In January 2009, when I was looking for a small cap dividend paying stock, this is one of the stocks I analyzed. I reviewed this stock last in June of 2009 and I am again looking at it to see how it is fairing. The reason I did not invest in this stock was because it wasn’t earning money. Reviewing what analysts are saying now about it, they do not expect this company to have positive earnings until this year. 2010 is expected to have negative earnings again.
The most interesting thing I find about this stock is that there is insider buying (about $1.6M) and no insider selling. This is the same as when I last reviewed this stock. The CEO and CFO both have more options that shares, but this is not true of other insiders and of the directors. A lot of insiders have a healthy number of shares (that is in the 100,000 plus range) in this company. There are three larger investors that own around 36% of the shares. This is certainly a plus for this company.
Certainly, the company has not done well over the past 5 years. This includes cutting out the dividends in 2009. No one seems to have made any money in this stock over the past 5 years. Over the past 5 years, revenues, earnings, book value, cash flow, and total return are all down. The bright spot is the Asset/Liability Ratio, which has fallen since the end of 2009, but still at a health 2.10. The Liquidity Ratio used to also be very good, with a 5 year average of 2.98. However, the current one is just 1.07. This is because the company is running down its cash. Where you want to see both these ratios is at 1.50. The Leverage Ratio is also getting worse. The 5 year average is good at 1.63, but the latest ratio is at 1.91. This ratio is not that high, but worrisome that it is climbing.
However, the 10 year growth statistics are much better than the 5 year one. Those who have held the stock for 10 years have done well with total returns in the range of 10 to 14%. The recession seems to have been hard on this company, but this is because they sell information to the oil and gas industries. Cash Flow, Revenue and Book Value are up over the past 10 years. Although the revenue per share is flat because of the increase in the number of shares outstanding for this company.
Because the company is not making any money, we cannot judge this stock by the Price/Earnings Ratio. However, if the company earnings $.04 per share in 2011, it puts the P/E ratio at 54.8. This is a high ratio. I get a Graham price based on $.04 earnings in 2011 of $1.15. The Graham Price was higher in 2005 at $2.36. The 10 year average is $1.87. These are both lower than the current stock price of 2.19. This stock has had a recent run in price as it was just $1.70 at the beginning of the year.
The Price/Book Value is currently at 1.49. This is some 30% above the 10 year average of 1.15, but only 7% higher than the 5 year average of 1.39. Since this stock no longer has a dividend and I do not know when it will again, you can not judge the stock by dividend yield.
When I look at analysts recommendations, I find a couple of Strong Buy recommendations and one Hold recommendation. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) There are only a few analysts following this stock. The analysts with the Strong Buy recommendations feel this stock is very undervalued. Here is a recent article about this stock.
Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse’s 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.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, January 31, 2011
Friday, January 28, 2011
Is Dividend Investing Dead?
I have been investing since the 1970’s and on a regular basis; some analyst/market observer will tell you dividend investing is dead. In fact, the way I heard about dividend investing was reading such an article. I did not know until that time that people invested that way. To me, it sounded like a good idea. In the 1970’s I was just feeling my way as far as investing went.
When I talked to people who invested, they all seemed to be going for the big score. None of these people seemed to have made any money at this, let alone really making a big score. Of course, some would make talk about making 500% or 1000% return on some investment, but they still had no real money. Either they blew what they earned on the next big investment score, or their investment was so small that they really didn’t earn much money. I figured that there must be a better way.
Dividend investing is simply when you buy stocks for their dividend payments. You hope that over time both the stock price and the dividend payments would increase. I must admit that this is how I made enough money to stop working. It is especially my investment in large dividend paying banks and utilities where I have made the most money.
Of course, the total value of my portfolio has varied greatly, but not so my dividend income. My dividend income has generally just gone up. Recessions are a problem when with investing. My dividend income increases overall slow down. Some companies cut their dividends, some leave them level and some increase them. Recession affect different companies differently. Also, different sorts of recession affect companies differently too.
There has been two recent recession with bear markets. The first affect tech and industrial companies the worse. The last one affected financial companies the worst. In both these recessions, my stock portfolio value has tanked, but my dividends have not. Since I live off my dividends, these recessions have not really affected me much. It is hard to see the value of my assets go down, but my dividend income has increased both times.
My total income has gone down a couple of times. The first time it went down some 15% in 2002, as I sold off my remaining bonds to buy dividend paying stock. Stocks generally have a lower yield than bonds. It took just over 2 years for my income to recover from this. The second time my total income went down it was in 2008 and the decline was 3.4%. I was earning less in interest on my MMFs. I have enough in MMFs plus ING Account and expected dividend income to fund my spending for the next 5 years. This is so I am never in a position where I have to sell an investment at an inopportune time. This second time it took just 6 months for my income to recover.
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 talked to people who invested, they all seemed to be going for the big score. None of these people seemed to have made any money at this, let alone really making a big score. Of course, some would make talk about making 500% or 1000% return on some investment, but they still had no real money. Either they blew what they earned on the next big investment score, or their investment was so small that they really didn’t earn much money. I figured that there must be a better way.
Dividend investing is simply when you buy stocks for their dividend payments. You hope that over time both the stock price and the dividend payments would increase. I must admit that this is how I made enough money to stop working. It is especially my investment in large dividend paying banks and utilities where I have made the most money.
Of course, the total value of my portfolio has varied greatly, but not so my dividend income. My dividend income has generally just gone up. Recessions are a problem when with investing. My dividend income increases overall slow down. Some companies cut their dividends, some leave them level and some increase them. Recession affect different companies differently. Also, different sorts of recession affect companies differently too.
There has been two recent recession with bear markets. The first affect tech and industrial companies the worse. The last one affected financial companies the worst. In both these recessions, my stock portfolio value has tanked, but my dividends have not. Since I live off my dividends, these recessions have not really affected me much. It is hard to see the value of my assets go down, but my dividend income has increased both times.
My total income has gone down a couple of times. The first time it went down some 15% in 2002, as I sold off my remaining bonds to buy dividend paying stock. Stocks generally have a lower yield than bonds. It took just over 2 years for my income to recover from this. The second time my total income went down it was in 2008 and the decline was 3.4%. I was earning less in interest on my MMFs. I have enough in MMFs plus ING Account and expected dividend income to fund my spending for the next 5 years. This is so I am never in a position where I have to sell an investment at an inopportune time. This second time it took just 6 months for my income to recover.
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, January 27, 2011
TMX Group 2
This is a stock (TSX-X) that I follow but do not own. It is classified as a financial stock and I already have too much in the financial area with my bank and insurance holdings. This stock was created when the Toronto Stock Exchange went public in 2002. What I want to look at today is what my spreadsheet says about the current price and what the Analysts say about this stock.
However, first I want to see what the Insider Trading report says. The thing that stands out is that, except for the directors, insiders have more stock options than shares. This is not what I like to see, but it is very common. There has been a small bit of insider selling over the past year, but it is insignificant. There has been no insider buying.
There are two indications of confidence of the insiders in this company. The first thing is that the stock options that have recently been issued have been kept. The other thing is that the dividends were increased in 2010. The increase was for just over 5%. This is lower than the 5 year average of 11%. However, this is the first increase in 3 years.
When I look at the Price/Earnings Ratios, I find that they are high. The 5 year median low P/E Ratio is 18 and the 5 year median high P/E Ratio is 25. The current P/E Ratio of 12.5 is therefore low on a relative basis. Sites that use the last 12 months earnings in their P/E Ratio calculations get a much higher P/E ratio of 23. They give a forward P/E Ratios closer to mine at 12.3.
I get a current Graham Price of $27.75. The stock price of $38.35 is 38% higher than the Graham Price. The low stock price is, on average, 126% above the Graham Price. This is because there was a huge difference between the stock price and the Graham Price between 2004 and 2007. As I have said before, the stock price of TMX fell in 2008 and has not yet recovered.
When I look at the Price/Book Value Ratio, I get a 10 year average of 10.09. This is a very high ratio. The current one at 3.29 is only 30% of the 10 year average. This shows that the stock price is relatively cheap. However, a P/B Ratio of 3.29 is not a low one.
The last thing to look at is the Dividend Yield. The current yield of 4.2% is good and it is higher than the 5 year average of 3.9%. The other thing to note is that the average 5 year payout ratio based on earnings is 73% and the average 5 year payout ratio based on cash flow is 49%. It is expected at the current dividend rate that the payout ratio based on earnings will be 53% and the payout ratio based on cash flow will be 48%. It is hard to say if there is much room for increased dividends in 2011.
When I look at analysts’ recommendations, I get the full range. There are Strong Buy, Buy, Hold, Underperform and Sell recommendations for this stock. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.)
Some analysts are worried that competition could limit TMX’s growth in the future. The best anyone says is that the stock is fairly valued. Some mention the fact that it has good free cash flow and future dividends and dividend increases will not be a problem for this stock. TMX also stands to make money every time one of the Unit Trust companies converts to a corporation. They get a fee for each change. There should be lots of this in 2011.
TMX Group operates Canada's two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, the country's first fixed income interdealer broker. TMX Group also owns The Equicom Group Inc., a leading provider of investor relations and related corporate communication services in Canada. TMX Group has its headquarters in Toronto and maintains offices in Montreal, Calgary and Vancouver. Its web site is here TMX. See my spreadsheet at x.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.
However, first I want to see what the Insider Trading report says. The thing that stands out is that, except for the directors, insiders have more stock options than shares. This is not what I like to see, but it is very common. There has been a small bit of insider selling over the past year, but it is insignificant. There has been no insider buying.
There are two indications of confidence of the insiders in this company. The first thing is that the stock options that have recently been issued have been kept. The other thing is that the dividends were increased in 2010. The increase was for just over 5%. This is lower than the 5 year average of 11%. However, this is the first increase in 3 years.
When I look at the Price/Earnings Ratios, I find that they are high. The 5 year median low P/E Ratio is 18 and the 5 year median high P/E Ratio is 25. The current P/E Ratio of 12.5 is therefore low on a relative basis. Sites that use the last 12 months earnings in their P/E Ratio calculations get a much higher P/E ratio of 23. They give a forward P/E Ratios closer to mine at 12.3.
I get a current Graham Price of $27.75. The stock price of $38.35 is 38% higher than the Graham Price. The low stock price is, on average, 126% above the Graham Price. This is because there was a huge difference between the stock price and the Graham Price between 2004 and 2007. As I have said before, the stock price of TMX fell in 2008 and has not yet recovered.
When I look at the Price/Book Value Ratio, I get a 10 year average of 10.09. This is a very high ratio. The current one at 3.29 is only 30% of the 10 year average. This shows that the stock price is relatively cheap. However, a P/B Ratio of 3.29 is not a low one.
The last thing to look at is the Dividend Yield. The current yield of 4.2% is good and it is higher than the 5 year average of 3.9%. The other thing to note is that the average 5 year payout ratio based on earnings is 73% and the average 5 year payout ratio based on cash flow is 49%. It is expected at the current dividend rate that the payout ratio based on earnings will be 53% and the payout ratio based on cash flow will be 48%. It is hard to say if there is much room for increased dividends in 2011.
When I look at analysts’ recommendations, I get the full range. There are Strong Buy, Buy, Hold, Underperform and Sell recommendations for this stock. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.)
Some analysts are worried that competition could limit TMX’s growth in the future. The best anyone says is that the stock is fairly valued. Some mention the fact that it has good free cash flow and future dividends and dividend increases will not be a problem for this stock. TMX also stands to make money every time one of the Unit Trust companies converts to a corporation. They get a fee for each change. There should be lots of this in 2011.
TMX Group operates Canada's two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, the country's first fixed income interdealer broker. TMX Group also owns The Equicom Group Inc., a leading provider of investor relations and related corporate communication services in Canada. TMX Group has its headquarters in Toronto and maintains offices in Montreal, Calgary and Vancouver. Its web site is here TMX. See my spreadsheet at x.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.
Wednesday, January 26, 2011
TMX Group
This is a stock (TSX-X) that I follow but do not own. It is classified as a financial stock and I already have too much in the financial area with my bank and insurance holdings. This stock was created when the Toronto Stock Exchange went public in 2002.
This stock started off with very good dividend increases. The 5 and 7 year growth in dividends is 11% and 23% per year, respectively. However, the average increase during the first few years of dividend payments was 55%. In 2007, the increase was only 15% and then from 2007 to 2009 inclusive, there was no change. There was an increase in the later part of 2010 of just over 5%.
The current yield is good at 4.2%. The reason the yield is so good is that the stock price fell over 50% in 2008 and has not yet recovered. As far as total returns go, I have 5 and 8 years of them as this stock only was issued in 2002. If you had purchased this stock 5 years ago, your return would be nil or very low (under 2% per year), with about 3.5% to 4% per year of the return being dividends. No matter how you look at this stock, the price has not done well over the past 5 years.
If you purchased the stock at a reasonable price within the first couple of years of its existence, you would have made between 15% and 25% per year return. 7% to 9% of this return would have been in dividends. The problem again with this stock is that it peaked in 2007/8 and has never fully recovered.
However, it is not entirely the company’s fault about the total return on this stock. What TMX has done is steadily increased its revenue, cash flow and book value quite nicely over this time period. For example, the revenue has increased over the past 5 and 10 years by 16% and 12.5% per share per year, respectively. The company has been in business before it went public, so I have, for some statistics, figures going back at least 10 years.
Where the growth has not been good is for earnings. I have earnings growth for the last 5 and 9 years. I am using 9 years because the earnings in 1999 were negative. Over the past 9 years, growth was just 2.4% per year. However, 2000 could have just been a very good year after a very bad year. But, even the 5 year growth in earnings at 7% is not that good, but is acceptable.
The Return on Equity is quite good and has always been quite good. For the financial year ending December 2009, the ROE is 18% and for the last 12 months, it is a bit better at 19%. The caution here is that the Leverage Ratio (Asset/Book Value) is quite high with 5 year average of 6.75. This ratio has come down a lot lately and is currently at a more reasonable, but still a bit high, value of 3.83. This company has a lot of debt.
The Liquidity Ratio at the end of 2009 was 1.10 and the current one is even lower at 1.00. At 1.00 is means that the current assets and current liability are the same. The Asset/Liability Ratio is currently at 1.36 and has a 5 year average of 1.41. What you want is for the Liquidity Ratio and the A/L Ratio to be at least 1.50.
Tomorrow, I will look at what my spreadsheet tell about the current stock price and also what analysts say about this stock.
TMX Group operates Canada's two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, the country's first fixed income interdealer broker. TMX Group also owns The Equicom Group Inc., a leading provider of investor relations and related corporate communication services in Canada. TMX Group has its headquarters in Toronto and maintains offices in Montreal, Calgary and Vancouver. Its web site is here TMX. See my spreadsheet at x.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 stock started off with very good dividend increases. The 5 and 7 year growth in dividends is 11% and 23% per year, respectively. However, the average increase during the first few years of dividend payments was 55%. In 2007, the increase was only 15% and then from 2007 to 2009 inclusive, there was no change. There was an increase in the later part of 2010 of just over 5%.
The current yield is good at 4.2%. The reason the yield is so good is that the stock price fell over 50% in 2008 and has not yet recovered. As far as total returns go, I have 5 and 8 years of them as this stock only was issued in 2002. If you had purchased this stock 5 years ago, your return would be nil or very low (under 2% per year), with about 3.5% to 4% per year of the return being dividends. No matter how you look at this stock, the price has not done well over the past 5 years.
If you purchased the stock at a reasonable price within the first couple of years of its existence, you would have made between 15% and 25% per year return. 7% to 9% of this return would have been in dividends. The problem again with this stock is that it peaked in 2007/8 and has never fully recovered.
However, it is not entirely the company’s fault about the total return on this stock. What TMX has done is steadily increased its revenue, cash flow and book value quite nicely over this time period. For example, the revenue has increased over the past 5 and 10 years by 16% and 12.5% per share per year, respectively. The company has been in business before it went public, so I have, for some statistics, figures going back at least 10 years.
Where the growth has not been good is for earnings. I have earnings growth for the last 5 and 9 years. I am using 9 years because the earnings in 1999 were negative. Over the past 9 years, growth was just 2.4% per year. However, 2000 could have just been a very good year after a very bad year. But, even the 5 year growth in earnings at 7% is not that good, but is acceptable.
The Return on Equity is quite good and has always been quite good. For the financial year ending December 2009, the ROE is 18% and for the last 12 months, it is a bit better at 19%. The caution here is that the Leverage Ratio (Asset/Book Value) is quite high with 5 year average of 6.75. This ratio has come down a lot lately and is currently at a more reasonable, but still a bit high, value of 3.83. This company has a lot of debt.
The Liquidity Ratio at the end of 2009 was 1.10 and the current one is even lower at 1.00. At 1.00 is means that the current assets and current liability are the same. The Asset/Liability Ratio is currently at 1.36 and has a 5 year average of 1.41. What you want is for the Liquidity Ratio and the A/L Ratio to be at least 1.50.
Tomorrow, I will look at what my spreadsheet tell about the current stock price and also what analysts say about this stock.
TMX Group operates Canada's two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, the country's first fixed income interdealer broker. TMX Group also owns The Equicom Group Inc., a leading provider of investor relations and related corporate communication services in Canada. TMX Group has its headquarters in Toronto and maintains offices in Montreal, Calgary and Vancouver. Its web site is here TMX. See my spreadsheet at x.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, January 25, 2011
Teck Resources Ltd 2
I have followed this stock (TSX-TCK.B) for sometime. I was looking at it in November 2008 and I thought that the price was getting rather silly. So I bought 100 shares and sold then when the price picked up in May 2009. I made just over $1,200. This was lots of fun. For a little amount of money, I got to play the market.
When I look at the Insider Trading report, I find there is some $36.9M of insider selling and about $24,000 of Insider Buying. The buying occurred last June when the stock price was just below $35. Most of the selling has occurred during the recent rise in the price of this stock. And, everyone is selling, including CEO, CFO, Officers and Directors. Considering this company has a worth of $36B, the selling is a very small percentage of the company’s total worth.
A good thing to say about this company is that they restarted the dividend payments in 2010 and then proceeded to raise the dividend 50%. The dividends are not back, to where they were, but this is a good start and shows that the company has faith in near future earnings. The other thing to mention is that the number of shares increased in 2008 by 10% to purchase Fording Coal. They were again raised by 21% in 2009 to raise some cash.
Is the current price of its stock good? I get a price of $59.60. First, the stock recently made an all time high at $61.79 and has since then fall back a bit. When I look at the Price/Earnings Ratio, I find it has been rather low on this stock. The 5 year median low is just 5 and the 5 year median high is 14. The 5 year median price is just 8. A P/E of 10 or below is considered a low P/E. The current P/E is 11 and this is close, but under the 5 year high.
I get a Graham Price of $57.44. The current stock price is just 3.8% above this. The average difference between the Graham Price and the stock price is 9.7%. So, by this measure, the stock price is not bad. I get a Price/Book Value Ratio of 2.30 and a 10 year average P/B Ratio of 1.61. By this measure, the current ratio is 40% above the 10 year average and so points to a high price. The last thing to look at is the dividend yield. The current dividend yield is just 1%. The 5 year average is higher at 2.3%. So, by this measure, the stock price is also high.
When I look at analysts recommendations, I find lots of Strong Buy, Buy and Hold recommendations. I also find 1 sell recommendation. The consensus would be a Buy. (See my site for information on analyst ratings.) A contrarian might look at all the Strong Buy and Buy recommendations and think this might not be a good time to buy, as a consensus opinion is often wrong.
Analysts that give a hold recommendation mostly mention the recent run up in stock price. They feel that it should pull back some more to be at a good price. Some feel it will pull back some more because of profit taking (it did recently make an all time high). Even analysts that give this a Strong Buy recommendation say that the risk is high on this stock (it is mining after all). A lot of analysts feel it is a high quality Canadian mining company that will do well in the long term.
If you want to buy a high quality Canadian mining company, this would certainly be a good one to have. There is an entry on Wikipedia for this company, see Teck Resources.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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 the Insider Trading report, I find there is some $36.9M of insider selling and about $24,000 of Insider Buying. The buying occurred last June when the stock price was just below $35. Most of the selling has occurred during the recent rise in the price of this stock. And, everyone is selling, including CEO, CFO, Officers and Directors. Considering this company has a worth of $36B, the selling is a very small percentage of the company’s total worth.
A good thing to say about this company is that they restarted the dividend payments in 2010 and then proceeded to raise the dividend 50%. The dividends are not back, to where they were, but this is a good start and shows that the company has faith in near future earnings. The other thing to mention is that the number of shares increased in 2008 by 10% to purchase Fording Coal. They were again raised by 21% in 2009 to raise some cash.
Is the current price of its stock good? I get a price of $59.60. First, the stock recently made an all time high at $61.79 and has since then fall back a bit. When I look at the Price/Earnings Ratio, I find it has been rather low on this stock. The 5 year median low is just 5 and the 5 year median high is 14. The 5 year median price is just 8. A P/E of 10 or below is considered a low P/E. The current P/E is 11 and this is close, but under the 5 year high.
I get a Graham Price of $57.44. The current stock price is just 3.8% above this. The average difference between the Graham Price and the stock price is 9.7%. So, by this measure, the stock price is not bad. I get a Price/Book Value Ratio of 2.30 and a 10 year average P/B Ratio of 1.61. By this measure, the current ratio is 40% above the 10 year average and so points to a high price. The last thing to look at is the dividend yield. The current dividend yield is just 1%. The 5 year average is higher at 2.3%. So, by this measure, the stock price is also high.
When I look at analysts recommendations, I find lots of Strong Buy, Buy and Hold recommendations. I also find 1 sell recommendation. The consensus would be a Buy. (See my site for information on analyst ratings.) A contrarian might look at all the Strong Buy and Buy recommendations and think this might not be a good time to buy, as a consensus opinion is often wrong.
Analysts that give a hold recommendation mostly mention the recent run up in stock price. They feel that it should pull back some more to be at a good price. Some feel it will pull back some more because of profit taking (it did recently make an all time high). Even analysts that give this a Strong Buy recommendation say that the risk is high on this stock (it is mining after all). A lot of analysts feel it is a high quality Canadian mining company that will do well in the long term.
If you want to buy a high quality Canadian mining company, this would certainly be a good one to have. There is an entry on Wikipedia for this company, see Teck Resources.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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, January 24, 2011
Teck Resources Ltd
I have followed this stock (TSX-TCK.B) for sometime. I was looking at it in November 2008 and I thought that the price was getting rather silly. So I bought 100 shares and sold then when the price picked up in May 2009. I made just over $1,200. This was lots of fun. Generally, I do not buy mining stock, as you have to keep an eye on them all the time. With my portfolio, I could ignore it for 6 months and nothing will happen. I do follow some mining stock because they are a big part of the TSX.
The shares of this company bottom at around $3.93 in December of 2008. No dividends were paid in 2009, but the stock did start to recover in 2009 and hit $39.80 by year end. Today, the stock price is up again, higher than it has ever been at $59.60. Dividends were reinstated, and then increased in 2010.
The company had short term debt problems with their take over of Fording Coal. For this, they got hammered in the market. Unfortunately, they bought Fording Coal at the wrong time. When they started to take over Fording Coal they could not have foreseen their future problems, but they did do the takeover at a market top.
The dividend payments are, at $.60 a year are below those paid in 2008 of $1.00 per share. But, also please note that since this is a mining company, dividends could possibly fluctuate in the future. This company has not paid out a high percentage of its earnings or cash flow.
Teck Resources has had good growth over the past 5 and 10 years, with the 10 year figures usually much better than the 5 year figures. Revenues per share have grown over the past 5 and 10 years at the rate of 9% and 16% per year, respectively. Cash flow, net of non-cash items, has grown at the rate of 6% and 22% per year per share over the past 5 and 10 years, respectively. The only growth figures where the 5 year growth was better than the 10 year growth was in book value. Book Value has grown at the rate of 25% and 12% per share per year, over the past 5 and 10 years, respectively.
The Liquidity Ratio has usually been very good for this stock. It is currently at 2.19 and has a 5 year average of 2.43. The only year this fell alarmingly low was in 2008 and it ended up at 0.44 that year. The Asset/Liability Ratio is currently at 2.18 and has a 5 year average of 2.04. Even in 2008, this ratio was good at 1.54. For these ratios, you want one of at least 1.50. A ratio of 1.50 says that the assets are one and one half times the liabilities.
I guess the last thing to cover today is the Return on Equity. The ROE has been quite good since 2004 and the ROE at the end of 2009 was 12.6% with a 5 year average of 17.9%. The ROE to September 2010 is also good 12.3%. Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say about this stock.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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.
The shares of this company bottom at around $3.93 in December of 2008. No dividends were paid in 2009, but the stock did start to recover in 2009 and hit $39.80 by year end. Today, the stock price is up again, higher than it has ever been at $59.60. Dividends were reinstated, and then increased in 2010.
The company had short term debt problems with their take over of Fording Coal. For this, they got hammered in the market. Unfortunately, they bought Fording Coal at the wrong time. When they started to take over Fording Coal they could not have foreseen their future problems, but they did do the takeover at a market top.
The dividend payments are, at $.60 a year are below those paid in 2008 of $1.00 per share. But, also please note that since this is a mining company, dividends could possibly fluctuate in the future. This company has not paid out a high percentage of its earnings or cash flow.
Teck Resources has had good growth over the past 5 and 10 years, with the 10 year figures usually much better than the 5 year figures. Revenues per share have grown over the past 5 and 10 years at the rate of 9% and 16% per year, respectively. Cash flow, net of non-cash items, has grown at the rate of 6% and 22% per year per share over the past 5 and 10 years, respectively. The only growth figures where the 5 year growth was better than the 10 year growth was in book value. Book Value has grown at the rate of 25% and 12% per share per year, over the past 5 and 10 years, respectively.
The Liquidity Ratio has usually been very good for this stock. It is currently at 2.19 and has a 5 year average of 2.43. The only year this fell alarmingly low was in 2008 and it ended up at 0.44 that year. The Asset/Liability Ratio is currently at 2.18 and has a 5 year average of 2.04. Even in 2008, this ratio was good at 1.54. For these ratios, you want one of at least 1.50. A ratio of 1.50 says that the assets are one and one half times the liabilities.
I guess the last thing to cover today is the Return on Equity. The ROE has been quite good since 2004 and the ROE at the end of 2009 was 12.6% with a 5 year average of 17.9%. The ROE to September 2010 is also good 12.3%. Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say about this stock.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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, January 21, 2011
Metro Inc 2
This annual report is in on this stock (TSX-MRU.A) that I own. The financial year for this stock ends in September each year. I have done well with this stock, earning total return of 17.7% per year on the stock I bought in 2004. I have had this stock for 7 years and I am making a 3.9% yield on my original investment; even though the 5 year average yield is just 1.5%. The company showed faith in this company by increasing the dividends by almost 24% in the financial year ending September 2010.
When I look at the insider trading report, I find that over the past year there has been some $7.8M of insider selling. $2M of this was by the CEO and the rest by officers of the company. Everyone, but the directors have far more options than shares. The company is also buying back shares on the open market to cancel. The main problem with this is that it often just covers new options. However, I must admit that the number of shares over the past few years has been declining by 2-3% per year.
The 5 year Price/Earnings Ratio median low is 9 and 5 year P/E Ratio median high is 13.7. So, the current P/E ratio that I get of 11 shows a reasonable stock price. Sites that get a current P/E based on last 12 months earnings get one of 11.7. I get a current Graham Price of $45.05. The current stock price of $43.91 is 2.5% lower. It is always a good sign if the stock price is below the current Graham price. On average, this stock’s price is 8% higher than the Graham Price.
I get a current Price/Book Value ratio of 1.89 and a 10 year average P/B Ratio of 2.12. The current P/B Ratio is therefore some 89% of the 10 year average. The current P/B Ratio is below the 10 year average and this point also to a reasonable stock price. The last thing is the dividend yield. The current one at 1.55% is higher than the 5 year average of 1.49%. Not by much, but it is higher, so this also points to a reasonable current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. There are just as many Hold recommendations as Buy recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Analysts seem worried about competition from Loblaw and Sobeys and feel that this might limit the growth in earnings for Metro. The difference in a 12 month stock price between the Holds and the Buys is not much with the Holds expecting a $48 stock price and the Buys a $50 stock price.
This would be a good stock to buy for increasing dividend income and capital gain. This would be a good stock if you do not need the yield. That is if you are in the process of building your portfolio or have enough high yield stocks to balance your portfolio with a low yield stock. Metro has consistently raised their dividend every year and they are on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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 the insider trading report, I find that over the past year there has been some $7.8M of insider selling. $2M of this was by the CEO and the rest by officers of the company. Everyone, but the directors have far more options than shares. The company is also buying back shares on the open market to cancel. The main problem with this is that it often just covers new options. However, I must admit that the number of shares over the past few years has been declining by 2-3% per year.
The 5 year Price/Earnings Ratio median low is 9 and 5 year P/E Ratio median high is 13.7. So, the current P/E ratio that I get of 11 shows a reasonable stock price. Sites that get a current P/E based on last 12 months earnings get one of 11.7. I get a current Graham Price of $45.05. The current stock price of $43.91 is 2.5% lower. It is always a good sign if the stock price is below the current Graham price. On average, this stock’s price is 8% higher than the Graham Price.
I get a current Price/Book Value ratio of 1.89 and a 10 year average P/B Ratio of 2.12. The current P/B Ratio is therefore some 89% of the 10 year average. The current P/B Ratio is below the 10 year average and this point also to a reasonable stock price. The last thing is the dividend yield. The current one at 1.55% is higher than the 5 year average of 1.49%. Not by much, but it is higher, so this also points to a reasonable current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. There are just as many Hold recommendations as Buy recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Analysts seem worried about competition from Loblaw and Sobeys and feel that this might limit the growth in earnings for Metro. The difference in a 12 month stock price between the Holds and the Buys is not much with the Holds expecting a $48 stock price and the Buys a $50 stock price.
This would be a good stock to buy for increasing dividend income and capital gain. This would be a good stock if you do not need the yield. That is if you are in the process of building your portfolio or have enough high yield stocks to balance your portfolio with a low yield stock. Metro has consistently raised their dividend every year and they are on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).
Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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, January 20, 2011
Metro Inc
The annual report is in on this stock (TSX-MRU.A) that I own. I first bought this stock in 2001 for my RRSP and I bought more in 2004 for my trading account. I sold some in 2009 as it was over 10% of my portfolio and most analysts did not think it was going to do well over the next little while. I have done well with this stock, earning total return of 17.7% per year on the stock I bought in 2004 and earning a total return on the stock of my RRSP of 12.4% per year.
I sold what I held in my RRSP account and bought some TD bank instead. The other thing to note was that TD bank was paying a high dividend at just over 5% compared to less than 1.5% of Metro. However, I should also say that on my investment in 2009, just a couple of years ago, I am earning 3.9% return on my investment. The reason for this is the 23% rise in dividends in 2010. However, on a longer term of 5 years, the dividend has increased some 11% per year.
The 10 year growth in dividends is higher at 16% per year. This is because the dividend increases were very high after they started to pay dividends in 1995 until 2005. Dividend increases have been a lot lower since 2005. The other thing to note about dividends is that their portion of the total return varies from 1.5% over the past 5 years to around 2% over the past 10 years.
They haven’t yet raised the dividends for 2011, but looking at expected earnings and cash flow, their payout ratios for 2011 and 2012 are already at the average for this stock. The average and current payout ratio in regards to earnings is 17.5% (the same for both) and the average and current payout ratio in regards to cash flow is 12% and 11% respectively. You have to wonder if there is room for a significant increase for 2011 or 2012 if they want to keep the same ratios.
The growth figures for this company are generally very good. For example, earnings per share have grown over the past 5 and 10 years at the rate of 13% and 8% per year respectively. The cash flow per share has grown at the rate of 18% and 13% per year, respectively. The conclusion can only be that the company has grown nicely in the past.
The Liquidity ratio on this company tends to be a bit low. It is currently at 1.09 and has a 5 year average of 1.04. The Asset/Liability Ratio is much better at a current ratio of 2.03 and a 5 year average of 1.88. The Leverage Ratio (Asset/Book Value) at a 5 year average of 2.16 is rather average. The Return on Equity for the company is quite good; with a 5 year average ROE of 15%. The ROE for the financial year ending in September 2010 is also good at 16%.
All in all this has been a good investment for me. The reason that it became a large part of my portfolio is because it grow well and not because I purchased too much of this stock. I am pleased with my investment in this stock and I intend to hold on to the stock I currently have.
Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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 sold what I held in my RRSP account and bought some TD bank instead. The other thing to note was that TD bank was paying a high dividend at just over 5% compared to less than 1.5% of Metro. However, I should also say that on my investment in 2009, just a couple of years ago, I am earning 3.9% return on my investment. The reason for this is the 23% rise in dividends in 2010. However, on a longer term of 5 years, the dividend has increased some 11% per year.
The 10 year growth in dividends is higher at 16% per year. This is because the dividend increases were very high after they started to pay dividends in 1995 until 2005. Dividend increases have been a lot lower since 2005. The other thing to note about dividends is that their portion of the total return varies from 1.5% over the past 5 years to around 2% over the past 10 years.
They haven’t yet raised the dividends for 2011, but looking at expected earnings and cash flow, their payout ratios for 2011 and 2012 are already at the average for this stock. The average and current payout ratio in regards to earnings is 17.5% (the same for both) and the average and current payout ratio in regards to cash flow is 12% and 11% respectively. You have to wonder if there is room for a significant increase for 2011 or 2012 if they want to keep the same ratios.
The growth figures for this company are generally very good. For example, earnings per share have grown over the past 5 and 10 years at the rate of 13% and 8% per year respectively. The cash flow per share has grown at the rate of 18% and 13% per year, respectively. The conclusion can only be that the company has grown nicely in the past.
The Liquidity ratio on this company tends to be a bit low. It is currently at 1.09 and has a 5 year average of 1.04. The Asset/Liability Ratio is much better at a current ratio of 2.03 and a 5 year average of 1.88. The Leverage Ratio (Asset/Book Value) at a 5 year average of 2.16 is rather average. The Return on Equity for the company is quite good; with a 5 year average ROE of 15%. The ROE for the financial year ending in September 2010 is also good at 16%.
All in all this has been a good investment for me. The reason that it became a large part of my portfolio is because it grow well and not because I purchased too much of this stock. I am pleased with my investment in this stock and I intend to hold on to the stock I currently have.
Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A & P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is here Metro. See my spreadsheet at mru.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.
Wednesday, January 19, 2011
Saving for Retirement
First, with the debate about increasing CPP or using private industry to look after increased pension, no one seems to talk about the cost. By cost, I mean fees or administration costs. We seem to get a good deal from CPP because it is not properly funded and its cost will come from taxes. I understand that CPP is better funded when compared to similar plans from other countries. Lots of countries are on a pay as you go basis for their pensions and these are all in trouble.
I have seen no where that any one looks at the amount of money going to governments compared to what is spend on taxpayers. Everyone seems to agree that government employees get higher salaries and benefits than employees of the private sector. This would lead one to believe that the administration costs of governments are quite high.
My point is that, it may be cheaper for pensioners to have increased pensions run by the private sector than by the government sector. The other thing is that the CPP fund has currently a very big foot print in our financial markets. Should we really give it an every bigger one?
The above are my thoughts on the subject of pensions. But, what I really want to talk about is saving for retirement. Stock, bonds, mutual funds, ETFs etc all cost lots of money. What you buy will determine your future. So, it might just be wise to understand what it is you are buying.
On my blog, I mainly talk about specific stock. Personally, I have learned a lot about investing by doing. I tried initially to read about how the stock market worked, but I really did not pay attention until I bought some shares. So, I read some and did some stock buying to learn. There are investing educational sites on the internet. See Investor Education Fund (IEF) site that is funded by the Ontario Securities Commission called Get Smarter About Money.
One thing that complicated my investing in stocks in the 1970’s was the rising interest rates. I had barely gotten started when I realized that I could make more money in fixed assets than in stocks. This was the late 1970’s and early 1980’s. I had started to buy Canadian Savings bonds on a monthly payment basis to cash them in, in November, to buy stocks. However, interest rates in 1978 were around 9 1/2%. This is probably better than you could make in the stock market. And, to boot, Canadian Savings bonds are almost risk free.
GICs at that time peaked 18% in the early 1980’s. You cannot make that sort of money in the stock market. GICs are also investment vehicles with almost no risk. So, for a few years I mostly bought bonds and GICs. The high interest rates came to an end. The last bond I had was a 20 year CIBC bond at 9.65% in 1994. I sold that a few years ago at a good capital gain. As it gets closer to maturity, the value of the bond would decline and be worth only the $50,000 I paid for it.
Why did I start to invest? My dream was to live off dividends from stocks and spend my time reading. I had a 30 year plan to do this, but I later realized that it was unrealistic as it called for returns in the neighborhood of 10% return per year on average. Well, you never know how life will turn out. I got my dividend income in 23 years, so I quit work. Along the way, I got interested in investing and hence my investing blog. I also worked in IT and developed an interest in computer.
So, I spend my mornings reading and my afternoons working on my computer. I do investment spreadsheets, I read stuff, I do genealogy and I keep in touch with friends and family via my computer. Life does not turn out as you expect. In the same way that life goes up and down, so does the market. So, do not get trapped into buying high and selling low. That is buying as the market is rising and selling when it is falling.
It is not so bad to buy into a rising market, just do not over pay for a stock. But, selling in a falling market can be disastrous. You will lock in any paper losses you have. If your stock falls you should ask your self before you sell – is the company going bankrupt? If not, perhaps you should reconsider selling; a lot of stock movement has to do with P/E ratios going up and down, and not the stock’s intrinsic value changing.
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 have seen no where that any one looks at the amount of money going to governments compared to what is spend on taxpayers. Everyone seems to agree that government employees get higher salaries and benefits than employees of the private sector. This would lead one to believe that the administration costs of governments are quite high.
My point is that, it may be cheaper for pensioners to have increased pensions run by the private sector than by the government sector. The other thing is that the CPP fund has currently a very big foot print in our financial markets. Should we really give it an every bigger one?
The above are my thoughts on the subject of pensions. But, what I really want to talk about is saving for retirement. Stock, bonds, mutual funds, ETFs etc all cost lots of money. What you buy will determine your future. So, it might just be wise to understand what it is you are buying.
On my blog, I mainly talk about specific stock. Personally, I have learned a lot about investing by doing. I tried initially to read about how the stock market worked, but I really did not pay attention until I bought some shares. So, I read some and did some stock buying to learn. There are investing educational sites on the internet. See Investor Education Fund (IEF) site that is funded by the Ontario Securities Commission called Get Smarter About Money.
One thing that complicated my investing in stocks in the 1970’s was the rising interest rates. I had barely gotten started when I realized that I could make more money in fixed assets than in stocks. This was the late 1970’s and early 1980’s. I had started to buy Canadian Savings bonds on a monthly payment basis to cash them in, in November, to buy stocks. However, interest rates in 1978 were around 9 1/2%. This is probably better than you could make in the stock market. And, to boot, Canadian Savings bonds are almost risk free.
GICs at that time peaked 18% in the early 1980’s. You cannot make that sort of money in the stock market. GICs are also investment vehicles with almost no risk. So, for a few years I mostly bought bonds and GICs. The high interest rates came to an end. The last bond I had was a 20 year CIBC bond at 9.65% in 1994. I sold that a few years ago at a good capital gain. As it gets closer to maturity, the value of the bond would decline and be worth only the $50,000 I paid for it.
Why did I start to invest? My dream was to live off dividends from stocks and spend my time reading. I had a 30 year plan to do this, but I later realized that it was unrealistic as it called for returns in the neighborhood of 10% return per year on average. Well, you never know how life will turn out. I got my dividend income in 23 years, so I quit work. Along the way, I got interested in investing and hence my investing blog. I also worked in IT and developed an interest in computer.
So, I spend my mornings reading and my afternoons working on my computer. I do investment spreadsheets, I read stuff, I do genealogy and I keep in touch with friends and family via my computer. Life does not turn out as you expect. In the same way that life goes up and down, so does the market. So, do not get trapped into buying high and selling low. That is buying as the market is rising and selling when it is falling.
It is not so bad to buy into a rising market, just do not over pay for a stock. But, selling in a falling market can be disastrous. You will lock in any paper losses you have. If your stock falls you should ask your self before you sell – is the company going bankrupt? If not, perhaps you should reconsider selling; a lot of stock movement has to do with P/E ratios going up and down, and not the stock’s intrinsic value changing.
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, January 18, 2011
Waterfurnaces Renewable Energy 2
This is a stock (TSX-WFI) that I follow, but I do not own. It is a utility like stock, but it is more risky that other utility stocks. People who have invested in this company have done very well. The company has been paying dividends since 2003.
When I look at the Insider Trading report, what I find is a tiny bit of insider buying and no insider selling. Insiders do not seem to have much in the way of either options or shares. On the graphics showing options and shares for officers of the company, it shows there are more shares than options (however, these are all in small amounts). What we can say that is positive is that the dividends were increase in 2010 by around 16%.
When I look at the P/E Ratios, I get a 5 year median low P/E Ratio of 16.7 and a 5 year median high P/E Ratio of 29. The current P/E Ratio I get is 17, so this is relatively low for this stock, although this is not a particularly low P/E Ratio. Sites that use the last 12 months earnings to get a P/E Ratio get one of 20.
For the Graham Price, I get one of $9.21 for 2011. The current stock price of $24.25 is some 62% higher than the Graham Price. The reason for a low Graham Price is because the growth in book value has not kept up with the growth in earnings. See my report of yesterday. I must say that the average difference between the Graham Price and the stock price is around 120%, with the low difference around 65%. So past history shows that on a relative basis, the stock price is not that high.
The problem with the low Book Value is also shown in the Price/Book Value Ratio. This is currently running at 9.14, with this company having a 10 year average P/B Ratio of 6.91. By the P/B Ratio, the stock price looks high.
The current Dividend Yield of 3.6% is above the 5 year average of 3.3%. This yield shows a current good stock price. A yield of 3.6% is a good yield for a stock. The dividend growth potential of this stock is good. If the dividends continue to increase at the current 5 year growth rate, you could be earning 5% in 5 years time, or 9.8% in 10 years time on an investment in this stock today. However, I should also point out while past history of a stock might point towards a possible future; there is no guarantee of this future. That is, your investment, might not perform this well.
This is not a big company, so there are not that many analysts that follow it. What I find is Strong Buy, Buy and Hold recommendations. The consensus is probably a Buy. (See my site for information on analyst ratings.)
There is not much in analyst reports that I can find, however, I read one that said that insiders own a good chuck of the stock. This and the following one said that insiders were buying. I could not confirm about insiders holdings in the Insider Trading document, but this report does seem incomplete. Apparently, the Head Office for this company is in Fort Wayne, Indiana. They also have an office in Toronto. This company does work in both US and Canada. It is also traded in the US via pink sheets.
I find a blog entry dated December 2010 on this company at Canadian Financial DIY. Because this is a small company, it is risky, but it just might be worth buying for future capital gains and dividend growth.
Waterfurnaces Renewable Energy Inc is a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is here WaterFurnace Inc. See my spreadsheet at wfi.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 the Insider Trading report, what I find is a tiny bit of insider buying and no insider selling. Insiders do not seem to have much in the way of either options or shares. On the graphics showing options and shares for officers of the company, it shows there are more shares than options (however, these are all in small amounts). What we can say that is positive is that the dividends were increase in 2010 by around 16%.
When I look at the P/E Ratios, I get a 5 year median low P/E Ratio of 16.7 and a 5 year median high P/E Ratio of 29. The current P/E Ratio I get is 17, so this is relatively low for this stock, although this is not a particularly low P/E Ratio. Sites that use the last 12 months earnings to get a P/E Ratio get one of 20.
For the Graham Price, I get one of $9.21 for 2011. The current stock price of $24.25 is some 62% higher than the Graham Price. The reason for a low Graham Price is because the growth in book value has not kept up with the growth in earnings. See my report of yesterday. I must say that the average difference between the Graham Price and the stock price is around 120%, with the low difference around 65%. So past history shows that on a relative basis, the stock price is not that high.
The problem with the low Book Value is also shown in the Price/Book Value Ratio. This is currently running at 9.14, with this company having a 10 year average P/B Ratio of 6.91. By the P/B Ratio, the stock price looks high.
The current Dividend Yield of 3.6% is above the 5 year average of 3.3%. This yield shows a current good stock price. A yield of 3.6% is a good yield for a stock. The dividend growth potential of this stock is good. If the dividends continue to increase at the current 5 year growth rate, you could be earning 5% in 5 years time, or 9.8% in 10 years time on an investment in this stock today. However, I should also point out while past history of a stock might point towards a possible future; there is no guarantee of this future. That is, your investment, might not perform this well.
This is not a big company, so there are not that many analysts that follow it. What I find is Strong Buy, Buy and Hold recommendations. The consensus is probably a Buy. (See my site for information on analyst ratings.)
There is not much in analyst reports that I can find, however, I read one that said that insiders own a good chuck of the stock. This and the following one said that insiders were buying. I could not confirm about insiders holdings in the Insider Trading document, but this report does seem incomplete. Apparently, the Head Office for this company is in Fort Wayne, Indiana. They also have an office in Toronto. This company does work in both US and Canada. It is also traded in the US via pink sheets.
I find a blog entry dated December 2010 on this company at Canadian Financial DIY. Because this is a small company, it is risky, but it just might be worth buying for future capital gains and dividend growth.
Waterfurnaces Renewable Energy Inc is a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is here WaterFurnace Inc. See my spreadsheet at wfi.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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