The full title is “The Bottom Billion Why The Poorest Countries Are Failing And What Can Be Done About It.” This is a very interesting book about the poorest people on earth and what the Western World can do for them. It does not give practical advice for individuals, but it does give practical things governments and aid agencies that give out aid can do.
What I like about Paul Collier’s book is that he looks at various things that have been done to help poor people and poor countries and then tries to analyses these things to see if they actually work or not. I like that he advocates practical things that seem to work. He talks about some standard solutions that do not work and solutions that do work.
I think that this is a very important book on world poverty. It is filled with statistics and common sense. He tries to come up with workable practical solutions. What I did not like about Jeffery Sach’s book on the End of Poverty, is that he comes up with grand schemes to help the poor. We have had grand schemes before, and they have not worked.
For book on Amazon see http://www.amazon.com/Bottom-Billion-Poorest-Countries-Failing/dp/0195311450. For book review at Oxford Press, see http://www.oup.com/us/catalog/general/subject/Economics/Developmental/?view=usa&ci=9780195311457 and at Financial Times see http://www.ft.com/cms/s/0/4858ed7e-0178-11dc-8b8c-000b5df10621.html?nclick_check=1.
He is also on www.ted.com, a wonderful site of speakers on all sorts of ideas. He is at http://www.ted.com/index.php/talks/paul_collier_shares_4_ways_to_help_the_bottom_billion.html.
Thursday, July 31, 2008
Wednesday, July 30, 2008
TransAlta Corp 2
This is a utility company (TSX-TA) and what you expect from a utility company is around 8% return, with 2% to 4% of that return to be dividend income. The 10 year return on this company is 7.8%, with some 3% from dividend. This is because the company’s stock price has increased quite a bit over the last 5 years. The 5 year return is some 19%.
As I mentioned yesterday, at present, most analysts have a hold on this company and there is an offer to buy it at $39 a share. The stock has had a checkered past and there has not been much in the way of dividend increases until this year. The current dividend has increased from $1.00 per to $1.08 a share, the first increase in some 8 years. The company had a bad year in 2006, but has since recovered. Over the long term, this has been a good steady company for me with a return since 1987of some 9.3%.
I can see why most analysts have a hold call on this stock. No one expects it to go past $36 over the next year, so, it is not a good buy at present. Also, the current P/E is 22.5 and this is high for a utility company. It would not be a good buy unless the stock price pulled back a bit. The one good thing from the March 2008 report is the Accrual Ratio is -5% and this tends to show that a stock is throwing off more cash than is apparent. Such an Accrual ratio usually means that a stock will go higher, but this is only the first quarterly report for 2008.
I have reloaded my spreadsheet with 2008 estimates and figures from the March 2008 quarterly report.
TransAlta Corp is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Its web site is http://www.transalta.com/. See my spreadsheet on this company at http://www.spbrunner.com/stocks/ta.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 at http://www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on web site.
As I mentioned yesterday, at present, most analysts have a hold on this company and there is an offer to buy it at $39 a share. The stock has had a checkered past and there has not been much in the way of dividend increases until this year. The current dividend has increased from $1.00 per to $1.08 a share, the first increase in some 8 years. The company had a bad year in 2006, but has since recovered. Over the long term, this has been a good steady company for me with a return since 1987of some 9.3%.
I can see why most analysts have a hold call on this stock. No one expects it to go past $36 over the next year, so, it is not a good buy at present. Also, the current P/E is 22.5 and this is high for a utility company. It would not be a good buy unless the stock price pulled back a bit. The one good thing from the March 2008 report is the Accrual Ratio is -5% and this tends to show that a stock is throwing off more cash than is apparent. Such an Accrual ratio usually means that a stock will go higher, but this is only the first quarterly report for 2008.
I have reloaded my spreadsheet with 2008 estimates and figures from the March 2008 quarterly report.
TransAlta Corp is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Its web site is http://www.transalta.com/. See my spreadsheet on this company at http://www.spbrunner.com/stocks/ta.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 at http://www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on web site.
Tuesday, July 29, 2008
TransAlta Corp
This is another utility company (TSX-TA) in which I have invested. It is not the any dividend achiever list, as they do not consistently raise their dividends. However, I like utility companies, as they tend to do well. I have been invested in this company since 1987 and I have an average annual return of 9.3%. Over the last 5 years, I have earned some 19.6% return on this company.
At present, most analysts have a hold on this company. There is an offer to buy it at $39 a share. There are investors that feel that the company can do more to maximize shareholder value. I think the hold rating is given by analysts because it would seem that this company is overvalued.
The problems with this company are that Revenue and Earnings per Share (EPS) are not growing much. Revenue, for the past 5 years to December 31, 2007, is 8.8% per annum and EPS is 6.4 % per annum. The problem being that you if you cannot grow revenue, you cannot grow much. At December 31, 2007, the Graham price was $19.85 and the stock price was $33.35. For a utility company you would like to see the Graham price and the stock price much closer. The reason for the low Graham price is the low growth in EPS and the low growth in Book Value. Book Value has barely grown over the 5 or 10 years.
The Current Asset/Current Liability Ratio is only at .54 and the Asset/Liability ratio a bit better at 1.26. This means that the company has a high debt. However, most utility companies have high debt ratios. The really only bright spot is the Operational Profit Margin is very good at 30.5% and the Accrual Ratio is at least negative. Although an Accrual Ratio of -1.8 is not that great.
This company is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Its web site is http://www.transalta.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/ta.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
At present, most analysts have a hold on this company. There is an offer to buy it at $39 a share. There are investors that feel that the company can do more to maximize shareholder value. I think the hold rating is given by analysts because it would seem that this company is overvalued.
The problems with this company are that Revenue and Earnings per Share (EPS) are not growing much. Revenue, for the past 5 years to December 31, 2007, is 8.8% per annum and EPS is 6.4 % per annum. The problem being that you if you cannot grow revenue, you cannot grow much. At December 31, 2007, the Graham price was $19.85 and the stock price was $33.35. For a utility company you would like to see the Graham price and the stock price much closer. The reason for the low Graham price is the low growth in EPS and the low growth in Book Value. Book Value has barely grown over the 5 or 10 years.
The Current Asset/Current Liability Ratio is only at .54 and the Asset/Liability ratio a bit better at 1.26. This means that the company has a high debt. However, most utility companies have high debt ratios. The really only bright spot is the Operational Profit Margin is very good at 30.5% and the Accrual Ratio is at least negative. Although an Accrual Ratio of -1.8 is not that great.
This company is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Its web site is http://www.transalta.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/ta.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Monday, July 28, 2008
Fortis Inc 2
Most analysts on the internet seem to have a buy rating on this stock (TSX-FTS). Some have recently switched to a buy from hold because of the recent pull back of the stock price. There has also been some insider buying for this stock. There is a fair range in the expected Earnings per Share (EPS) for this calendar year, ranging from the low $1.40 to $1.60. The quarterly EPS for March 31, 2008 is $.55 compared to the one of year ago of $.35. This is an increase of 57%.
This is a good stock, which for the last 10 years has consistently raised their dividends. However, note that prior to 10 years ago, they had some difficulties and did low the dividends. Their dividends have been rised an average of 6.4% yearly over the last 10 years and 10.8% over this last 5 years. Their current dividend rise is 22% from $.82 a share to $1.00 a share. The revenue for the quarter ending March 31, 2008, at $1,146M is higher than the $483M of a year ago by 137%.
The current and trailing P/E ratios are 17.3% and 20%, which is lower than the 5 year averages, which are 19% and 20.3%. For the quarterly ending March 31, 2008, both the Operational Cash Flow and the Operational Profit margin are up. The Accrual Ratio has greatly improved for March 31, 2008 quarterly report to 1.8%. These are items that I found negative on Friday for this stock in connection with the 5 years ending December 31, 2007. The other negative, which was the high debt level, is about the same.
By and large, this is a good stock, with a nice increasing dividend and it is selling at a reasonable price. It is also a relatively low risk stock. It is a good stock to buy if you are interested in low risk dividend paying stocks.
This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. It had recently bought Teresen, a BC gas utility. Its web site is http://www.fortisinc.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/fts.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
This is a good stock, which for the last 10 years has consistently raised their dividends. However, note that prior to 10 years ago, they had some difficulties and did low the dividends. Their dividends have been rised an average of 6.4% yearly over the last 10 years and 10.8% over this last 5 years. Their current dividend rise is 22% from $.82 a share to $1.00 a share. The revenue for the quarter ending March 31, 2008, at $1,146M is higher than the $483M of a year ago by 137%.
The current and trailing P/E ratios are 17.3% and 20%, which is lower than the 5 year averages, which are 19% and 20.3%. For the quarterly ending March 31, 2008, both the Operational Cash Flow and the Operational Profit margin are up. The Accrual Ratio has greatly improved for March 31, 2008 quarterly report to 1.8%. These are items that I found negative on Friday for this stock in connection with the 5 years ending December 31, 2007. The other negative, which was the high debt level, is about the same.
By and large, this is a good stock, with a nice increasing dividend and it is selling at a reasonable price. It is also a relatively low risk stock. It is a good stock to buy if you are interested in low risk dividend paying stocks.
This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. It had recently bought Teresen, a BC gas utility. Its web site is http://www.fortisinc.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/fts.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Friday, July 25, 2008
Fortis Inc
I bought this company in 1987 (TSX-FTS) and make additional purchases in 1995 and 1998. According to Quicken, I have made some 13.8% average annual returns on this stock. This return, of course, includes dividends. I have made a return of 16.5% over the last 5 years. The spreadsheet gives a 5 year return of 20.6% as the spreadsheet goes to 2007 and my figures are more current. According to my spreadsheet, this stock has increased its dividend over the last 10 years by 6.4% per year and over the last 5 years at 10.8% per year.
Revenues on this stock have been increasing much quicker than the Earnings per Share (EPS). Revenues have increased over the last 5 years at 30.6% per year, but the EPS has only increased by 6.3%. However, if you look at the revenue per share, it has only increased by 9.7% per year over the last 5 years. This is because the company has increased its revenue by buying other companies. Their most recent purchase was of Teresen in 2007. For this stock, the book value has increased by 14% a year over the last 5 years and the accrual ratio at the end of 2007 is a low 1.7%.
Now I will turn to the negative stuff. The debt load is quite high, with a current Asset/Liability of .59 and the Asset/Liability of 1.39. However, please note that the debt load has always been quite high on this stock. The Operational Cash Flow increase over the last 5 years is low at 3.5% and the Operational Profit Margin has decreased in 2007 to 13.7% compared to a 10 year average of 18%.
Overall, this has been a great company for me. It has been a very steady earner with nice increasing dividends. This stock has done slightly better than the TSX over the last 5 years, but slightly under the TSX over the past year. Note that the charts do not include dividends, which are quite good and add another 3.5% earnings on average over the last 5 years.
This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. It had recently bought Teresen, a BC gas utility. Its web site is http://www.fortisinc.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/fts.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Revenues on this stock have been increasing much quicker than the Earnings per Share (EPS). Revenues have increased over the last 5 years at 30.6% per year, but the EPS has only increased by 6.3%. However, if you look at the revenue per share, it has only increased by 9.7% per year over the last 5 years. This is because the company has increased its revenue by buying other companies. Their most recent purchase was of Teresen in 2007. For this stock, the book value has increased by 14% a year over the last 5 years and the accrual ratio at the end of 2007 is a low 1.7%.
Now I will turn to the negative stuff. The debt load is quite high, with a current Asset/Liability of .59 and the Asset/Liability of 1.39. However, please note that the debt load has always been quite high on this stock. The Operational Cash Flow increase over the last 5 years is low at 3.5% and the Operational Profit Margin has decreased in 2007 to 13.7% compared to a 10 year average of 18%.
Overall, this has been a great company for me. It has been a very steady earner with nice increasing dividends. This stock has done slightly better than the TSX over the last 5 years, but slightly under the TSX over the past year. Note that the charts do not include dividends, which are quite good and add another 3.5% earnings on average over the last 5 years.
This company provides gas and electricity to customers across Canada, through regulated holdings that include a natural gas utility in British Columbia, and electric utilities in 5 provinces in Canada, and 3 Caribbean countries. It owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns and operates hotels in eight Canadian provinces as well as commercial real estate in Atlantic Canada. It had recently bought Teresen, a BC gas utility. Its web site is http://www.fortisinc.com/. See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/fts.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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Thursday, July 24, 2008
Tracking Stocks In A Bear Market
Yes, the Earnings per Share (EPS) on some stock have been going down. However, if you have been paying attention, in this market decline, as in all market declines, the Price/Earnings (P/E) ratio has also been going down. This is what happens to even good stocks in a market decline. And, lower levels of P/Es can persist for sometime.
You can still do fine in a Bear Market if you have invested in good dividend paying stocks. By good dividend paying stocks, I mean stocks that have a history of increasing their dividends on a regular basis. In a down market, the way to see if you are making progress is to track your dividend payments rather than the total value of your stocks using the stock price.
You can survive a Bear Market by first making sure that you have good stocks. You really only lose money if the companies you invested in get into financial difficulties. Stocks that have high debt can be problematic in Bear Markets. So review your companies and make sure that they are in good shape. Make sure that there are no alarms concerning debt. If EPS or Revenues fall a bit, do not worry, this often happens in Bear Markets. What you want to worry about is big drops in EPS or Revenues that the companies do not explain to your satisfaction.
If you have done the above, now all you need to do is hold on. With your dividends that are coming in, hold them as cash in case some good buys come up.
I have a stock portfolio rich in good dividend paying stocks and it has survived very well in declining markets. In the last market slow down in 2000, 2001, my portfolio value (that is the total of the stock prices) declined, but my dividend income continued to increase. When the market recovered, my portfolio value recovered very nicely also. The same is happening now. The value of my portfolio is declining, but my dividend income continues to increase.
You can still do fine in a Bear Market if you have invested in good dividend paying stocks. By good dividend paying stocks, I mean stocks that have a history of increasing their dividends on a regular basis. In a down market, the way to see if you are making progress is to track your dividend payments rather than the total value of your stocks using the stock price.
You can survive a Bear Market by first making sure that you have good stocks. You really only lose money if the companies you invested in get into financial difficulties. Stocks that have high debt can be problematic in Bear Markets. So review your companies and make sure that they are in good shape. Make sure that there are no alarms concerning debt. If EPS or Revenues fall a bit, do not worry, this often happens in Bear Markets. What you want to worry about is big drops in EPS or Revenues that the companies do not explain to your satisfaction.
If you have done the above, now all you need to do is hold on. With your dividends that are coming in, hold them as cash in case some good buys come up.
I have a stock portfolio rich in good dividend paying stocks and it has survived very well in declining markets. In the last market slow down in 2000, 2001, my portfolio value (that is the total of the stock prices) declined, but my dividend income continued to increase. When the market recovered, my portfolio value recovered very nicely also. The same is happening now. The value of my portfolio is declining, but my dividend income continues to increase.
Wednesday, July 23, 2008
Giving, by Bill Clinton
Giving - how each of us can change the world - is a great book. It is a very easy read. It inspired me to start lending money via Kiva.org. On this website, you can loan small amounts of money to people all over the world. It finally seems that I was actually helping someone. All the money I have given to charity seems to have disappeared down a black hole, never to be seen again, never to actually do any good for anyone.
Now if you are a capitalist, as I would judge anyone who invests is, Kiva is the perfect investment for the future. Here you seem to be investing in people who want to be capitalists. If we want to keep the wealth we now have, I feel we must do something to spread around some wealth. Charity never seems to help. I have been giving to charity since I started to work in the late ‘60s. This is something like 40 years ago. I cannot point to any improvement in anyone’s life or any improvement for the poor of Toronto, where I live. In fact, we seem to have a lot more poor in Toronto now than there was 40 years ago.
Getting one great idea from a book is fantastic. What else can I say? If you believe in liberty, freedom and capitalism, then investing in potential capitalists in poor counties may be a very good investment indeed.
This micro-credit site is at http://www.kiva.org/. Bill Clinton’s site is at http://giving.clintonfoundation.org/. The book is on Amazon at http://www.amazon.com/Giving-How-Each-Change-World/dp/0307266745.
On the web, you can find both positive and negative reviews of this book. There are a lot of negative reviews. However, I read books all the time, often having 3 or 4 on the go at one time. I read mostly non-fiction (history, economics etc) and some sci-fi. Most of the negative reviews feel that the book is too filled with feel-good stories when there is so much misery around the world. Sorry, but I still feel that if a book gives you one great idea, it is worth it.
Now if you are a capitalist, as I would judge anyone who invests is, Kiva is the perfect investment for the future. Here you seem to be investing in people who want to be capitalists. If we want to keep the wealth we now have, I feel we must do something to spread around some wealth. Charity never seems to help. I have been giving to charity since I started to work in the late ‘60s. This is something like 40 years ago. I cannot point to any improvement in anyone’s life or any improvement for the poor of Toronto, where I live. In fact, we seem to have a lot more poor in Toronto now than there was 40 years ago.
Getting one great idea from a book is fantastic. What else can I say? If you believe in liberty, freedom and capitalism, then investing in potential capitalists in poor counties may be a very good investment indeed.
This micro-credit site is at http://www.kiva.org/. Bill Clinton’s site is at http://giving.clintonfoundation.org/. The book is on Amazon at http://www.amazon.com/Giving-How-Each-Change-World/dp/0307266745.
On the web, you can find both positive and negative reviews of this book. There are a lot of negative reviews. However, I read books all the time, often having 3 or 4 on the go at one time. I read mostly non-fiction (history, economics etc) and some sci-fi. Most of the negative reviews feel that the book is too filled with feel-good stories when there is so much misery around the world. Sorry, but I still feel that if a book gives you one great idea, it is worth it.
Tuesday, July 22, 2008
Bombardier Inc 2
Is this currently a good stock (TSX-BBD.B) to buy? Considering the business that it is in, this stock is a high risk. So, if you cannot stand to invest in a high risk stock, this stock is not for you. The insiders are overall, selling not buying. Some people have a buy rating and some a hold rating. It seems some have changed to a buy when the stock has come down from the high $8 range to the high $6 range. For the past year, this stock has done better then the TSX and recent decline is with the current market decline.
This stock has an the financial year ending at January 31each year, so the financial data I am looking at is the year ending at January 31, 2008. Everyone seems to expect the Earnings per Share (EPS) to be substantially higher for the 2009 annual report. Most expect the EPS to be in the low $.50 range. Since the dividend payments have been restarted, Bombardier is expecting earnings to improve also. If the EPS is $.51, then the dividend yield will be 19.6%. This stock’s dividend yield has been in the low 20% range, so this seems a reasonable EPS to expect.
Cash flows were very strong for the year ending in January 31, 2008, but I do not expect this to be repeated at the same rate for the current year, but they should be stronger than in the past few years. The asset/liability ratio is low at 1.18 for January 2008 and slightly worse at 1.16 for April 2008. However, the ratio for this stock has never been high. The company carries a lot of debt. The Return on Equity (ROE) is better for 2008 at 10.2%, but it is not back to where it was before the stock got into trouble. The Accrual Ratio is very good at -7.4%. This is one of the few bright spots for this stock.
This is clearly a turn around situation and as such is a risky situation. So, clearly, unless you can stand a lot of risk, you should not invest in this stock. However, I feel that this stock could once again become a great stock for my portfolio. The stock certainly seems to be getting back on track. However, it is still in the airplane business and this, as always, is risky.
See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/bbd.htm. The problem with this company is that the stock price is only in Canadian Dollars, but the financial reporting is in US Dollars. To make the spreadsheet figures compatible, I have used the US Dollar financial figures and converted the stock prices into US Dollars. I also show revenue, earnings and dividends in Canadian Dollars
Bombardier is a manufacturer of business jets, regional aircraft and rail transportation equipment. They also provide financial services and asset management. They are an international company, selling and manufacturing all over the world. The controlling shareholder is the Bombardier family. Its web site is http://www.bombardier.com/.
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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
This stock has an the financial year ending at January 31each year, so the financial data I am looking at is the year ending at January 31, 2008. Everyone seems to expect the Earnings per Share (EPS) to be substantially higher for the 2009 annual report. Most expect the EPS to be in the low $.50 range. Since the dividend payments have been restarted, Bombardier is expecting earnings to improve also. If the EPS is $.51, then the dividend yield will be 19.6%. This stock’s dividend yield has been in the low 20% range, so this seems a reasonable EPS to expect.
Cash flows were very strong for the year ending in January 31, 2008, but I do not expect this to be repeated at the same rate for the current year, but they should be stronger than in the past few years. The asset/liability ratio is low at 1.18 for January 2008 and slightly worse at 1.16 for April 2008. However, the ratio for this stock has never been high. The company carries a lot of debt. The Return on Equity (ROE) is better for 2008 at 10.2%, but it is not back to where it was before the stock got into trouble. The Accrual Ratio is very good at -7.4%. This is one of the few bright spots for this stock.
This is clearly a turn around situation and as such is a risky situation. So, clearly, unless you can stand a lot of risk, you should not invest in this stock. However, I feel that this stock could once again become a great stock for my portfolio. The stock certainly seems to be getting back on track. However, it is still in the airplane business and this, as always, is risky.
See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/bbd.htm. The problem with this company is that the stock price is only in Canadian Dollars, but the financial reporting is in US Dollars. To make the spreadsheet figures compatible, I have used the US Dollar financial figures and converted the stock prices into US Dollars. I also show revenue, earnings and dividends in Canadian Dollars
Bombardier is a manufacturer of business jets, regional aircraft and rail transportation equipment. They also provide financial services and asset management. They are an international company, selling and manufacturing all over the world. The controlling shareholder is the Bombardier family. Its web site is http://www.bombardier.com/.
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 at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Monday, July 21, 2008
Bombardier Inc
I bought shares in this company in 1987 (TSX-BBD.B) . Up until 2001, I was making some 35% return per annum on this stock. When the stock first dropped in 2002, I had still made some 28% return per annum on this stock. Even by the lowest point in 2005, I had made some 13% per annum on this stock. By that time, it seemed to be turning itself around, so I never sold. At the current price, I have made some 16% return on this stock per annum.
This company got into difficulty in 2003, and cut their dividend in 2004, then eliminated the dividend in 2005. The stock hit the low point in 2005 when it eliminated its dividend. This stock has been doing better since the low in 2005 and with the announcement of the final results for the quarter ending April 28, 2008, Bombardier has reinstated their dividend.
I certainly suffered big loses in my portfolio because of the drop in this stock, and it is still only worth 1/3 of what it was worth in 2001. But before it crashed, it was an excellent stock and it consistently raised its dividend and split it stock. I am hopeful that now that it has reinstated its dividend, it will again raise it consistently.
This stock has a controlling shareholder of the Bombardier family. A controlling shareholder is not necessarily a bad thing. I know that, especially in the US, they frown upon controlling shareholders. However, I believe that the Bombardier family has been working very hard to make this company an outstanding company again. I feel that when controlling shareholders work to make a company a fine investment for all the shareholders, not just themselves, controlling shareholders are good. I do not mind investing in companies, such as Bombardier that have controlling shareholders.
See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/bbd.htm. The problem with this company is that the stock price is only in Canadian Dollars, but the financial reporting is in US Dollars. To make the spreadsheet figures compatible, I have used the US Dollar financial figures and converted the stock prices into US Dollars. I also show revenue, earnings and dividends in Canadian Dollars. See my website at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Bombardier is a manufacturer of business jets, regional aircraft and rail transportation equipment. They also provide financial services and asset management. They are an international company, selling and manufacturing all over the world. The controlling shareholder is the Bombardier family. Its web site is http://www.bombardier.com/.
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.
This company got into difficulty in 2003, and cut their dividend in 2004, then eliminated the dividend in 2005. The stock hit the low point in 2005 when it eliminated its dividend. This stock has been doing better since the low in 2005 and with the announcement of the final results for the quarter ending April 28, 2008, Bombardier has reinstated their dividend.
I certainly suffered big loses in my portfolio because of the drop in this stock, and it is still only worth 1/3 of what it was worth in 2001. But before it crashed, it was an excellent stock and it consistently raised its dividend and split it stock. I am hopeful that now that it has reinstated its dividend, it will again raise it consistently.
This stock has a controlling shareholder of the Bombardier family. A controlling shareholder is not necessarily a bad thing. I know that, especially in the US, they frown upon controlling shareholders. However, I believe that the Bombardier family has been working very hard to make this company an outstanding company again. I feel that when controlling shareholders work to make a company a fine investment for all the shareholders, not just themselves, controlling shareholders are good. I do not mind investing in companies, such as Bombardier that have controlling shareholders.
See my spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/bbd.htm. The problem with this company is that the stock price is only in Canadian Dollars, but the financial reporting is in US Dollars. To make the spreadsheet figures compatible, I have used the US Dollar financial figures and converted the stock prices into US Dollars. I also show revenue, earnings and dividends in Canadian Dollars. See my website at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
Bombardier is a manufacturer of business jets, regional aircraft and rail transportation equipment. They also provide financial services and asset management. They are an international company, selling and manufacturing all over the world. The controlling shareholder is the Bombardier family. Its web site is http://www.bombardier.com/.
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.
Friday, July 18, 2008
TransCanada Corp2
Since I started a review of this stock (TSX-TRP), I thought I might as well finish it before I move on. I note that a number of people have a buy rating on it and some with a hold rating (as they think it is overvalued). This is utility stock, from which you would expect slow growth and a good dividend. The Graham price is only $30.71, according to my calculations, but the current price is $38.36. So, I can see why they might think it is overvalued. Although, I see most analysts, what ever their rating, have a 12 month stock price of $43-$44. This is higher than current price, and also this stock provides dividends, with a current yield of 3.8%.
The following figures are based on 5 year averages to December 31 2007, the last Annual Report date. Revenues are increasing at 11% per year. Revenue increases are good as they what that will eventually push up the earnings. The Earnings per share (EPS) has increase by 8.5% per annum. The dividends have been increasing by just over 6% a year. This is good as it is better than inflation.
The cash flow is increasing at a health rate of 17% per year. The closing price is up on average, 16% per year. The book value has only increase by 8.6% per year, but you tend to get low growth in book value when a large portion of the earnings is paid in dividends. The payout ratio on this stock runs about 60%.
The Current asset/Current liability ratio is low at .76. This means that the current assets cannot cover the current liabilities. However, the Asset/Liability ratio is at a better 1.55. The current Return on Equity (ROE) is good at 12.6%. The Accrual Ratio at -.17%, and this is not bad ratio.
As I had noted previously, if you compare this stock with the TSX, you will see that it has not done as well as the TSX over the last 5 years, but has done as well as other Utility stocks. Part of the reason that charts show that this stock has not done was well as the TSX, is that the charts only take into account the stock price movements. They do not consider the dividend payments.
As for 2008, the dividend has already been increased by almost 6%. This is certainly a good sign. However, most people feel that the EPS will remain the same as or be slightly lower than for 2007. A lot of people feel that we are going to have slow or no market growth in the near future. If this occurs, the place to have your money is in dividend paying stocks that increase their dividends on a regular basis. This stock certainly fits that bill.
The only real negative on this stock is the low Graham Price. As in all stock, you have to way the negatives and the positives to see if a stock is suitable to buy or hold. All stocks will have some negatives. This has been a good stock for me and I will continue to hold 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 spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/trp.htm. (I have reloaded this spreadsheet because of new 2008 figures. See my website at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
The following figures are based on 5 year averages to December 31 2007, the last Annual Report date. Revenues are increasing at 11% per year. Revenue increases are good as they what that will eventually push up the earnings. The Earnings per share (EPS) has increase by 8.5% per annum. The dividends have been increasing by just over 6% a year. This is good as it is better than inflation.
The cash flow is increasing at a health rate of 17% per year. The closing price is up on average, 16% per year. The book value has only increase by 8.6% per year, but you tend to get low growth in book value when a large portion of the earnings is paid in dividends. The payout ratio on this stock runs about 60%.
The Current asset/Current liability ratio is low at .76. This means that the current assets cannot cover the current liabilities. However, the Asset/Liability ratio is at a better 1.55. The current Return on Equity (ROE) is good at 12.6%. The Accrual Ratio at -.17%, and this is not bad ratio.
As I had noted previously, if you compare this stock with the TSX, you will see that it has not done as well as the TSX over the last 5 years, but has done as well as other Utility stocks. Part of the reason that charts show that this stock has not done was well as the TSX, is that the charts only take into account the stock price movements. They do not consider the dividend payments.
As for 2008, the dividend has already been increased by almost 6%. This is certainly a good sign. However, most people feel that the EPS will remain the same as or be slightly lower than for 2007. A lot of people feel that we are going to have slow or no market growth in the near future. If this occurs, the place to have your money is in dividend paying stocks that increase their dividends on a regular basis. This stock certainly fits that bill.
The only real negative on this stock is the low Graham Price. As in all stock, you have to way the negatives and the positives to see if a stock is suitable to buy or hold. All stocks will have some negatives. This has been a good stock for me and I will continue to hold 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 spreadsheet on this company at http://ca.geocities.com/brunnsu@rogers.com/trp.htm. (I have reloaded this spreadsheet because of new 2008 figures. See my website at http://ca.geocities.com/brunnsu@rogers.com/opinion.html for a list of the stocks for which I have put up spreadsheets on web site.
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