 year median low difference between the stock price and Graham price is the stock price being 8% lower than the Graham Price. The 10 year median high difference between the stock price and Graham price is the stock price being 43% higher than the Graham Price. A difference of 58% does point to a high current stock price.
As far as the dividend yield goes, we do not learn too much. The 5 year median dividend yield is 9% and the current one is 4.6% and suggests a high stock price. However, this company used to be an income trust company and those companies had higher dividend yields than corporations.
This company cut is dividend when switching to a corporation. In a corporate model you do not expect as high dividend yields as the income trusts produced. It was expected the dividend yields on income trusts that switched to corporations would lower their dividends yields to 4 to 5% and this is the range for this company.
The 10 year median Price/Book Value Ratio is 2.50 and the current one is 2.33. This is the only test that shows a reasonable stock price.
When I look at analysts’ recommendations, I get Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Buy. Most recommendations are Strong Buy and Buy and there are very few others.
A couple of Strong Buy analysts said that they like that AltaGas were buying SEMCO because of this company’s Natural Gas Distribution and Natural Gas Storage Utilities in Alaska and Michigan. See article on Market Wire.
Two Strong Buy analysts gave a 12 months stock price of $36.00. On expects strong growth in dividends over the next 5 and 10 years at around 10% per year. Some analysts like the current dividend yield.
A lot of utility stocks are overpriced because of investors who usually get interest income are looking for income from stocks now. This stock still has a good yield. But, however you look at the P/E Ratio, one of 24 is rather high for a utility stock.
I do not sell a stock simply because it is overpriced as the market overprices and underprices stocks all the time. I will not buy any more of this stock as it is 2.4% of my portfolio. It is at 2.4% of my portfolio because it has grown so well. Usually after such a growth spurt a stock slows down. Analysts do not think this will happen to this stock, but I personally would not be buying at this time.
Going forward, I would expect a dividend yield between 4 and 5% and capital gain closer to 8% than to what I have receiving on this stock.
Blogger Alberta Venture writes of AltaGas on March 12, 2012 on his site.
AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas. See my spreadsheet at ala.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.
When I look at insider trading, I find insider selling of $1.7M and minimal insider buying with net insider selling of $1.6M. The insider selling looks like officers are cashing in options. This company also has more than just the standard options with Rights Performance Units, Rights Restricted Units and Subscription Rights.
The CEO has a substantial investment with shares own worth just under $38M. One of the directors has a similar investment in the company. The CFO and the officers of the company have more options than shares. Most of the directors do too, with some exceptions.
There are some 68 institutions that own around 34% of this company. They have bought and sold shares over the past 3 months with a net of sellers, but overall institutions have increased their holdings in the company very marginally.
I get 5 year median low and high Price/Earnings Ratios of 12.74 and 15.21. The current P/E ratio of 24.09 is showing a rather high stock price at $30.35. This stock is at basic a utility; so a P/E ratio of 24 is high.
I get a Graham Price of $19.22 and the current stock price is some 58% higher than the Graham Price. The 10 year median low difference between the stock price and Graham price is the stock price being 8% lower than the Graham Price. The 10 year median high difference between the stock price and Graham price is the stock price being 43% higher than the Graham Price. A difference of 58% does point to a high current stock price.
As far as the dividend yield goes, we do not learn too much. The 5 year median dividend yield is 9% and the current one is 4.6% and suggests a high stock price. However, this company used to be an income trust company and those companies had higher dividend yields than corporations.
This company cut is dividend when switching to a corporation. In a corporate model you do not expect as high dividend yields as the income trusts produced. It was expected the dividend yields on income trusts that switched to corporations would lower their dividends yields to 4 to 5% and this is the range for this company.
The 10 year median Price/Book Value Ratio is 2.50 and the current one is 2.33. This is the only test that shows a reasonable stock price.
When I look at analysts’ recommendations, I get Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Buy. Most recommendations are Strong Buy and Buy and there are very few others.
A couple of Strong Buy analysts said that they like that AltaGas were buying SEMCO because of this company’s Natural Gas Distribution and Natural Gas Storage Utilities in Alaska and Michigan. See article on Market Wire.
Two Strong Buy analysts gave a 12 months stock price of $36.00. On expects strong growth in dividends over the next 5 and 10 years at around 10% per year. Some analysts like the current dividend yield.
A lot of utility stocks are overpriced because of investors who usually get interest income are looking for income from stocks now. This stock still has a good yield. But, however you look at the P/E Ratio, one of 24 is rather high for a utility stock.
I do not sell a stock simply because it is overpriced as the market overprices and underprices stocks all the time. I will not buy any more of this stock as it is 2.4% of my portfolio. It is at 2.4% of my portfolio because it has grown so well. Usually after such a growth spurt a stock slows down. Analysts do not think this will happen to this stock, but I personally would not be buying at this time.
Going forward, I would expect a dividend yield between 4 and 5% and capital gain closer to 8% than to what I have receiving on this stock.
Blogger Alberta Venture writes of AltaGas on March 12, 2012 on his site.
AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas. See my spreadsheet at ala.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.
Thursday, April 19, 2012
For all you Novice Investors
The following is an interview with a friend who wanted to understand what it is I am blogging about, so this is for all you novice investors who are not sure about what I blog about.
I must admit that I am in information overload and spread sheets are beyond me!
I get about 150 people looking at my blog daily and sometimes none or sometimes one or two look at the spreadsheets. You are not alone in this.
You are currently reading "Economics of Good and Evil" by Tomas Sedlacek, how has it helped you to better understand the current economic situation?
I understood the situation before I read the book. I read a lot of economic books, magazines and articles. Tomas Sedlacek is considered to be one of the ‘five hot minds in economics’ by the Yale Economic Review. If you Google Tomas Sedlacek and RSA, you should get his 20 minute video that explains very well our current economic problems.
What advice would you give to the low risk, medium risk and high risk investor?
Risk is a very subjective thing. What I might think is low risk others may not. Maybe we should go to smarter risk or smarter investing. First a smart investor should know his/her comfort level. Do not invest in something that might keep you awake at night. The second big cardinal rule is “do not invest in something you do not understand”.
If you are going to invest what are your goals? Are you trying to retain your capital or to make some money? People who are currently investing in bonds often say that they are safe and they want to retain capital. Of course the current problem with our extremely low interest rates is that you are probably not even retaining capital with bonds as your capital is being eaten away by inflation.
If you are out to make money, you have to realize that often with high returns comes with high risk. This is generally true but not always, because for some high risk investments you make lousy returns. However, you are not going to make any money without taking some risks.
I invest in high quality dividend paying blue chip stocks. Often such stocks make more money than other stock because they are less volatile. My portfolio does not reach the lows of the stock market. It also does not reach the highs either. Less volatile sock often produce higher returns over the long term.
At 45+years, how much money does one really need to start to invest meaningfully?
Usually, when starting out investing, one does not have much money. I started out by buying Canadian Savings bonds on a monthly plan and then cashing them in in November to buy some shares. To buy stock you need a minimum of $3,000. You have to buy stocks in a board lot that is 100 shares. Quality shares start around $30, but can be a lot higher. TD Bank is currently around $82. So for TD Bank you will need $8200, plus commission.
It is a wise idea to have more than one stream of income. A job is generally the first steam of income a person gets. Investing can give you a stream of income. In fact investing can give you a number of different streams if you diversify. Some diversify into commodities, bonds, GIC and stocks. Others make money out of buying and selling or renting real estate and still other make money on the internet.
Personally, I diversify my income using different sectors of the investment market. I have stocks in industrial, consumer, real estate, financial and utility sectors. I have very little in resources as I find this sector very risky.
Should one be looking at GICs and Bonds v mutual funds and stocks?
We have gone from a climate of extremely high interest rates to one of extremely low interest rates. I used to have GICs and Bonds. I sold my last bond in 2007. It was a 30 year CIBC bond due in 2014 with interest rate just below 10%. I sold my last GIC in 1997.
The problem with any interest bearing investment vehicle at the moment is the very low interest rates. A lot of high quality government bonds in Canada have interest rates around 2% and some are lower. Inflation is running current around 2%. And, do not forget that you have to pay tax on any income. This is the reason I have no bonds currently. Interest rates are much too low.
The other reason I have no bonds is that we are at the tail end of a very long bond bull market. With bonds, the interest rate and value of bonds go in the opposite directions. So if you buy a $50,000 bond with a 2% interest rate and interest rates go up, your bond will be worth less than $50,000.
The volatile of the bond value depends on how much interest rates change and what the bond duration is. The longer the period to the bond’s maturity the more volatile the bond’s value will be. Interest rates are extremely low. They have nowhere to go but up. At some point we are going to go into a bond bear market.
People generally do not buy mutual funds, they are sold mutual funds. One problem with a lot of mutual funds is the high fees. However, you cannot expect people to invest for you for free. Another problem is that there are more mutual funds to choose from than there are stocks on the stock exchange. You have the same problem with ETFs (Exchange Traded funds)
Currently, I am into stocks and mostly dividend paying Canadian Stocks. My blog mostly talks about specific stocks.
How about paying off the mortgage v buying RRSPs?
The general rule is always paying off debt before investing. However, this is a general rule. You may have a good reason to do otherwise. If you are going to invest before paying off your debt can you articulate why?
What is the situation with the Toronto housing market from the investment point of view?
I have not owned a house or condo in Toronto yet. I love apartment living, so if I buy it would be a condo. However, I am worried about the number of condos being built currently in Toronto. I also worry about what the future holds for those monthly condo fees. They seem to keep go up and up.
I have always rented an apartment in Toronto. However, when my son was growing up I did have a cottage.
What is your tip of the month to the average zoomer?
Now is not the time to buy utilities and REITs. Everyone is looking for income because of the low interest rates. The stock of utilities and REITs are currently overpriced.
What books would you recommend to the new investor, the low, medium and high risk investor?
I do not read that many investments books. One I did like was Stocks for the Long Run by Jeremy J. Siegel. He is an American, but what he says also applies to our market.
I know a blogger I follow called Dividend Ninja has recently recommended “Never Too Late, Take Control of Your Retirement and Your Future” by Gail Vaz-Oxlade. Another blogger I like, My Own Advisor has recommended Millionaire Teacher by Andrew Hallam.
Maybe you could give me some examples of what you are typically asked by people
Usually people ask me to recommend a stock and I cannot do that as I am not a licenced advisor. Of course, I can tell them what I am buying or what I am reviewing. The thing is I am investing to live off my dividends. It may not be what others want to do. However, the stocks I have and review are often just as great for new investors as they are for people living off dividends.
Would you think it is a good idea for parents/grandparents to buy stocks for their children/grand children?
If the child is 18 or over, there are no problems. You can get into tax complexity if the child is under 18. Any income is taxable back to the parent/grandparent. Capital Gain is taxable in the hands of the child.
If you are using the RESP vehicle, you can of course have stocks if the RESP is a trading account. The problem here for stocks is that you have to plan 5 years before the RESP money is need to get out of the market. No one knows exactly where the market is at any time, but you do know if it is relatively high or relatively low. Within the 5 years to when money is need, you need to pick a time when the market is relatively high to sell the stocks.
I know people have often suggested giving children shares in toy game companies, but I think that is a bad idea. They are not good long term investments. Games and toy changed very rapidly. You need good stable companies. Utilities are probably best. I know utilities are currently overpriced, but they will not always be.
Please Susan, now that you know how very basic my questions are, could you please make your responses at a very simple level?
Let me know what you do not understand and we can fix it.
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.
I must admit that I am in information overload and spread sheets are beyond me!
I get about 150 people looking at my blog daily and sometimes none or sometimes one or two look at the spreadsheets. You are not alone in this.
You are currently reading "Economics of Good and Evil" by Tomas Sedlacek, how has it helped you to better understand the current economic situation?
I understood the situation before I read the book. I read a lot of economic books, magazines and articles. Tomas Sedlacek is considered to be one of the ‘five hot minds in economics’ by the Yale Economic Review. If you Google Tomas Sedlacek and RSA, you should get his 20 minute video that explains very well our current economic problems.
What advice would you give to the low risk, medium risk and high risk investor?
Risk is a very subjective thing. What I might think is low risk others may not. Maybe we should go to smarter risk or smarter investing. First a smart investor should know his/her comfort level. Do not invest in something that might keep you awake at night. The second big cardinal rule is “do not invest in something you do not understand”.
If you are going to invest what are your goals? Are you trying to retain your capital or to make some money? People who are currently investing in bonds often say that they are safe and they want to retain capital. Of course the current problem with our extremely low interest rates is that you are probably not even retaining capital with bonds as your capital is being eaten away by inflation.
If you are out to make money, you have to realize that often with high returns comes with high risk. This is generally true but not always, because for some high risk investments you make lousy returns. However, you are not going to make any money without taking some risks.
I invest in high quality dividend paying blue chip stocks. Often such stocks make more money than other stock because they are less volatile. My portfolio does not reach the lows of the stock market. It also does not reach the highs either. Less volatile sock often produce higher returns over the long term.
At 45+years, how much money does one really need to start to invest meaningfully?
Usually, when starting out investing, one does not have much money. I started out by buying Canadian Savings bonds on a monthly plan and then cashing them in in November to buy some shares. To buy stock you need a minimum of $3,000. You have to buy stocks in a board lot that is 100 shares. Quality shares start around $30, but can be a lot higher. TD Bank is currently around $82. So for TD Bank you will need $8200, plus commission.
It is a wise idea to have more than one stream of income. A job is generally the first steam of income a person gets. Investing can give you a stream of income. In fact investing can give you a number of different streams if you diversify. Some diversify into commodities, bonds, GIC and stocks. Others make money out of buying and selling or renting real estate and still other make money on the internet.
Personally, I diversify my income using different sectors of the investment market. I have stocks in industrial, consumer, real estate, financial and utility sectors. I have very little in resources as I find this sector very risky.
Should one be looking at GICs and Bonds v mutual funds and stocks?
We have gone from a climate of extremely high interest rates to one of extremely low interest rates. I used to have GICs and Bonds. I sold my last bond in 2007. It was a 30 year CIBC bond due in 2014 with interest rate just below 10%. I sold my last GIC in 1997.
The problem with any interest bearing investment vehicle at the moment is the very low interest rates. A lot of high quality government bonds in Canada have interest rates around 2% and some are lower. Inflation is running current around 2%. And, do not forget that you have to pay tax on any income. This is the reason I have no bonds currently. Interest rates are much too low.
The other reason I have no bonds is that we are at the tail end of a very long bond bull market. With bonds, the interest rate and value of bonds go in the opposite directions. So if you buy a $50,000 bond with a 2% interest rate and interest rates go up, your bond will be worth less than $50,000.
The volatile of the bond value depends on how much interest rates change and what the bond duration is. The longer the period to the bond’s maturity the more volatile the bond’s value will be. Interest rates are extremely low. They have nowhere to go but up. At some point we are going to go into a bond bear market.
People generally do not buy mutual funds, they are sold mutual funds. One problem with a lot of mutual funds is the high fees. However, you cannot expect people to invest for you for free. Another problem is that there are more mutual funds to choose from than there are stocks on the stock exchange. You have the same problem with ETFs (Exchange Traded funds)
Currently, I am into stocks and mostly dividend paying Canadian Stocks. My blog mostly talks about specific stocks.
How about paying off the mortgage v buying RRSPs?
The general rule is always paying off debt before investing. However, this is a general rule. You may have a good reason to do otherwise. If you are going to invest before paying off your debt can you articulate why?
What is the situation with the Toronto housing market from the investment point of view?
I have not owned a house or condo in Toronto yet. I love apartment living, so if I buy it would be a condo. However, I am worried about the number of condos being built currently in Toronto. I also worry about what the future holds for those monthly condo fees. They seem to keep go up and up.
I have always rented an apartment in Toronto. However, when my son was growing up I did have a cottage.
What is your tip of the month to the average zoomer?
Now is not the time to buy utilities and REITs. Everyone is looking for income because of the low interest rates. The stock of utilities and REITs are currently overpriced.
What books would you recommend to the new investor, the low, medium and high risk investor?
I do not read that many investments books. One I did like was Stocks for the Long Run by Jeremy J. Siegel. He is an American, but what he says also applies to our market.
I know a blogger I follow called Dividend Ninja has recently recommended “Never Too Late, Take Control of Your Retirement and Your Future” by Gail Vaz-Oxlade. Another blogger I like, My Own Advisor has recommended Millionaire Teacher by Andrew Hallam.
Maybe you could give me some examples of what you are typically asked by people
Usually people ask me to recommend a stock and I cannot do that as I am not a licenced advisor. Of course, I can tell them what I am buying or what I am reviewing. The thing is I am investing to live off my dividends. It may not be what others want to do. However, the stocks I have and review are often just as great for new investors as they are for people living off dividends.
Would you think it is a good idea for parents/grandparents to buy stocks for their children/grand children?
If the child is 18 or over, there are no problems. You can get into tax complexity if the child is under 18. Any income is taxable back to the parent/grandparent. Capital Gain is taxable in the hands of the child.
If you are using the RESP vehicle, you can of course have stocks if the RESP is a trading account. The problem here for stocks is that you have to plan 5 years before the RESP money is need to get out of the market. No one knows exactly where the market is at any time, but you do know if it is relatively high or relatively low. Within the 5 years to when money is need, you need to pick a time when the market is relatively high to sell the stocks.
I know people have often suggested giving children shares in toy game companies, but I think that is a bad idea. They are not good long term investments. Games and toy changed very rapidly. You need good stable companies. Utilities are probably best. I know utilities are currently overpriced, but they will not always be.
Please Susan, now that you know how very basic my questions are, could you please make your responses at a very simple level?
Let me know what you do not understand and we can fix it.
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.
Wednesday, April 18, 2012
AltaGas Ltd
I own this stock (TSX-ALA). I first bought this stock in May 2009 and then bought more in November 2009 and in June 2010. I have made a return of 36.5% per year. Dividends count for 8.8% per year of my return or 24% of my return. My capital gain return is 27.7% per year.
This company used to be an income Trust under AltaGas Income Trust (TSX-ALA.UN). I bought it at a good time when the stock was down. A number of income trust companies lowered their dividends because of the change to a corporation. This company decreased their dividend by 39% before it started to increase it again. The dividend is still 36% lower than it was in at its peak in 2009.
Dividend growth over the past 5 years is negative. It has gone down by 7.9% per year over the past 5 years. However, it is up over the past 10 years by 18.9%. Dividends were increased in 2011 by 4.5%. The 5 year median Dividend Payout Ratios are 121% for earnings and 74% for cash flow. DPRs for 2011 were 132% for earnings and 56% for cash flow. The DPRs for earnings is not expected to be below the earnings level until next year (2013).
If you had held the stock for the last 5 and 10 years you would probably have made a return of 10.8% and 25.6% per year. (I did better because I held the stock for less than 3 years.) The dividend portion of the above return was 6.8% and 9.2% per year. Dividends made up 63% and 36% of the return. Capital gains made up 4% and 16.4% per year of the return.
Going forward you should expect the portion of the return attributed to dividends to go down. Income Trusts gave out very high dividend yields. Corporations have much lower dividend yields. The current dividend yield is 4.55%. I would not expect any improvement on this in the future.
Other growth for this company shows that the 10 year growth is better than the 5 year growth. For example revenue growth is down by 6.2% per year over the past 5 years, but up by 3.3% per year over the past 10 years. Cash Flow is down by 3% per year over the past 5 years, but up by 6.5% over the past 10 years. A lot of companies are in this situation because of the recent recession.
As far as debt ratios go, the current Liquidity Ratio is just 0.65. Even talking off the current portion of the debt (which has been handled) the ratio only moves up to 0.79. However, this is typical of this sort of company. The Debt Ratio is much better at 1.62. The current Leverage and Debt/Equity Ratios at 3.05 and 1.88 are fine and typical of this sort of company. (This company can be compared to pipeline companies like Enbridge (TSX-ENB) or Pembina (TSX-PPL).)
The Return on Equity is rather low at 8.1% for 2011. The 5 year median ROE is better at13.5%. The ROE on comprehensive income at 7.4% is close to the ROE on net income.
I will be holding on to my shares. I bought this as a long term investment. However, I expect a lower rate of return in the future. Over the next few years I would expect total return to be between 10 and 15% with dividends making up 4 to 4.5% of the return and capital gain making up 6% to 10.5%.
AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas. See my spreadsheet at ala.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.
This company used to be an income Trust under AltaGas Income Trust (TSX-ALA.UN). I bought it at a good time when the stock was down. A number of income trust companies lowered their dividends because of the change to a corporation. This company decreased their dividend by 39% before it started to increase it again. The dividend is still 36% lower than it was in at its peak in 2009.
Dividend growth over the past 5 years is negative. It has gone down by 7.9% per year over the past 5 years. However, it is up over the past 10 years by 18.9%. Dividends were increased in 2011 by 4.5%. The 5 year median Dividend Payout Ratios are 121% for earnings and 74% for cash flow. DPRs for 2011 were 132% for earnings and 56% for cash flow. The DPRs for earnings is not expected to be below the earnings level until next year (2013).
If you had held the stock for the last 5 and 10 years you would probably have made a return of 10.8% and 25.6% per year. (I did better because I held the stock for less than 3 years.) The dividend portion of the above return was 6.8% and 9.2% per year. Dividends made up 63% and 36% of the return. Capital gains made up 4% and 16.4% per year of the return.
Going forward you should expect the portion of the return attributed to dividends to go down. Income Trusts gave out very high dividend yields. Corporations have much lower dividend yields. The current dividend yield is 4.55%. I would not expect any improvement on this in the future.
Other growth for this company shows that the 10 year growth is better than the 5 year growth. For example revenue growth is down by 6.2% per year over the past 5 years, but up by 3.3% per year over the past 10 years. Cash Flow is down by 3% per year over the past 5 years, but up by 6.5% over the past 10 years. A lot of companies are in this situation because of the recent recession.
As far as debt ratios go, the current Liquidity Ratio is just 0.65. Even talking off the current portion of the debt (which has been handled) the ratio only moves up to 0.79. However, this is typical of this sort of company. The Debt Ratio is much better at 1.62. The current Leverage and Debt/Equity Ratios at 3.05 and 1.88 are fine and typical of this sort of company. (This company can be compared to pipeline companies like Enbridge (TSX-ENB) or Pembina (TSX-PPL).)
The Return on Equity is rather low at 8.1% for 2011. The 5 year median ROE is better at13.5%. The ROE on comprehensive income at 7.4% is close to the ROE on net income.
I will be holding on to my shares. I bought this as a long term investment. However, I expect a lower rate of return in the future. Over the next few years I would expect total return to be between 10 and 15% with dividends making up 4 to 4.5% of the return and capital gain making up 6% to 10.5%.
AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas. See my spreadsheet at ala.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.
Tuesday, April 17, 2012
Toromont Industries Ltd 2
I own this stock (TSX-TIH). I first bought this stock in 2007 and then some more in 2008. My total return, if I exclude Enerflex is 9% per year. With Enerflex included my return is 7.4% per year. The problem with Enerflex is that Toromont did not have it for very long. Basically, I treating the money I got from it as a special dividend payment.
When I look at insider trading, I find that there is $3.1M of insider selling and a bit of insider buying with net insider selling at $2.7M. This is a lot of insider selling for a company this size. Insiders, not only have options but they have other options type units called Rights Deferred Share Units. Only the CEO and CFO have more options than shares. There are some officers with substantial shares.
There are some 51 institutions that hold 47% of the shares of this company. They have bought and sold shares over the past 3 months and have decreased their holdings by 2.3%. This is a negative.
My 5 year median low and high Price/Earnings Ratios are 11.86 and 15.96. The current P/E ratio of 15.16 would suggest a rather high current stock price. However, I do get a 10 year median P/E ratio of 14.98, which is not far from the current 15.16.
I get a Graham Price of $13.47. The low, median and high difference between the Graham price and stock price is the stock price being 7.9%, 29% and 52% higher than the Graham Price. The current stock price of 23.13 is some 72% higher than the Graham price. This also suggests the current stock price of 23.13 is rather high.
I get a 10 year Price/Book Value of 2.79 and the current P/B Ratio is 4.39. The current one is almost 60% higher than the 10 year ratio and suggests a rather high current stock price. However, you have to wonder how valid this test is for this stock as the book value did decline by 66% in 2011. The decline had mostly to do the purchase and sale of Enerflex.
The current dividend yield is 2.03% and the 5 year median dividend yield is 2.23%, about 7% higher. This would suggest a rather high current stock price. The current yield of 2.03 is not as low as the yield has gone as this stock has a 10 year median low dividend yield of 1.64%. Dividend yield was lower in the past.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Hold. The Hold recommendation comes with a 12 month stock price of $25.69 and a Buy with a 12 months stock price of $27. The price of $27 gives a P/E of 15.88 against the 2013 EPS estimates and within the historical P/E range. (True as my 10 year P/E range is 12.50 to 18.01.)
Some analysts prefer Finning (TSX-FTT) to this stock. Some liked it better before the Enerflex spin-off. There is some ambivalence to the spin-off of Enerflex. Others think it is good long term hold and will have increasing dividends in the future. One mentioned that there has been a recent run up in this stock and he did not expect much upside in the short term.
I am going to hold on to the shares I have. I think that I will do well in the long term on this company. I also do not expect much upside in the near future, but I do expect a good return over the long term.
There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Husky. See my spreadsheet at tih.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.
When I look at insider trading, I find that there is $3.1M of insider selling and a bit of insider buying with net insider selling at $2.7M. This is a lot of insider selling for a company this size. Insiders, not only have options but they have other options type units called Rights Deferred Share Units. Only the CEO and CFO have more options than shares. There are some officers with substantial shares.
There are some 51 institutions that hold 47% of the shares of this company. They have bought and sold shares over the past 3 months and have decreased their holdings by 2.3%. This is a negative.
My 5 year median low and high Price/Earnings Ratios are 11.86 and 15.96. The current P/E ratio of 15.16 would suggest a rather high current stock price. However, I do get a 10 year median P/E ratio of 14.98, which is not far from the current 15.16.
I get a Graham Price of $13.47. The low, median and high difference between the Graham price and stock price is the stock price being 7.9%, 29% and 52% higher than the Graham Price. The current stock price of 23.13 is some 72% higher than the Graham price. This also suggests the current stock price of 23.13 is rather high.
I get a 10 year Price/Book Value of 2.79 and the current P/B Ratio is 4.39. The current one is almost 60% higher than the 10 year ratio and suggests a rather high current stock price. However, you have to wonder how valid this test is for this stock as the book value did decline by 66% in 2011. The decline had mostly to do the purchase and sale of Enerflex.
The current dividend yield is 2.03% and the 5 year median dividend yield is 2.23%, about 7% higher. This would suggest a rather high current stock price. The current yield of 2.03 is not as low as the yield has gone as this stock has a 10 year median low dividend yield of 1.64%. Dividend yield was lower in the past.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Hold. The Hold recommendation comes with a 12 month stock price of $25.69 and a Buy with a 12 months stock price of $27. The price of $27 gives a P/E of 15.88 against the 2013 EPS estimates and within the historical P/E range. (True as my 10 year P/E range is 12.50 to 18.01.)
Some analysts prefer Finning (TSX-FTT) to this stock. Some liked it better before the Enerflex spin-off. There is some ambivalence to the spin-off of Enerflex. Others think it is good long term hold and will have increasing dividends in the future. One mentioned that there has been a recent run up in this stock and he did not expect much upside in the short term.
I am going to hold on to the shares I have. I think that I will do well in the long term on this company. I also do not expect much upside in the near future, but I do expect a good return over the long term.
There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Husky. See my spreadsheet at tih.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.
Monday, April 16, 2012
Toromont Industries Ltd
I own this stock (TSX-TIH). I first bought this stock in 2007 and then some more in 2008. My total return, if I exclude Enerflex is 9% per year. With Enerflex included my return is 7.4% per year. The problem with Enerflex is that Toromont did not have it for very long. Basically, I treating the money I got from it as a special dividend payment.
Looking at the 9% return this breaks down into a return of 13.5% per year return on dividends and a 4.5% loss in capital gains. I sold Enerflex after I received the shares and sold this stock at a loss. The stock first tracked up and then down after it was spun-off. It was had headed a bit higher when I sold. It was not a stock I wanted to hold, so I thought I would get out while I could get a reasonable price for it.
The return on this stock is only decent over the past 5 years because of the special dividend of the Enerflex spin-off. I think that the net result of Toromont buying and then spinning Enerflex off is a loss for its shareholders. However, most people feel more confused about it then thinking it was a negative move. There is an article about this at Daily Buy Sell Advisor.
According to my spreadsheet, if you had held this stock over the past 5 and 10 years, you would have earned 8.7% and 14.9% per year return, respectively. The portion accorded to dividends would be 11.5% and 7.3% per year. Going forward, dividend portion of your return will be closer 2% per year.
Looking at growth, the dividends have grown at the rate of 5.8% and 12% over the past 5 and 10 years to the end of 2011. The dividend growth to date would be lower at 3.7% and 10.9% per year over the past 5 and 10 years. The lower to date one is because dividends were decreased following spin-off of Enerflex. However, they have since increased dividends by 9.1%.
Growth in revenue, earnings, cash flow and book value is rather low or non-existent. For example the growth in EPS is negative (3% per year) over the past 5 years and over the past 10 years is 6.5% per year. The growth in cash flow per share is 0% per year and 2.3% per year over the past 5 and 10 years.
The book value declined by 66% in 2011 due to the spin-off the Enerflex. Over the past 5 years book value has declined 9.7% per year. Over the past 10 years book value has grown by 0% per year. This has all to do with the purchase and spin-off of Enerflex. The spin-off value was less than the purchase value.
This big decline in book value has distorted the Return on Equity. Because book value is now so low and net income was quite good, the ROE is showing at an impossible 61%. ROE based on Comprehensive Income is worse at 63%. (The ROE for 2011 is useless and it tells us nothing.)
The only good thing is the debt ratios. The current Liquidity Ratio is very good at 1.74. The current Debt Ratio is also good at 1.79. The current Leverage and Debt/Equity Ratios are ok at 2.26 and 1.26.
I still have hope for this stock. It is an Industrial stock so I expect long term returns to be about 8%, with 2% from dividends and 6% from capital gains. The total return is not far off this when I include Enerflex and get a return of 7.4%. I think it would have done better without buying and selling Enerflex. Also the Industrials have not really recovered from the latest recession. I still think that this company still has potential.
I thought a lot about how to update my spreadsheet because of the Enerflex Ltd (TSX-EFX) spin-off. I have come to the conclusion that as a shareholder of Toromont, I only got a cash equivalent to the share price of Enerflex on the date of separation. That date was June 3rd, 2011. Enerflex was worth $12.65 per share on that day. Unfortunately, the stock went up a bit and then tracked lower for a while. I sold Enerflex at a loss.
There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Husky. See my spreadsheet at tih.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.
Looking at the 9% return this breaks down into a return of 13.5% per year return on dividends and a 4.5% loss in capital gains. I sold Enerflex after I received the shares and sold this stock at a loss. The stock first tracked up and then down after it was spun-off. It was had headed a bit higher when I sold. It was not a stock I wanted to hold, so I thought I would get out while I could get a reasonable price for it.
The return on this stock is only decent over the past 5 years because of the special dividend of the Enerflex spin-off. I think that the net result of Toromont buying and then spinning Enerflex off is a loss for its shareholders. However, most people feel more confused about it then thinking it was a negative move. There is an article about this at Daily Buy Sell Advisor.
According to my spreadsheet, if you had held this stock over the past 5 and 10 years, you would have earned 8.7% and 14.9% per year return, respectively. The portion accorded to dividends would be 11.5% and 7.3% per year. Going forward, dividend portion of your return will be closer 2% per year.
Looking at growth, the dividends have grown at the rate of 5.8% and 12% over the past 5 and 10 years to the end of 2011. The dividend growth to date would be lower at 3.7% and 10.9% per year over the past 5 and 10 years. The lower to date one is because dividends were decreased following spin-off of Enerflex. However, they have since increased dividends by 9.1%.
Growth in revenue, earnings, cash flow and book value is rather low or non-existent. For example the growth in EPS is negative (3% per year) over the past 5 years and over the past 10 years is 6.5% per year. The growth in cash flow per share is 0% per year and 2.3% per year over the past 5 and 10 years.
The book value declined by 66% in 2011 due to the spin-off the Enerflex. Over the past 5 years book value has declined 9.7% per year. Over the past 10 years book value has grown by 0% per year. This has all to do with the purchase and spin-off of Enerflex. The spin-off value was less than the purchase value.
This big decline in book value has distorted the Return on Equity. Because book value is now so low and net income was quite good, the ROE is showing at an impossible 61%. ROE based on Comprehensive Income is worse at 63%. (The ROE for 2011 is useless and it tells us nothing.)
The only good thing is the debt ratios. The current Liquidity Ratio is very good at 1.74. The current Debt Ratio is also good at 1.79. The current Leverage and Debt/Equity Ratios are ok at 2.26 and 1.26.
I still have hope for this stock. It is an Industrial stock so I expect long term returns to be about 8%, with 2% from dividends and 6% from capital gains. The total return is not far off this when I include Enerflex and get a return of 7.4%. I think it would have done better without buying and selling Enerflex. Also the Industrials have not really recovered from the latest recession. I still think that this company still has potential.
I thought a lot about how to update my spreadsheet because of the Enerflex Ltd (TSX-EFX) spin-off. I have come to the conclusion that as a shareholder of Toromont, I only got a cash equivalent to the share price of Enerflex on the date of separation. That date was June 3rd, 2011. Enerflex was worth $12.65 per share on that day. Unfortunately, the stock went up a bit and then tracked lower for a while. I sold Enerflex at a loss.
There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Husky. See my spreadsheet at tih.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.
Friday, April 13, 2012
Badger Daylighting Ltd
I so not own this stock (TSX-BAD). This company came up on an article called
Some Small Cap dividend payers to review from G&M. This stock also came out on a list entitled an alluring mix of stability and profits at G&M.
The first article looked at what the pros who manage
small-cap funds are buying. Badger was
one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at what stocks
might appeal to a conservative investor looking for income.
So the above is why I decided to review this company. Now, on to what I found.
The first thing that caught my eye was dividends. Although the current dividend yield at 4% is
good, the 5 year median dividend yield at 6.6% is higher. This is because dividends were reduced by 19%
in 2011. Over the past 5 year dividends are down by 3.5% per year. This company started to pay dividends in 2004
and since that time dividends are up by 9.7% per year.
This stock used to be an Income Trust under
(TSX-BAD.UN). Most companies changing
from Income Trust to corporations lowered dividends. This is what this company did. They have not announced when they might
increase their dividends again, but they probably will. The 5 year median Dividend Payout Ratios are
72% for earnings and 42% for cash flow.
The DPR for 2011 were lower at 44% and 34%. It would seem that they will be about the
same for 2012.
If you had invested in this company over the past 5 and 10
years, you would have made money. The
total return over the past 5 and 10 years would be around 15% and 35% per year,
respectively. The dividend portion would
have been around 7% and 11% per year, respectively. The dividends would have represented
something like 48% and 31% of the return.
Capital gain would have been at 8% and 24% per year, respectively.
There is good revenue, earnings, cash flow and book value
growth for this company. For example, the
earnings growth is running at 9.3% and 29.5% per year over the past 5 and 10
years. Cash Flow is running at 9.3% and
16.6% per year over the past 5 and 10 years.
The debt ratios are good.
The current Liquidity Ratio is 2.76 and the current Debt Ratio is 1.95. These both deal with assets and liabilities
and what you want is ratios at 1.50 (or above).
The current Leverage and Debt/Equity Ratios are also good. They are at 2.06 and 1.06 respectively. (Here the lower the ratio, the better the
ratios.) However, these last two ratios
are rising as the 5 year median Ratios were 1.81 and 0.81. They are not currently high, but they are
going in the wrong direction.
Return on Equity for 2011 is 28.9% and the 5 year median ROE
is 28.6%. The ROE based on comprehensive
income is around the same. For 2011 it
is 30.1% and it has a 5 year median of 28.6%.
When I look at insider trading, I find no insider buying and
no insider selling. It would seem that
options are being turned into shares. There
are 14 institutions that hold 54% of this company. There has been some buying and selling over
the past 3 months and they have reduced their holdings by 4% over this period.
I get 5 year median low and high Price/Earnings Ratios of
7.60 and 11.17. The current P/E of 9.96
is just above the median P/E Ratio of 9.38.
The current P/E of 9.96 is low.
Basically any P/E below 10 is low.
The P/E is just not relatively low to past P/E’s.
I get a Graham Price of $21.90. The current stock price of $25.70 is some 17%
above the Graham price. The low
difference between the Graham price and stock price is the stock price being
20% lower than the Graham Price. The
high difference between the Graham price and stock price is the stock price
being 38% higher than the Graham Price.
I get a 10 year median Price/Book Value Ratio of 2.68 and a
current P/B Ratio of 3.11. The current
ratio is some 16% higher than the P/B Ratio.
As expected the current dividend yield is lower than the 5 year dividend
yield because of the recent dividend cut.
However, the dividend yield has been trending down since a peak in
2009. There is nothing remarkable about
the current stock price. It is neither
really high nor really low and seems to be a bit above the median.
There are few analysts that following this stock. All the recommendations are either Strong Buy
or Hold. The consensus recommendations
would be a Buy. The Strong Buy analysts
like it because of low P/E and great dividend yield. They think the stock is cheap and the company
is well run. Another analyst thought the
price a bit high and would prefer it at $20.50 to $21.50 for it to be a buy.
At the moment I am not buying anything. However, this is an interesting stock with a
good dividend and seems to be reasonable priced.
Badger is North America's largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in the utility and petroleum industries. Badger's business model involves the provision of excavating services through two distinct entities: the Operating Partners (franchisees in the United States and agents in Canada), and Badger Corporate. Its web site is here Badger. See my spreadsheet at bad.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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