Friday, February 27, 2009

CI Financial 2

Today I want to review CI Financial stock (TSX-CIX) to see what analysts are saying about it. There has been quite a bit of insider buying and selling on this stock. The curious thing is that the buying has been at a higher price than the selling. Buying has been above about $15 and selling has been below $15. However, the selling all occurred after November 2008 and the buying occurred before. The other curious thing is that the current CEO, CFO and directors have all decreased their position in this company in recent months, however, former insiders has recently increased their position in this company. I am not sure what this is telling us.

I have today updated my spreadsheet for the latest report of December 2008. This report came out between me updating my spreadsheet for the last values and now. There are lots of Hold ratings on this stock, and a few Reduce Ratings. The mean rating would be a Hold. (See my site for information on analyst ratings.) No one expect that this company will have the same earnings and cash flows for 2009 that it had for 2008. Most expect these will be down about 40%.

Are there any good buy indicators on the spreadsheet? The current price is below the Graham Price, but if the earnings are reduced as expected, this Graham Price now shows itself below the current price. The yield is down below the 5 year average, however, this is because it is now a corporation rather than an Income Trust and the dividends have been reduced. The current P/E at 14.5 is below the 5 year average of 17.7. However, 14.5 is not a particularly low P/E rating.

The good thing with the new financials is that the Accrual Rating is much lower at 1.6% than it was, but this ratio is not showing a buy signal. The growth figures on this stock are still great with the annual report for December 2008; however, since no one expects 2009 to be a good year, it makes no sense to commit to this stock at this time.

CI Financial Corp. is a diversified wealth management firm and one of Canada’s largest investment fund companies. CI is an Independent and Canadian-owned company. This company provides investment advisory services to mutual funds sold under the CI, BPI, Signature, Harbour, Synergy and Clarica banners, through independent advisors. It is 37% owned by Sun Life. CI became a public company in June 1994 and it was listed on the Toronto Stock Exchange. They because an Income Trust in 2006 and effective January 1, 2009, CI converted back to a corporation. Its web site is www.ci.com. See my spreadsheet on this company at www.spbrunner.com/stocks/cix.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Thursday, February 26, 2009

CI Financial

This stock (TSX-CIX) is on the Dividend Achievers list at www.dividendachievers.com and the Dividend Aristocrats list at www.tmxmoney.com/ (see indices). Today I will review how this stock has done in the past. Tomorrow I will look at it now and for the future. This is also a stock I follow; however, I do not own any.

All my following figures are for the year ending at the last annual statement of December 2007. The revenue growth for the last 5 and 10 years was 26% and 28% per year. The 5 and 10 years growth for Earnings per Share (EPS) was 63% and 40% per year. If you look at the spreadsheet, you will see the huge increase for 2007. The 5 and 10 year figures for Dividend growth is 105% and 70%. However, this will not be maintained as this stock has changed from an Income Trust and the dividends will be decreased considerably.

The 5 and 10 year figures for the stock price growth was 23% and 31% per year. The stock is now down 50%, but this has more to do with this being a financial stock and the bear market, than the fact that dividends are down due to change to the company’s structure from an Income Trust to a corporation. The 5 and 10 year figures for cash flow is 9% and 20% per year. The 5 and 10 years for Book Value growth is 23% and 28% per year. All the figures above are more than great, but they will moderate as this company comes out of the bear market and resumes its business as a corporation. They have already pulled back on the Dividends.

The Return on Equity (ROE) is also very good as it is 43% for 2007 and the 5 year average is 22.8%. The Liquidity Ratio is low at .79 and it is lower than the 5 year average of .97. What I like to see is a Liquidity Ratio of at least 1.50. The Asset/Liability Ratio is very good at 1.67. This is also down from the 5 year average of 2.27, but any ratio over 1.50 is good here also.

The only thing really to complain about is the Accrual Ratio that is at 7.89%. With this figure, anything over 5% is very high. I also note that the 2008 Report has just come out, so I will review that tomorrow. Some this stocks growth figures are truly great. I have looked at this stock before, but for a while it seemed to be doing nothing much. However, it has certainly done well of late.

CI Financial Corp. is a diversified wealth management firm and one of Canada’s largest investment fund companies. CI is an Independent and Canadian-owned company. It is 37% owned by Sun Life. CI became a public company in June 1994 and it was listed on the Toronto Stock Exchange. They because an Income Trust in 2006 and effective January 1, 2009, CI converted back to a corporation. Its web site is www.ci.com. See my spreadsheet on this company at www.spbrunner.com/stocks/cix.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Wednesday, February 25, 2009

BCE Inc 2

I had a note on my calendar to take another look at this stock (TSX-BCE) after the December 2008 report was to be posted on February 11th. I had a chance to look at this today. What I do not like is that they have not produced proper annual statements. The analysts I have reviewed seem satisfied however. I still have questions on some figures and some are still in purple in my spreadsheet because I am unsure that I have the right figures.

The big question I have is what the EPS is for 2008. Some places show $2.25 and some show $1.01 or $1.02. I am not sure. The other things I do not have are cash flow figures as there is no proper cash flow statement. I have updated my spreadsheet on this stock as best as I can.

What analysts seem to expect for 2009 is that the stock price will go up to around $30.00. This is the same as the current Graham Price. Analysts seem about evenly divided into those that think this stock is a Hold and those that think this stock is a Strong Buy. There are also some Buy ratings on this stock. This is why the consensus rating on this stock is a Buy. (See my site for information on analyst ratings.)

What I look at is how a stock will do for me from now on. I must admit that I am a bit concerned, and this is why I have come back to review this stock. The consensus seems to be that it will do fine in the future. At the moment, I am going to continue to hold this stock, but I might decide to review this decision in the future. The telecommunication section has been a tough one for a while and I wonder if there is a reasonable change of making decent money in it.

This company has not been making any money for its shareholders for the last few years. It only spiked in price recently because of the buy-out. Since that has gone away, the price has dropped considerably. However, few companies are making money for their shareholders at this time. I am willing to give it some more time.

BCE Inc. is a communications company. Through Bell Canada, BCE provides local telephone, long distance, wireless communications, Internet access, data, video and other services to residential and business customers. Additional subsidiaries include Bell Globemedia, a media company that includes CTV and the Globe and Mail. Its web site is www.bce.ca. See my spreadsheet on this company at www.spbrunner.com/stocks/bce.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Tuesday, February 24, 2009

Bell Aliant 2

Today I am going to look at what analysts are saying about this stock (TSX-BA.UN). Is it a good buy now? The first thing I looked at was insider buying and selling. There is very little going on as far as insider buying and selling is concerned. There is a bit more insider selling, but the activity is small. Basically, we can learn nothing from this. The last distribution increase was in February 2008 when the distributions were increased by 2.8%. It is likely that the distribution level will have to be cut back when the new tax laws kick in for Income Trusts in 2013. I have updated my spreadsheet for with more estimates.

In looking at earnings, no one seems to expect that Bell Aliant will earn as much in 2009 as it did in 2008. Earnings in 2007 we unusually high, but both 2008 and 2009 is expected to be higher than 2006. More importantly, people expect the cash flow to be quite a bit lower for 2009 than it was in 2008. For Income Trust companies, cash flow is more important than earnings.

As far as the ratings go on this stock, there are some Strong Buy ratings, a few Buy ratings and quite a few Hold ratings on this stock. The consensus rating on this stock is a Buy, but is it just into the Buy territory. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 14 is lower than the 5 year average of 18 and this point to a current good price. Also, the current yield is almost 12% against the 5 year average of 7.5% so this also points to a good price. Also, Graham price is $35.20, which is quite a bit higher than the actual price of $24.35. This also point to a good price. Personally, I see nothing about this stock than would make me want to go out and buy some. This is probably why this stock has so many Hold ratings.

Looking at the charts, I compared this stock with the TSX and TSX Utilities. For the Year-to-date, 1 and 3 year periods, it has done better than both have. When looking at a longer range of the 5 and 10 year periods, this stock has done worse than both these indexes. The basic reason for the above is that Bell Aliant has not done as badly in this latest bear market as the TSX and TSX Utilities indexes.

Aliant is one of North America's largest regional communications providers serving customers in six Canadian provinces with information, communications and technology services, including voice, data, Internet, video and value-added business solutions. Through their information technology division, xwave, they also provide IT professional services in Canada and the United States. Its web site is www.bell.aliant.ca. See my spreadsheet on this company at www.spbrunner.com/stocks/ba.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Monday, February 23, 2009

Bell Aliant

I am reviewing this stock today (TSX-BA.UN) as it is a stock I follow. I got some of this stock from BCE, but I sold what I have in an odd lot offer from Bell Aliant. When I got the stock in November 2006, the ACB was set at $33.36 a share and when I sold it at the end of January 2008, I got $26.95 a share. I had small lots of this stock and at the time of the odd lot offer, most people had a Hold rating on this stock. I got dividends on this stock and according to quicken, I lost almost 5% per annum on this holding.

All my following figures are for the year ending at the last annual statement of December 2008. The results for December 2008 are unaudited and incomplete, so I have updated the spreadsheet as best as I can. First, what I find good about this stock. The Dividend growth for the last 5 and 10 years was 21% and 14%. The Book Value growth for the last 5 and 20 years was 21% and 14% and these are great figures. The cash flow growth for the last 5 and 10 years was 8% and 8.5%. Also, the Accruals are a negative number. If would be nice if the Accrual ration was below 5%, but -3.5% is not bad, as it is at least negative.

Revenue growth for the last 5 and 10 years was 9.6% and 6.6%. The 5 year figure is good, while the 10 year figure is ok. The Closing Price growth for the last 5 and 10 years was 1% and 7.3%. For the last 10 years, the stock has had high and lows, but has seldom been outside a band from about $25 to $35. You might want to buy this stock at its lows and sell at its high, but it does not seem to be to be a buy and hold type stock. The dividends have added about 5% of the return for the last 5 and 10 years. You would want, at a minimum a 7% to 8% on such a stock, and I do not see this stock producing this type of return over the long term. On the other had, the average 5 year yield on this stock is 7.5%, which is not bad.

The Asset/Liability Ratio is good at 2.56; however, the Liquidity is low at .56. It is desirable that both these ratios be 1.50 or higher. The Return on Equity (ROE) for 2007 and the average for the last 5 years is 6.6% and 23.5%. The 5 year average is good, but the one for 2008 is low. The growth in Earnings per Share for the last 5 and 10 years was -2% and 4%. I must admit that I guessed at the 2008 figure as it is not available anywhere. I suspect it is not available as it is much lower than last year, but is higher than 2006. In Unit Trust companies, the cash flow is much more important, as is the Distributable cash and these figures are not bad. However, the stock price seems to be going nowhere.

I will take about what the analysts say tomorrow.

Aliant is one of North America's largest regional communications providers serving customers in six Canadian provinces with information, communications and technology services, including voice, data, Internet, video and value-added business solutions. Through their information technology division, xwave, they also provide IT professional services in Canada and the United States. Its web site is www.bell.aliant.ca. See my spreadsheet on this company at www.spbrunner.com/stocks/ba.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Friday, February 20, 2009

Bulls, Bears and Chickens (or Pigs)

What I want to talk about this afternoon is the saying, Bulls make money, Bears make money, but Chickens get slaughtered. There is a variation on this of Bulls make money, Bears make money, but Pigs get slaughtered.

The Bulls are an optimistic sort. They believe that stocks markets will go up. This does not mean you have to be a high-risk individual. You can invest in high quality stock and still be a bull. If you buy quality stocks, you will have little to fear from bear markets. For bulls, bear markets can offer great stocks at great prices. In Bear markets, all stocks tend to fall, whether they deserve to or not. Bear markets can then offer wonderful, once in a life time opportunities. The only reason you want to sell in a Bear market is if a stock you are holding turns out to be a real dog. You also might want to sell a stock, if another stocks looks like it is a better one for the future. You may sell low, but you can buy low, so this would be a wash, sort of. You should also remember that it is very easy to picks winners in a bull market. It is much harder to pick winners for the long term or in difficult markets.

Bears are pessimistic. Some people seem to be perpetual bears, always believing that bad thinks are around the corner. However, some are just realistic. We do have down markets and you can make money in down markets. People can make money in a bear market by what is called “short selling”. This is borrowing a stock to sell, that you will buy back later. If the stock falls in price, you will earn money. Say you borrow a stock and sell it at $10 a share. Later, if you buy it back at $5.00 you will make a $5.00 profit on each share. Another strategy is to wait until you feel the bear market is over and try to buy stocks at its end. However, it is difficult for anyone to tell when a bear market will end.

Pigs tend to be greedy. They are looking for the big kill. Once markets go up, they tend to think that this will happen for ever. You need to be reasonable in your expectations, and you need to know your history. No market will go continually up. Not only are pigs greedy, but they also tend to get emotional and impatient. They buy on hot tips, rather than personal research, or creating a plan with a financial planner. They forget that you should never, ever, invest in anything you do not understand. They should be more cautious and if a stock has a huge run up, it might be wise to take some money off the table. Pigs are the biggest losers in the market.

Chickens tend to buy too high and sell too low. This is because they tend to buy at market highs and sell at market lows. They tend to sell everything into bear markets and run for cover. Chickens often wait far too long into a bear market and sell far too late. This is why the saying has that “chickens get slaughtered”. If you have high quality stocks, do not sell into a falling market. I believe that you should never buy anything that disturbs your sleep. You can buy some guaranteed mutual fund products, and other guaranteed products, but the guarantees come at a price and are only sold by insurance companies. You may never make much money if you are void the market and never take any risk. There is nothing in life that is risk free.

What I am is a long term bull. When I buy stocks, what I am buying is a future income stream. However, there is no guarantee that my purchases will result in a future income steam. But if you take no risks, you will not earn much. I do my homework and research stocks I want to buy. I sometimes make mistakes, and hopefully I learn from them. I do not try to buy at the bottom and sell at the time. What I try to do is find good quality stocks at a good price. If I have a stock that runs far to high, I often sell some of it (that is take money off the table).

There is an article about this subject at Investopedia. There is also a Wikipedia for investors that is at www.wikinvest.com/ . There is also a book on this subject called "Bulls Make Money Bears Make Money Pigs Get Slaughtered" by Anthony Gallea. It is available at Amazon, see my site for information.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Thursday, February 19, 2009

Finning International Inc. 2

Today I am going to look at what analysts are saying about this stock (TSX-FTT). Is it a good buy now? The first thing I looked at was insider buying and selling. There was quite a bit of insider selling last May and June by the CEO and some Directors. Since then, there has been some buying. Management has signaled that they have faith in the company by increasing the dividend from $.36 a share to $.44, which is an increase of over 22%. I have updated my spreadsheet for the 4th Quarterly Report on this stock. This report is unaudited and I had to put some annual figures together using all the quarterly reports.

In looking at earnings, Finning had earnings of only $.55 for 2008, compared to $1.53 for 2007. The main cause was goodwill write off and restructuring. Analysts seem to feel that this company will not be back to the 2007 earnings until 2010. There is a wide variance in what people expect this company to earn.

As far as the ratings go on this stock, there are Strong Buy ratings, Buy ratings and Hold ratings on this stock. This mean rating on this stock is a Buy. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 9 is lower than the 5 year average of 22 and this point to a current good price. Also, the current yield is 3% against the 5 year average of 1.5% so this also points to a good price. A problem is the Graham price, which has come down considerable because of the low EPS. However, the last one of $17, which will return with better earnings, is better than the current price of $12.76. To me, the negative for this stock is the inconsistent cash flow.

Looking at the charts, I compared this stock with the TSX, TSX Industrials and Toromont Industries. Except for the 10 year period, it has done worse than all these. In the 10 year period is has just done worse than Toromont. The main reason is that this company has been hit hard by the latest bear market. There are probably lots of Buy ratings on this stock as analysts expect that it will do much better when this bear market is over.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is www.finning.com. See my spreadsheet on this company at www.spbrunner.com/stocks/ftt.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Wednesday, February 18, 2009

Finning International Inc.

I am reviewing this stock today (TSX-FTT) as it is a stock I follow. This is also a dividend paying stock and it is on is on the Dividend Achievers list at www.dividendachievers.com. I do not own any of this stock as the company is quite similar to Toromont, which I do own.

All my following figures are for the year ending at the last annual statement of December 2007 as the report for 2008 is not yet out. First, what I find good about this stock. Revenue growth for the last 5 and 10 years was 12% and 9.3%. The Earnings per Share (EPS) growth for the last 5 and 10 years was 12.7% and 9%. The Dividend growth for the last 5 and 10 years was 19% and 13.6%. The Closing Price growth for the last 5 and 10 years was 18.9% and 13%. The Book Value growth for the last 5 and 10 years was not bad at8.99% and 7.7%.

The Asset/Liability Ratio is good at 1.64; however, the Liquidity is low at 1.30. It is desirable that both these ratios be 1.50 or higher. The Return on Equity (ROE) for 2007 and the average for the last 5 years is 17.% and 12.9% and these figures are not bad. The Accrual Ratio at 3.71% is not bad.

The main problem I see with stock is the lack of consistency and lack of growth in the cash flow. Growth and consistency in the cash flow is more important than in the EPS. It also has low liquidity figure and this is not good in a bear market. Tomorrow, I will review the latest quarterly report and look what stock analysts are saying about this stock.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is www.finning.com. See my spreadsheet on this company at www.spbrunner.com/stocks/ftt.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Tuesday, February 17, 2009

ATCO Ltd 2

Today I am going to look at what analysts are saying about this stock (TSX-ACO.X). Is it a good buy now? The first thing I looked at was insider buying and selling. There is quite of bit of insider buying and very little insider selling. Management has signaled that they have faith in the company by increasing the dividend from $.88 a share to $1.00, which is an increase of over 13%. I have updated my spreadsheet for the 3rd Quarterly Report on this stock.

In looking at earnings, everyone seems to expect that this company will earn less in 2008 than in 2007 and even a lower amount in 2009. However, there is a wide variance in what people expect this company to earn. Some analysts expect the cash flow to be lower in 2008 and 2009 than for 2007. However, some expect that it will be higher.

As far as the ratings go on this stock, there are Strong Buy ratings and Hold ratings on this stock and a few Buy ratings. This mean rating on this stock is tending towards a Hold. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 8.8 is lower than the 5 year average of 13 and this point to a current good price. Also, the current yield is 2.7% against the 5 year average of 2% so this also points to a good price. The last thing to mentions is that the Graham price of $52.42 is quite a bit above the current price of $36.29. This high Graham price also points to the stock being a good buy. The negatives for this stock and probably why it is rated a Hold is that the EPS are expect to go lower in the near term.

Looking at the charts, this stock has done better than the TSX and the TSX Utilities Index for all periods of except the 1 year period. For the one year period, it has done better than the TSX and about the same as the TSX Utilities index. This is a utilities stock and they tend to do better in bear markets than the general index. However, they do not do as well in bull markets as the general index. Utilities stocks add stability and dividend income to any portfolio. This is a great stock at a decent and this is probably the reason it is on so many “lists” as I said yesterday.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has a 52% stake in Canadian Utilities Ltd. The company utilizes a dual share structure and it is effectively controlled by R.D. Southern. Its web site is www.atco.com. See my spreadsheet on this company at www.spbrunner.com/stocks/aco.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Monday, February 16, 2009

ATCO Ltd

I am reviewing this stock today (TSX-ACO.X) as it is a stock I follow. This is also a dividend paying stock that is on everyone’s list. This stock is on the Dividend Achievers list at www.dividendachievers.com, the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm. Today I will review how this stock has done in the past.

All my following figures are for the year ending at the last annual statement of December 2007 as the report for 2008 is not yet out. First, what I find good about this stock. The Earnings per Share (EPS) growth for the last 5 and 10 years was 9.5% and 12%. The Dividend growth for the last 5 and 10 years is not bad at 8.7% and 11.7%. The Closing Price growth for the last 5 and 10 years was 23% and 15%. The Cash Flow growth for the last 5 and 10 years was 18% and 8%. The Book Value growth for the last 5 and 10 years was 9% and 10%.

The Liquidity is very good at 2.59; however, the Asset/Liability Ratio is low at 1.24. It is desirable that both these ratios be 1.50 or higher. The Return on Equity (ROE) for 2007 and the average for the last 5 years is 16% and this is a good figure. The total accrual figure of Accrual Ratio at 1.56% is not bad.

The main problem I see with stock is the last of revenue growth. The 5 year average of -1.91% is awful, and the 10 year figure of 3.5% is not very good either. Tomorrow, I will review the latest quarterly report and look what stock analysts are saying about this stock.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has a 52% stake in Canadian Utilities Ltd. The company utilizes a dual share structure and it is effectively controlled by R.D. Southern. Its web site is www.atco.com. See my spreadsheet on this company at www.spbrunner.com/stocks/aco.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Friday, February 13, 2009

Panic by Michael Lewis

The full title of this book is Panic, The Story of Modern Financial Insanity. In this book, Michael Lewis talks about the financial panic from 1987 to the current one. So this is all about the most recent insane market gyrations. This book is not really written my Michael Lewis; in fact, it is collection of articles published at the time of the recent panics that include 1987 stock market crash; the Russian default (including the failure of Long-Term Capital Management Hedge Fund); the Asian currency crisis; the Internet stock bubble and the latest subprime debacle.

It is a fairly light read and it is interesting because you can read what people were saying at the time of the financial problems. The down fall of this is that there is no historical perspective to help with our current financial difficulties. It might be helpful for people who had never been in a financial panic before. And, as it said, this book is a light read.

The most interesting thing that Michael Lewis says is that “The man on the street, for the first time, acted on the same foolish principles that have guided the behavior of sophisticated Wall Street traders for the past few decades.” To read more about Michael Lewis, see Michael_Lewis_(author) in wikipedia. I read this book recently and I did understand more about the financial panics he was talking about, but this is not the best book to read about financial panics.

To really understand what financial panics are all about, you might be better off reading a classic like “Extraordinary Popular Delusions & the Madness of Crowds” by Charles Mackay. See a review of this at www.buzzle.com.

My other book reviews are on my site at www.spbrunner.com/books.html. Also on my site is information on where to find this book on Amazon.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Thursday, February 12, 2009

Stephen Gadsden and Canadian 6 Pak 2

As I said yesterday, I will review the last 3 stocks of Stephen Gadsden Canadian 6 Pak. The stocks he is recommending are BMO (TSX- BMO); BCE (TSX-BCE); TransAlta Corp (TSX-TA); Enbridge Inc (TSX-ENB); TD Bank (TSX-TD) and Power Corp (TSX-POW). Since I follow all these stocks and own most of them, I thought I would review them and talk about what others are saying about these stocks. The one I do not own is Power Corp, but this is because I own Power Financial (TSX-PWF).

The next one to look at is Enbridge Inc (TSX- ENB) and this is a stock that I have reviewed several times on this blog. Looking at insider buying and selling, I see lots of insider selling. Insiders selling can be for a lot of reasons, so this does not tell us much. What is interesting is that all the selling has been above $40 a share and the buying has been below $40 a share. Looking at other analysts, the ratings on this stock run from Strong Buy to Hold, but the mean rating would be a Strong Buy.

I started to buy Enbridge in 2005 and bought more in the later part 2008 and again in 2009. Quicken says that I have made a profit on this stock of 6% per year. Not bad, considering we are in bear market and I have recently bought this stock. For this stock, that is due to report for December 2008 in a few days, analyst feel that earnings and cash flow will be fairly flat for 2008 and improve in 2009. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/enb.htm.

The next one is TD Bank (TSX-TD). Looking at insider buying and selling, I see lots of insider selling, but it all seems to do with options. Looking at other analysts, the ratings on this stock run the full gamete from Strong Buy to Sell and everything in between. This is the same as for BMO, however, in this case the mean rating is a buy.

I have had this stock since 2000 and Quicken says that I have made a profit on it of 5% per year. We are in a bear market where banks are being hit very hard. For this stock, analyst seem to be lowering their expectations for 2009, but still feel that earnings will be higher in both 2009 and 2010 than in 2008. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/td.htm.

The last stock to look at is Power Corp (TSX-POW). I have Power Financial rather this Power Corp. I tend to like financial stock. This stock has not done as well as Power Financial over the years, but it is felt a Power Corp is a more stable stock than Power Financial. This, of course, all depends on your point of view. Looking at insider buying and selling, I see lots of insider selling, but it is hard to tell if this means anything.

When looking at what the analysts are saying, the ratings on this stock run from Strong Buy to Hold, but the mean rating would be a Buy. For this stock, analyst seem to be lowering their expectations for 2009, and feel that earnings for 2009 will drop around 10% from that earned in 2008. They also seem to feel that earnings for 2010 should be better. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/pow.htm.

Note to yesterday, BCE has just raised their dividend by 5% and posted a loss of $.06 for the latest quarter. See my site for information on analyst ratings.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Wednesday, February 11, 2009

Transalta Corp

I have been gradually getting back into the stock market. The reason I review stocks and also publish my results is to help me think more critically on what I am doing. This company (TSX-TA) has just published the results (unaudited) for the year ending in 2008. I am updating both this company’s spreadsheet and my index spreadsheet. For the index spreadsheet, see indexport.htm.

My goal is to earn dividends to support myself and have a portfolio that is largely of financial institutions and utilities. Although utilities do not give you the growth and return of other stocks, they tend to be very stable producers of dividends. This company will fit the bill of a stable producer of dividends.

Although the growth in Revenues for the last 5 years at 4% is not great, it has grown its revenue by 12% for 2008 after several years of stagnating revenue growth. The 10 years revenue growth at 11% is much better than the 5 year growth. After having the same dividend of $1 since 1999, this company has increased their dividends by 8% and 7.4% for the last two years. The current yield is 5.3% and it is higher than the average 5 year yield of 4.1%.

Looking at other reasons that this stock is at a good current price, I see that the P/E of 14% and the trailing P/E of 18.5% is lower than the respective 5 year averages of 22% and 21%. The accrual ratio is negative and this is also a good sign.

No stock has all the desirable features for buying and this stock has some negative features. The Liquidity Ratio and the Asset/Liability Ratio are low at .56 and 1.47 respectively. When you have a bear market, it is also a bad time to have low liquidity. Also, the growth in Earnings per Share (EPS) for the last 5 and 10 year periods is bad at -1.3% and -1%. However, most analysts expect that the earnings for 2009 will be much improved.

I have decided today to buy some more of this stock and this will raise the percentage of this stock in my portfolio to almost 3%. Tomorrow, I will look at the last 3 stocks recommended by Stephen Gadsden.

It is an electric generation and marketing company. They operate in Canada, the U.S., Mexico and Australia. Most of its generating capacity is coal-fired, but it does produce electricity from both hydro power and alternative energy. Its web site is www.transalta.com. See my spreadsheet on this company at 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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Tuesday, February 10, 2009

Stephen Gadsden and Canadian 6 Pak

It has been reported that financial author and commentator Stephen Gadsden has recommended 6 Canadian dividend paying stock. He feels that it is a great time to load up on some cheap Canadian Dividend Paying stocks. The stocks he is recommending are BMO (TSX-BMO); BCE (TSX-BCE); TransAlta Corp (TSX-TA); Enbridge Inc (TSX-ENB); TD Bank (TSX-TD) and Power Corp (TSX-POW). Since I follow all these stocks and own most of them, I thought I would review them today and talk about what others are saying about these stocks. The one I do not own is Power Corp, but this is because I own Power Financial (TSX-PWF).

The first one of BMO (TSX- BMO) that I looked at shows that there is net selling by insiders. However, this involves options. The bright point is that the CFO of this bank has increased the number of shares he holds. Looking at other analysts, the ratings on this stock run the full gamete from Strong Buy to Sell and everything in between. I have had this stock since the 70’s, but have only tracked it on quicken since the first of 1988. Since that time, I have made a return of 15% per year on this stock. Earnings are expected to improve over the next two years. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/bmo.htm.

The next stock to discuss is BCE (TSX-BCE) and here there is modest insider buying and no insider selling. Looking at the ratings from analyst, this stock is rated from a Strong Buy to a Hold, with a mean rating of Hold. This is the first stock I bought. It is difficult to tell exactly what return I have had on this stock because of the divestiture of Nortel and the fact that I held some Nortel stock. I sold some Nortel at $90 a share and sold some at $2.50 a share. Taking BCE and Nortel together, Quicken says I have made an overage return of 9.8% return per year since 1988. It would seem every one expects earnings for 2008 to be half that of 2007 and then start to improve. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/bce.htm.

The next stock to discuss today is TransAlta Corp (TSX-TA). There has been recent insider buying on this stock and very little insider selling. The management of this stock seems to have faith in it as they have raised the dividends in 2008 and already for 2009. Looking at ratings from analyst, there are lots of Holds on this stock, and a few buys. The mean Rating would be Hold. I bought this stock in 1987 and since that time, I have made a return of 8% per year. Earnings for 2008 are expected to be lower than for 2007 and then some improvements in 2009. I have updated my spreadsheet for this stock. See my spreadsheet at www.spbrunner.com/stocks/ta.htm.

See my site for information on analyst ratings. Tomorrow, I will talk about the last 3 stocks of this 6 Pak.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Strip Bonds and Taxation in Canada

When I wrote the article on Bonds and Strip Bonds on this blog, I did not mean to get into taxation. However, the last paragraph of my article would be misleading as the how the profits on strip bonds are dealt with. I have updated my article according. See Bonds and Strip Bonds on my blog.

Monday, February 9, 2009

Waterfurnaces Renewable Energy 2

Today I am going to look at what analysts are saying about this stock (TSX-WFI). Is it a good buy now? The first thing I looked at was insider buying and selling. There is not much happening here. There was slightly more selling than buying, but selling occurred over $29 a share and buying occurred under $26 a share. Management has signaled that they have faith in the company by increasing the dividend. I have updated my spreadsheet for the 3rd Quarterly Report on this stock.

In looking at earnings, everyone seems to expect that this company will have good earnings for the financial years ending in 2008 and 2009. Part of the problem with the low growth in the financial year of 2007 is that this company makes a good portion of its income in US$ and reports in US$. At the end of 2007, the CDN$ and the US$ were almost on par. Currently the CDN$ is worth only $.80 of the US$.

Looking at the ratios on this stock, current P/E of 20.8 is lower than the 5 year average of 25 and this points to a current good price. The other positive thing is that the Accrual ratio is negative and it is a negative 9.2% and this point to the stock as being undervalued. However, the current yield is 3.3% against the 5 year average of 3.6%, so this would show the opposite, which is the stock, is rather high in price. It is interesting that the insiders are buying under $26. The other thing that is a negative is that the Graham price is quite a bit above the current price. This tends to occur on growth stock, where the stock is growing much faster than its underlying value. There is nothing wrong with this, but when stock are no longer growth stocks, the prices tend to fall back close to the Graham Price.

As far as the ratings go on this stock, there are Strong Buy ratings and Hold ratings on this stock. This makes the mean rating a Buy. This stock may have lots of room for both capital gain and dividends in the future, but it is a speculative buy. (See my site for information on analyst ratings.)

Looking at the charts, this stock has done better than the TSX for all periods of year-to-date to 10 years. The longer out you go, the better it has done against the TSX. I do not know of any sub index to compare it to. This stock is in the very new field of green energy.

They are 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 www.waterfurnace.com. See my spreadsheet at www.spbrunner.com/stocks/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 at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Friday, February 6, 2009

Waterfurnaces Renewable Energy

I am reviewing this stock today (TSX-WFI) as it has just been reviewed Investment Reporter. They think that the price is relative high, and it is a risky investment, but it is a buy for capital gains and dividend income.

All my following figures are for the year ending at the last annual statement of December 2007 as the December 2008 figures are not out year. The latest report is the third quarterly report, dated September 2008. First, what I find good about this stock. The Earnings per Share (EPS) growth for the last 5 and 10 years was 17.5% and 21%. Dividends just started 5 years ago, but the 5 year dividend growth is a healthy 11%. The Closing price growth for the last 5 and 10 years was 54% and 34%. The Return on Equity last year was 47% and the 5 year running average is 36%. The Liquidity is 2.94 where any figure over 1.50 is a good figure. The Asset/Liability Ratio is 2.38 a little lower than the 5 year average of 2.50. Here, again, any figure over 1.50 is good.

Now for what I do not care much for category. The 5 and 10 year growth in Revenue is just 5% and 7%. I must admit that part of the reason for this is the change in US/CDN currency. This stock reports in US$, probably because it does 80% of its business in the US. The 5 and 10 year growth in Book Value is -4% and 1%. Also, the 5 and 10 year growth in Cash Flow was 1% and 30%. The 10 year figures are good, but not the 5 year figures. This last thing to mention is that the Graham Price is just $5.44 and the current price is $28.25.

On Monday, I will review the latest quarterly report, and look at what other analysts are saying about this stock.

They are 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 www.waterfurnace.com. See my spreadsheet at www.spbrunner.com/stocks/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 at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Thursday, February 5, 2009

Bonds and Strip Bonds

A good use of bonds for your portfolio is after you start to take money out after retirement. If you are dependent on your investments to live, you need to have enough cash, with income from investments etc., to last 3 to 5 years into the future. You never want to be in a position where you must cash in an investment. What you want to do with bonds is have what is called a ladder portfolio. That is having bonds due in increments of 1 year, 2 years, 3 years and 4 years. You do not need to have a bond, say issued for 4 years, but a bond with only 4 years to run. For example, it could be a 30 year bond, but it matures in 4 years time.

First, the rate of return on bonds can vary and they vary because of perceived risk. For a bond, the higher the interest rate given, the higher the bond’s perceived risk. You can buy bonds of countries, municipalities, cities and companies. If you are buying corporate bonds, your risk depends on what company’s bonds you buy. This is really no different from stocks. Secondly, if a company goes bankrupt, bonds holders are ahead of preferred share holders and common share holders in getting their money back.

To buy bonds you really must speak to the Bond Desk with the bank you where you have your trading account. You do not want to speak to the people who sell shares, what you want is the bond desk. You do not pay a commission when buying or selling bonds. There is a buying price and a selling price for a particular bond. It is on the spread between these two prices where the bank makes the equivalent of a commission. You can see in the newspapers what bonds are for sale and at what price.

You will find a bond primer at www.smartmoney.com/. I cannot find a Canadian bond primer site. Please note that in Canada, we have different tax laws and there are no tax free bonds available.

You buy bonds in denominations of $1,000, but they are sold per $100. If you pay $97 per $100 for a bond and you keep it until maturity, you will get back $100 for each $97 you pay. You will have a capital gain. If you pay $103 per $100 for a bond and you keep it until maturity, you will get back $100 for each $103 you pay. You will have a capital loss. The bond market is generally more volatile than the stock market. It can be made safer if you hold a bond to maturity. Say you want to hold a bond for 5 years; you should buy a bond due in 5 years time. That is, you do not need to buy a 5 year bond, just a bond that matures in 5 years.

When you buy a bond, you will be quoted an interest to maturity. That is the rate you will earn on the bond, and this rate to maturity includes the capital gain or loss. If the interest rate quoted is 7%, this means that the interest to maturity is 7% or that you will earn 7% annually on your bond.

A strip bond is bond where both the principal and regular coupon payments (which have been removed) are sold separately. A strip bond is also known as a "zero-coupon bond." An investment firm will usually buy a debt instrument and "strip" it into its separate parts. That is someone buys a stream of income (interest payments), and someone buys the maturity value of the bond. When you buy a strip bond, you are buying the principal payment due at the end of the bond’s term. That is if a bond is a 10 year bond, you are buying the principal that is due in 10 year’s time. Strip bonds usually trade at a discount and mature to par value. (When they say trade at a discount, it is the example above where you pay $97 per $100 of bond value. When a bond is trading at a premium, it is the example above where you pay $103 per $100 of bond value.)

The implications of taxation in Canada on a strip bond is that even though you do not receive any interest on these bonds, Revenue Canada requires that you pay tax on the interest you would have received, had it been a regular bond. See stripbonds.info/public/taxation.htm.for a discussion on this.

Another thing you should realize in buying bonds is the bond’s capital and interest rates go in opposite directions. That is if the interest rates go up, the amount the bond is worth goes down and vice versa. Currently bonds have very low interest rates and some government bonds have almost 0% interest. They really cannot go lower. However, there is also a wide variance between some corporate bonds and government bonds. The variance is much wider than normal. It is difficult to anticipate how this will play out. Certain, government bonds will have an increase in interest rates in the future, as they cannot go down.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Wednesday, February 4, 2009

Dorel Industries 2

Today I am going to look at what analysts are saying about this stock (TSX-DII.B). Is it a good buy now? The first thing I looked at was insider buying and selling. There seems to be lots of selling and no buying. Insider selling does not tell you much, but if the stock was really undervalued, you think that there would be some buying. However, management has signaled that they have faith in the company by increasing the dividend.

In looking at earnings, everyone seems to expect that Dorel will have a good year in 2008. However, they also seem to expect that the earnings for 2009 will not be as good as for 2008. We are in a recession, so lowered earnings going forward is expected.

Looking at the ratios on this stock, higher Graham Price than stock price, lower current P/E than 5 year average and higher yield all points to this stock being at a good price. However, some of these better ratios is because of the Canadian Dollar being worth less than it was at the end of 2007. In 2007, the Canadian Dollar was on par with the US Dollar. Currently our Canadian Dollar will only buy $.80 in US Dollars. This is important as this stock reports in US Dollars.

As far as the ratings go on this stock, there are lots of both Buy ratings and Hold ratings on this stock. It depends where you look as to whether the mean rating is a Buy or a Hold. (See my site for information on analyst ratings.)

Looking at the charts, this stock has done worse than the TSX and TSX Consumer Staples Indexes over the last 5 and 10 years. For the last year and last 3 years, it has done better than the TSX, but not the Consumer Staples Index. Looking year to date, it has done worse than both indexes. Personally, I am going to keep an eye on this stock, but I am not going to buy any of it currently.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is www.dorel.com. See my spreadsheet at www.spbrunner.com/stocks/dii.htm. I have updated my spreadsheet for the 3rd Quarterly Report on this stock.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Tuesday, February 3, 2009

Dorel Industries

I am reviewing this stock today (TSX-DII.B) as it has just been reviewed Investment Reporter. The Investment Reporter has liked this stock for sometime. I had this stock between May 1999 and July 2006. I sold it because it was going nowhere and it did not pay a dividend. My gain on this stock was -1.2%. I do not think a dividend would help much. But, this stock certainly has the cash flow to support a dividend.

All my following figures are for the year ending at the last annual statement of December 2007. First, what I find good about this stock. The Book Value growth for the last 5 and 10 years was 10% and 16%. The Liquidity is 1.63 a little down from the 5 year average of 1.78. Any figure over 1.50 is a good figure. The Asset/Liability Ratio is 2.30 a little higher than the 5 year average of 2.14. Here, again, any figure over 1.50 is good. The total accrual figure is negative and the Accrual Ratio at -2.32% is not bad. The Return on Equity (ROE) is good at 9.3% for 2007 and 12.7% for the 5 year average.

In the acceptable, but not great category is the Revenue Growth with the last 5 year and 10 year figures at 3.5% and 13%. The Cash Flow growth for the last 5 year and 10 year periods are 3% and 10.8%. In both these cases, the 10 year figures are very good, but the 5 year periods are barely acceptable. The Closing Price, including current dividends for the 5 year and 10 year periods are -3% and 5.7%. This stock seems not to be going anywhere still, however, by the Graham Price, it is very undervalued.

Tomorrow, I will review the latest quarterly report and what other analysts are saying about this stock.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is www.dorel.com. See my spreadsheet at www.spbrunner.com/stocks/dii.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

Monday, February 2, 2009

Saputo 2

As I said on Friday, I will review today what the analysts are saying about this stock (TSX-SAP). I will update my spreadsheet with the figures from analyst’s reports and current stock prices. I have included estimates for 2009 and 2010. However, do not forget that these are just estimates, and can therefore be very wrong. First, I looked at insider buying and selling. There is lots of insider selling, but they are all option, so this means nothing.

The first thing I want to note is that the Globe Investor site gives this stock a 4 star rating. In looking at the ratings for this stock, they range from Strong Buy to Hold, with lots of Buy and Hold ratings and few Strong Buy ratings. The mean rating is a Buy. (See my site for information on analyst ratings.)

Because the price of milk and milk products has dropped significantly, it is not expected that Saputo will make more earnings this year than last. However, it is expected that profitability will return for 2010. This stock is considered to be a dividend paying growth stock, so usually the Graham Price is higher than the Stock Price. However, with the current bear market, the Stock Price has moved closer to the Graham Price. The dividends have grown just under 17% this year. This a good growth considering that many stock have cut back on dividend increases.

The good indicators on the price of this stock are the P/E at 14 is lower than the 5 year average of 18; and the yield of 2.8% is higher than the 5 year average of 1.8%. With the second quarterly results, the Asset/Liability Ratios are still very good. The only negative, again, is the Accrual Ratio is rather high.

Looking at the charts, this stock has done better than the TSX and the TSX Consumer Staples Index (of which it is a part) over the last 3, 5 and 10 years. For the past year, this stock has done worse than the TSX Consumer Staples Index, and for any shorter period, it has done worse than both the TSX and the TSX Consumer Staples Index. I have this stock and I currently intend on keeping it as I believe that, over the long term, I will gain in income and capital gain from it.

This stock (TSX-Sap)is on everyone list. Is on the Dividend Achievers list at www.dividendachievers.com, the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm.

This company is a dairy processor and cheese producer in Canada and USA. Its web site is www.saputo.com. See my spreadsheet at www.spbrunner.com/stocks/sap.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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.