Friday, July 23, 2010

Holidays

I am going on holidays and my next post will not until August 9, 2010. I am today republishing my index to the stock I cover. I have sorted the list by stock category of the TSX Sub-Index. This is because, when you compare stocks, you should really compare them to similar stocks. This index is on my site. To make a stock’s statistics easier to see, you can use your mouse to highlight a line or several lines, in the spreadsheet.

I have updated spreadsheets for all the stocks I own on my website. For other stocks, my website only has the spreadsheets used in my last blog on the stock. Since I have updated more spreadsheets than I have blogged about, you will find some updated statistics on the index, which you will not find on the spreadsheets published.

I have tried to be accurate when updating my spreadsheets and when updating my index, however, mistakes do creep in. So, be careful when reviewing my index and do not just accept what it says. If you are interested in a particular stock, you should check back to the spreadsheet on that stock to ensure the index figures are correct. You should also look at the annual statements and look at what other sites say about a stock. Do not just accept my figures.

To get to my spreadsheets, click on “stocks followed” below and click on the stock you are interested in. Under the stock, the first entry will be the link to the spreadsheet for that 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 for stocks followed and investment notes. Follow me on twitter.

Thursday, July 22, 2010

IESI-BFC Ltd 2

I first bought this stock (TSX-BIN) in November 2007. My total return to date is -2.3% per year. This company did not have a good year in 2009. It is not surprising, as a lot of companies did not have a good year in 2009. My negative return is also not surprising, as most stocks bought in the last 5 years would not show much in the total return category.

When I looked at Insider Trading, I am quite pleased. This stock is showing Insider Buying over the past year of $1.3M, including some very recent buying. Lately it seems that every company I have reviewed has had insider selling, so it is refreshing to see one with insider buying. There has been no insider selling under this company during the past year. Insider buying is a good sign as it signals that insiders have faith in the future of the company. There has been insider buying by the CEO, CFO, officers and directors. This is another good sign.

When looking at the average P/E ratios on this company, I have excluded the ones for 2005. That year, the earnings dropped some 70%, but the stock price went up. That made the P/E for 2005, very high. So I am looking at a 5 year low P/E ratio of 24 and a 5 year high P/E ratio of 38. Given this, the current P/E ratio, of 26 is not a bad ratio and it is pointing to a relatively good price. However, this is high ratio in absolute terms.

For 2010, I get a Graham price of $13.91. So the current stock price of $23.06 is some 66% above this. The problem with this stock is that the share price got hammered in the later part 2008 and early part of 2009, and the stock price moved quite a bit below the Graham price. Before that, the stock price was way above the Graham price. I doubt that the stock price will go as low as the Graham price in the near future, unless we go into a double dip recession.

When I look at the Price/Book Value ratio, I get a current one of 2.39 and a long term average of 1.91. So the current P/B ratio is 25% above the long term average. This would indicate that the stock price is relatively high. The Book Value decreased in 2009 and the stock price, since hitting a low in last 2008 and early 2009 has been climbing quite rapidly. Because this stock decreased their dividends when it changed to a corporation, the dividend yield is the lowest it has ever been.

When I look at the analyst recommendations, all I find are Strong Buy recommendations and Hold recommendations. I can find no other. (See my site for information on analyst ratings.) Lately, when most analysts talk about this stock, they refer to the successful recent merger with Waste Services Inc. One analyst says it is a hold because the company is more interested in growing that in increasing their dividends. The difference in Hold and Strong Buy is the expected stock price within the next 12 months that range from $22 to $28.

I will continue to hold the shares that I have at the moment and continue to track this company. However, I am not interested in buying more at the moment. I do not have a lot invested in this company at the current time.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here IESI-BFC. See my spreadsheet at bin.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, July 21, 2010

IESI-BFC Ltd.

I first bought this stock (TSX-BIN) in November 2007. My total return to date is -2.3% per year. This company did not have a good year in 2009. It is not surprising, as a lot of companies did not have a good year in 2009. My negative return is also not surprising, as most stocks bought in the last 5 years would not show much in the total return category. This stock was a Unit Trust (BFC.UN) when I bought it in 2007. In October 2008, it changed to a corporation (BFC). The company was restructured in 2009 and it changed its symbol to BIN.

When this stock changed to a corporation, it decreased its dividends. The dividend payments have decreased by just under 73%. The company gave out some special dividends in 2009 to help with the transition to a corporation. So previously yields on this company was in the 6% range and are now just over 2%. Prior to the change to a corporation, this company had a habit of increasing their dividends each year. So far, the dividend set in 2009 has not been increased. They do not expect to increase their dividends in 2010.

The payout ratio of dividends to cash flow has been coming down. It was 45% in 2008 and 30% in 2009. It is expected to be 20% in 2010. A payout ratio of 20% is a sustainable one for a corporation and is a good rate. I am hoping that once they hit the 20% payout ratio, that they will again consider dividend increases.

Some of the 10 year growth figures are fine; almost none of the 5 year growth figures are good. The best growth figures are for revenues and revenues per share has grown just over 11% per year for both the last 5 and 10 years. For earnings, the 5 and 10 year growth figures are -3% and 9.7% per year, respectively. Earnings for this company came down some 22% between 2008 and 2009.

One good thing to note on this company, if you had held it for 10 years, you would have made a total return from about 15% to 18%. The 15% is based on average price buy and sell. The 18% is based on a year end buy and sell. Basically, what you can hope for in stocks is that you buy and sell them at, at least an average price.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Its web site is here IESI-BFC. See my spreadsheet at bin.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, July 20, 2010

Alimentation Couche-Tard Inc. 2

I first bought this stock (TSX-ATD.B) in January 2004, and I bought some more in 2006 and 2007. My total return to date is 2.9%. All the growth figures are good for this stock except the ones for the stock price. The reason for this is that the P/E ratio used to be quite high (in 2006 it was 27) and now it is quite low (at 11.3 in 2010). This stock has a reporting year ending in April of each year.

In looking at insider trading, I find lots of insider selling over the last year to the tune of $3.3M. There was a tiny bit of insider buying. However, all this action took place in 2009 and there has been no insider trading for the current year of 2010. A good thing is that this company raised the dividend by 14% for the one paid in March 2010. This shows that management has faith in how well this company will do in the near future.

When I look at the P/E ratios for this company, I find that the 5 year average low is 13 and the 5 year average high is 20.5. The current P/E ratio, based on earning estimates, is 11.6. This is a relatively low P/E ratio and is not bad in absolute terms. I get a Graham Price of $18.51, based on earnings estimates. The current stock price of $20 is just 8% higher. On average, the low yearly stock price is 10% higher than the Graham Price. But, over the past two years, the Stock price has hit prices at around 30% lower than the Graham Price. However, this is a growth stock and you would expect the stock price to be generally higher than the Graham Price.

I get a current Price/Book Value Ratio of 2.26 and the 10 year average is 2.88. So the current P/B ratio is just under 80% of the 10 year average. The P/B ratio points to a current good stock price. The last thing is the dividend yield. The 5 year average yield is just .7%. However, the yield has been increasing lately and it reached as high as 1.2% in the last financial year. Currently the yield is .8%, which for this stock is probably not bad.

So, what do the analysts say? I find lots of Strong Buy, Buy and Hold recommendations. There are no others. The consensus would be a Buy. (See my site for information on analyst ratings.) Analysts talk about this stock being hit by the economic slow down and that, in the future, their profit margins should improve, especially when the US economy picks up. The difference between the Hold recommendations and the other recommendations is dependant on how much the analysts feel the stock price will pick up over the next year. Some think $20 is 1 year target price and some think that $25 is the 1 year target price.

I am happy with my investment in this company at present, and I will continue my investment in this company. However, I have no current plans to add more stock to my portfolio in the near future.

Alimentation Couche-Tard is Canada’s leading convenience store retailer under brands such as Couche-Tard, Mac’s, Becker’s, Mike’s Mart and has US brand Circle K. The company has alliances with fast-food chains including M & M Meat Shops, Pizza Pizza , Subway and Irving Oil. They just opened up Circle K brand in Vietnam. They are expanding into the U.S., having bought Johnson Oil, a major gas station and convenience store operator. Ownership of this company is such that D√©veloppements Orano Inc. owns 42% and Metro owns 22%. Its web site is here Alimentation . See my spreadsheet at atd.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, July 19, 2010

Alimentation Couche-Tard Inc.

I first bought this stock (TSX-ATD.B) in January 2004, and I bought some more in 2006 and 2007. My total return to date is 2.9%. All the growth figures are good for this stock except the ones for the stock price. The reason for this is that the P/E ratio used to be quite high (in 2006 it was 27) and now it is quite low (at 11.3 in 2010). This stock has a reporting year ending in April of each year and they have just reported for April 2010.

This is considered to be a dividend paying growth company. The dividend yield on this stock is quite low (the 5 year average is .7%). This is the sort of stock you might want to buy to diversify your portfolio into consumer stocks. The yield is low, but the growth in dividends is not bad 9.7% for the last 4 years. This company just started to pay dividends in 2006. The yield has also been moving up as it started in 2006 at .4% and is now at .8%.

As I have said, this stock’s growth figures are all good except for the stock price growth. We are in a recession and consumer stocks can get hit hard to recessions. This company also reports in US$ and the growth figures are better in US$ and in CDN$. This is because our dollar has risen against the US$ recently.

For example, the growth in revenue per share has risen over the past 5 and 10 years by 12% and 24% per year respectively. The 5 year figures are worse because the revenues did not grow in the financial year ending in April 2010. They are building value for their shareholders as the 5 and 10 year growth in Book Value is 15% and 21% per year, respectively.

The Liquidity Ratio at 1.17 is not bad, as current assets can cover current liabilities. The Asset/Liability ratio is much better at 1.78. I prefer both these ratios to be at least at 1.50. The last thing to mention today is the Return on Equity. The ROE for the financial year ending April 2010 is 18.8% and the 5 year running ROE is 18.1%. Both these ROE figures are good.

Although I do not have that much invested in this company, I am happy with my investment and will continue to hold on to the stock I have. I try to balance my portfolio with dividend paying stocks that have high yields that grow slowly and low yields that grow quickly. Tomorrow, I will look at the ratios pertaining to the stock price and also see what analysts say about this stock.

Alimentation Couche-Tard is Canada’s leading convenience store retailer under brands such as Couche-Tard, Mac’s, Becker’s, Mike’s Mart and has US brand Circle K. The company has alliances with fast-food chains including M & M Meat Shops, Pizza Pizza , Subway and Irving Oil. They just opened up Circle K brand in Vietnam. They are expanding into the U.S., having bought Johnson Oil, a major gas station and convenience store operator. Ownership of this company is such that D√©veloppements Orano Inc. owns 42% and Metro owns 22%. Its web site is here Alimentation. See my spreadsheet at atd.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, July 16, 2010

Computer Modelling Group Ltd 2

I first bought this stock (TSX-CMG,) in November 2008 and bought some more in March of 2009. My total return to date on this stock is 30% per year. This is a small cap stock that is growing fast and is also a dividend paying stock. This stock will, of course, be more risky that most dividend paying stock, so be careful. Only buy this stock if you can afford to take the risk of owning a small cap stock.

When I look at the Insider trading report, I see lots of Insider Selling to the tune of $6.7M. Most reports I have been looking at lately show lots of insider selling and I find this discouraging. However, we are in a recession and you never know why people sell. In this case, all the selling seems to be in shares (compared to lots of other company insider selling which seemed to be in stock options). There is extremely minor insider buying (totally some $9,000). The Insider selling is about 2% of the market value of this stock.

The way that the management has shown confidence in this stock is that they have increased the dividend, and paid a special dividend this year. However, one thing I do not like is that it would appear that they used almost all their cash flow for this year to pay the dividend this year. On the other hand, they did have enough cash to pay this dividend, so from this point of view; the dividend paid is not a problem.

When I look at the 5 year low P/E ratio, I get one of 10.4 and when I look at the 5 year high P/E ratio, I get one of 17.6. Based on earnings estimates for 2011 financial year, I get a current P/E of 19. Note that the earnings estimate for 2011 has been lowered as the estimate for 2010 was $.91 and it came in at $.80. Also, I get a Graham Price of $5.95. With the current stock price being at $17.53, it is off the Graham Price by 195%. This is not quite a bad as the high price for 2010 of $17.50, which was off the 2010 Graham price by 215%. However, it is almost there.

When I look at the dividend yield, I get a 5 year average of 3.9% and a 5 year high of 5.3%. The current yield is just 4.1%. It is better than average, so this is good. The last thing to look at is the Price/Book Value Ratio. The 10 year average is 4.38. The current ratio at 10.27 is over twice that. I must say that this ratio has been rising steadily over the last 10 years. If you look at the stock price chart, you will see that since June of 2008, this stock has been rising and it has done much better than the market as a whole.

There are not many analysts following this stock, however, most recommendations are Strong Buy and Buy. However, I did find one Hold recommendation. Since there are more Buy recommendations than Strong Buy recommendations, the consensus would be a Buy. (See my site for information on analyst ratings.)

What analysts like about this company is the lack of debt and the great dividends. (Liquidity and A/L ratios are 2.44 and 2.56, which are very high). This company has most of the market for heavy oil software. However, this is a tech company, and sometimes, things change rapidly with tech companies.

Personally, I might want to buy some more of this stock in the future, but I think that the current stock price is a little high. The other side of this is that this is a growth company, and it may be sometime time (or never) when it gets to a more reasonable relative price. A P/E of 19 is not especially high for a growth company. I am certainly happy with my investment and I will hold on to it.

It is a computer software technology and consulting firm engaged in the development and sale of software. They have 250 Clients in 45 countries. Their reservoir simulation software assists petroleum companies to extract an increased amount of oil and gas from their reservoirs. Its web site is here Computer Modelling. See my spreadsheet at cmg.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, July 15, 2010

Computer Modelling Group Ltd

I first bought this stock (TSX-CMG,) in November 2008 and bought some more in March of 2009. My total return to date on this stock is 30% per year. This is a small cap stock that is growing fast and is also a dividend paying stock. This stock will, of course, be more risky that most dividend paying stock, so be careful. Only buy this stock if you can afford to take the risk of owning a small cap stock.

In looking at growth figures on this stock there is nothing bad to say. It is currently growing fast, although the growth for the financial year ending in March 2010 has not been as good as for other years. For example, the growth in revenue for the last 5 and 10 years has been 21% and 18% per year respectively. Cash Flow has also done well, with the growth for the last 5 and 10 years at 21% and 40% per year respectively.

This stock has also been no slouch when it has come to dividend growth. They just started to pay dividends in 2004 and the 5 year growth figure is 50% per year. The current dividend yield is decent at 4.1%. I should point out the dividend yield on high stock prices over the past 5 years is 3% and the dividend yield on low stock prices over the last 5 years is 5.3%. This stock has grown quickly and the dividends have also grown very quickly. At some point, a small cap will grow more slowly, so past growth cannot be used to determine future growth.

This stock also has a strong balance sheet. The Liquidity Ratio and the Asset/Liability Ratio for 2010 are both good at 2.44 and 2.56 respectively. Any ratio over 1.50 is good, so these are more than good. The last thing to talk about is the Return on Equity and here again; this stock has done very, very well. The ROE for 2009 is 190% and the 5 year average is 44.5% per year.

I am please with the performance of this stock and I intend to hold on to this for quite sometime. Please note again, this is a risky stock, so only invest in it if you can afford to take a risk. Another thing you could do, for fun, is invest a bit of money in it. After all, investing should be fun too.

It is a computer software technology and consulting firm engaged in the development and sale of software. They have 250 Clients in 45 countries. Their reservoir simulation software assists petroleum companies to extract an increased amount of oil and gas from their reservoirs. Its web site is here Computer Modelling. See my spreadsheet at cmg.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, July 14, 2010

State of My Dividends, Q2 2010 2

Yesterday, I updated my spreadsheet on dividends. For all my stocks, I have shown in the “10” (for 2010) column, if a company has actually increased their dividend yet for the current year of 2010. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2010.

Pareto Corp (TSX-PTO) is a small cap company that has just recently started to pay dividends in 2008. For 2009, they raised their dividends 50% and for 2010, they have raised their dividends 25%. They have also paid a special dividend of $.04 per share in 2010. This special dividend is half the dividend to be paid this year, which is at the rate of $.08 per share. The dividend yield for this stock is quite good at 4.8%. They also have paid in dividends just, on average, about 30% of their cash flow, so this is good also. See the spreadsheet.

Shoppers Drug Mart (TSX-SC) is the stock I have bought for my TFSA. They did not have a good year in 2009 and did not raise their dividends. I had an increase in dividends of 6.8% in 2009 because the dividend increase in 2008 was made part way through the year. The current dividend increase is at 4.65% because it is going from $.215 to $.225, but because it is made part way through the year, my increase in dividends this year is only 3.5% as the total dividends for the year increased from $.86 per share in 2009 to $.89 per share in 2010. If the dividends are kept at this rate for 2011, I will get, in 2011, $.90 per share and this will be an increase of 1.1% for 2011. See the spreadsheet.

SNC-Lavalin Group Inc (TSX-SNC) is a favorite stock of mine. They consistently raise their dividends each year and for the past 5 years, the average increase is 27%. However, 2009 was not a great year and for 2010, the dividend increase is just 13.3%. The other thing to mention about this stock is that the dividend yield is low and is currently at 1.5% (a high for this stock). The dividend yield is usually closer to 1%, or just below 1%.

SNC is a dividend paying growth stocks and it is the sort you would buy after buying more conservative for your portfolio. Conservative stocks would be utility and financial stocks. This stock is considered to be a consumer stock and most consumer stocks have low yields, but they are a good way to diversify your portfolio. Also, I did not show this stock increase in my first quarter as the first quarterly dividend came in, in the first part of April, not in March as expected. My second quarterly payment came in June. Some stocks are more consistent with their dividends payments than other stocks. See the spreadsheet.

TransCanada Corp (TSX-TRP) is my last stock to talk about today. This is a solid, conservative, utility type stock. Since the quarterly dividend payments went from $.38 per share to $.40 per share, the dividends have gone up about 5.3%. My increase in dividends for 2010 is about 5.3% as this company raised their dividends after the first quarter in 2009 also. This stock has a good dividend yield, which is running a bit higher than usual at 4.5%. The average dividend increase over the past 5 years is running at around 5.3% per year, so this year increase is quite normal. See the spreadsheet.


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, July 13, 2010

State of My Dividends, Q2 2010

Today, I am updating my spreadsheet on dividends. For all my stocks, I have shown in the “10” (for 2010) column, if a company has actually increased their dividend yet for the current year of 2010. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2010.

For the second quarter of this year, I have had 7 companies increase their dividends (these dividends are in blue to distinguish them from increases that occurred in the first quarter). Since I do dividend calculations based on the applicable company’s financial year, I have also started columns for 2011. There are other increases shown in the columns for 2010 and some for 2011 and this is because when a company increases its dividend part way through their financial year, the total dividends for the following financial year will also be affect.

For example, take Emera Inc (TSX-EMA). I received the dividend in February 2010 at the old dividend rate in effect at the end of 2009 that is $.2725 per share. The dividend I received in May 2010 was at the increased rate of $.2825 per share. So, for 2010 I will receive one dividend at $.2725 per share and 3 at $.2825 per share. So, total dividend for 2009 is $1.03 ($.2525 x3, $.2725 x 1). For 2010, total dividend will be $1.12 ($.2725 x1, $.2825x3) for an increase of 8.7%. I can potentially receive in 2011 4 dividends of $.2825 or $1.13, an increase of .9% over 2010. So, for 2010 I put a Y in “10” column to show that there was a dividend increase in 2010 and for 2011, I put an “N” in “11” column to show no actual increase, so far, in dividends for 2011. (See more on Emera below.)

The first stock to talk about is BCE Inc (TSX-BCE). This company has a fairly good recent record of increasing it dividends, but they do not increase them every year. The 5 and 10 year growth in dividends is 5.7% and 1.5% per year, respectively. BCE lowered their dividend when they sold off Nortel in 2000. They also only paid out 2 dividends in 2008, when they thought they were going to go private. This, of course, did not occur and they restated the dividends, so dividends really did not change in 2008. In both 2009 and this year, dividends are increased by just over 8%. This is a good increase. I must admit that I have made a lot in dividends over the years from this stock. See the spreadsheet.

And, now back to Emera Inc (TSX-EMA). The dividends for this stock are quite high, usually running around 4.5% and higher. The best you can say is that dividend increases have kept pace with inflation. The increases for 2008, 2009 and 2010 have been above 6.7% and this is nice. The 5 and 10 year growth in dividends is 3.2% and 1.7% per year, respectively. This is considered to be a solid dividend paying stock and it is a utility stock. See the spreadsheet.

Melcor Developments Inc (TSX-MRD) is a real estate company and is considered a higher risk that the last two companies. They pay out dividends twice a year, as they can afford to. They also have paid out special dividends quite often over the years. If you look at just the regular dividends, the increase in dividends over the past 5 and 10 years have been at the rate of just over 15% per year. But as I have said, the regular dividends have fluctuated and dividends for 2006 to 2010 have been, per share, $.30, $.40, $.42, $.25, and $.30. So changes in dividends from 2007 to 2010 are 33% increase, 5% increase, 50% decrease and then a 20% increase. You can make good income from this stock, but you have to be able to tolerate fluctuating dividends. The problem also, is that dividends would tend to decrease in recessions, and that may not fit into your spending plans. See the spreadsheet.

Tomorrow, I will continue talking about my stocks with dividend increases in this first quarter of this year.

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, July 12, 2010

TransCanada Corp 2

I first bought this stock (TSX-TRP, NYSE-TRP) in 2000 and then bought more in 2006. I have made a total return on this stock of 10.7% per year. On my original investment in 2000, I am making a return of 7.6%.

When I looked at Insider Trading last year, there was lots of Insider Buying. This year, there is lots of Insider Selling. Insider selling is almost up to $27M. The selling seems to be all stock options, so it is hard to say if this is a bad sign or not. You never know why people sell. Management has raised the dividends this year, and this points to management’s faith in producing enough cash flow for an increased dividend.

The 5 year average low P/E ratio is 13.5 and the 5 year average high is 17. Based on earning estimate for 2010, the current P/E is 17.5. One problem is that earnings expectations are rather low for this year. I get a current Graham Price of $32.66. Note that this has been coming down recently, because of lower earnings. The Graham Price of 2008 was $34.44. The current price is just 8.8% off current Graham Price. Note that the Graham Price uses the earnings estimates also.

When I look at the current dividend yield, I get one of 4.5%. The 5 year average is 3.9% and the 5 year average high is 4.4%. So, on a relative basis, the yield is a good one. When I look at the Price/Book Value ratio, I get a current one of 1.52 and a 10 year average of 1.95. The current one is only 78% of the 10 year average and this also points to a good current stock price. Note that neither the dividend yield, nor the P/B Ratio use estimates.

When I look at analysts’ recommendations, I find lots of Strong Buy, and Buy recommendations and a few Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) This stock is also considered to be a low risk stock. It is also considered a defensive stock (that is one you have in recessions). Some people are worried about the Keystone pipeline being built, but it already has US government approval.

I am happy with this stock and I will continue to hold it. I will probably not buy more as I have enough of this stock in my portfolio and I do not like any one stock to be a too high a percentage of my total portfolio.

TransCanada is a leader in energy infrastructure. Their network of pipeline taps into virtually all major gas supply basins in North America. TransCanada is one of the continent’s largest providers of gas storage and related services. It is a growing independent power producer. Its web site is here TransCanada. See my spreadsheet at trp.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, July 9, 2010

TransCanada Corp

I first bought this stock (TSX-TRP, NYSE-TRP) in 2000 and then bought more in 2006. I had been looking at the stock for a while and in 2000, when for the second year in a row they reduced their dividends, I bought. Dividends were reduced as the company wanted to reorganize for the future benefit of the shareholders. This stock was slammed really hard for their trouble. I have made a total return on this stock of 10.7% per year.

This is a utility stock, and when looking at some growth figures, some are good and some just ok. This is not a growth stock, so do not expect great growth. What you can expect is solid earnings and good dividends. As I said yesterday, from utility stocks, you should expect 8% total return with approximately 4% from dividends and 4% from growth in stock value. Over the past 5 or 10 years, total return using average prices, would be 7.8% and 11.9% per year, respectively. The 5 year total returns are a little low, but we are in a recession.

If you look at growth in earnings, the 5 and 10 year figures are 0% and 4.3% per year, respectively. Earnings were low in 2009 and they are not expected to pick up again until 2011. Since the earnings for the 1st quarter came in lower than expected, the earnings estimates for 2010 have been lowered. The earning estimates for 2011 have basically remained the same. (By the way, this is a typical reaction to a lower than expected quarterly earnings result.)

If you look at growth in dividends, the 5 and 10 years figures are 5.3% and 3% per year, respectively. They have raised their dividends this year and they certainly have enough cash flow to cover the dividends to be paid. The last growth figures I want to talk about is that for book value. The 5 and 10 year growth in book value is 11% and 8% per year, respectively. These are good long term results.

The Return on Equity figures are good. The 5 year running average is still above 10% and the ROE for 2009 was good at 8.7%. However, the ROE for the 1st quarter is a little lower at 7.4%. The Liquidity Ratio is usually low and the current one is just 0.50. However, the company has enough cash flow and has no trouble securing debt. The Asset/Liability Ratio is healthy at 1.63.

I feel that this stock is a good solid utility stock and I will continue to hold on to the shares I own in this company. I will not be buying more because I already have enough shares for my portfolio in this stock.

TransCanada is a leader in energy infrastructure. Their network of pipeline taps into virtually all major gas supply basins in North America. TransCanada is one of the continent’s largest providers of gas storage and related services. It is a growing independent power producer. Its web site is here TransCanada. See my spreadsheet at trp.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, July 8, 2010

TransAlta Corp 2

I will continue to review this stock, TransAlta Corp (TSX-TA, NYSE-TAC) today. I have owned for a long time. It is basically an electrical utility. What you should expect out of such a company is 8% return over the long term, basically with 4% from dividends and 4% from stock increases. I bought this company in 1987 and I bought some more in February of 2009. To date I have made a return of 7.7%. (The stock is currently depressed because of the recession.)

When I looked at Insider Trading, I find a bit more Insider Selling than Insider Buying, but there is not much of either. Last year when I looked, there was lots of Insider Buying. In both 2008 and 2009, the dividend was increased. It looks like there will be no dividend increase for 2010.

When I look at 5 year average P/E low, I get one of 18 and the 5 year average P/E high is 27. These are high P/E ratios. The current P/E ratio based on earnings estimates for 2010 is 18. So, it is good on a relative bases, but is rather high on an absolute basis. I get a current Graham Price of $18.52. The current stock price of $19.96 is only 8% higher. The stock price of this stock is seldom at the Graham Price and it has been, on average, some 15% above the low stock price over the past 5 years.

I get a 10 year average Price/Book Value ratio of 2.08. The current P/B ratio of 1.44 is only 69% of the 10 year average and therefore this does point to a good relative stock price. The last thing to look at is the yield. It is at 5.8%. This is above the 5 year average of 4.2% and also above the 5 year average low of 5.2%. It is about the same as the 10 year average low yield. All in all, we are looking at a good relative stock price.

When I look at Analysts recommendations, I find a few Strong Buy, and lots of Hold recommendations. I also find 1 Underperform and 1 Sell recommendations. It is interesting there are no Buy recommendations. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.)

It is also interesting that the analysts with the Hold and Strong Buy recommendations say the same things. The dividend is good and there is not much upside to the stock price. Both think the total earnings going forward will the in the 8% and 9% range.

I plan to hold on to this stock. It is a utility stock; and what I expect and want from it is a good dividend and total returns of 8%. I feel that stock portfolios need some solid dividend paying stock in them and this would fit that bill. It is also at a relatively good current price. A lot of people feel that the stock market is not going to do a lot anyway in the near future. So, if you buy this stock, you can enjoy a good dividend until times improve.

TransAlta Corp 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 here TransAlta. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

Wednesday, July 7, 2010

TransAlta Corp

I am back to reviewing stocks that I own, and this one, TransAlta Corp (TSX-TA, NYSE-TAC) I have owned for a long time. It is basically an electrical utility. What you should expect out of such a company is 8% return over the long term, basically with 4% from Dividends and 4% from Stock increases. I bought this company in 1987 and I bought some more in February of 2009. To date I have made a return of 7.7%. (The stock is currently depressed because of the recession. )

This stock pays a good dividend, usually in the area of 4%. However, the dividend is currently just over 6%. They do not raise their dividends often or usually by very much. The dividend growth for the last 5 and 10 years has been 3% and 2% per year, respectively.

Really, none of the growth figures is anything to write home about. TransAlta Corp had a tough year in 2009. The growth in revenue for the last 5 and 10 years was 0% and 10%. This is because revenue was down 11% in 2009. Also, cash flow growth over the last 5 and 10 years is 0% because cash flow dropped in 2009. However, 2008 was a usually good year for cash flow.

The company has a lot of debt, and this is quite normal for this sort of company. Leverage (Assets/Book Value) is 3.20 in 2010. It has been coming down lately as the 5 and 10 year Leverage is 3.48 and 3.75. The Liquidity Ratio is also better, coming in at 1.01 in the first quarter of 2010. The 5 year average is just 0.75. The Asset/Debt Ratio has usually been ok, with a 5 year average of 1.43 and a current one 1.45. The Return on Equity for 2009 was a bit low at 7%, but for the 1st quarter, it is back to what you would expect at 8.8%.

Let’s face it; this stock will never generate a lot of money for you. However, what it will do is give your portfolio some solid consistent income. I am happy with this stock. It has done as well as I expected to do. I will not be buying anymore as I have enough in my portfolio.

TransAlta Corp 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 here TransAlta. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, July 6, 2010

Just Energy Income Fund 2

I started to review this company (TSX-JE.UN) yesterday. As I said, this is not your typical low risk utility company. However, the risk is probably not more than a medium one. I did a spreadsheet on this company as I have recently read a few articles suggesting this was a good stock to buy.

When I look at the Insider Trading information, I find that over the past year there was some Insider Selling to the tune of $2.6M, however, this all occurred at the end of 2009. There is no Insider Buying over the past year. There has been no insider buying or selling this year. There have been a number of Stock Option grants to insider this year; and they seemed to have all been retained. This is considered a good sign. Also, a number of insiders have gotten stock through their company’s plan, and this is also considered to be a good sign.

When I look at the P/E ratios, I find that the 5 year average low is 12 and the 5 year average high is 17. Using the earnings estimates I get a current P/E of 16, which is a bit on the high side. The problem being is that earnings are expected to drop for the year ending March 2011. I should note that distributable cash is expected to rise in both 2011 and 2012. However, the company has permission to change to a corporation and so why any one would still is distributable cash to value this company, I do not know.

I cannot determine a Graham Price as it is based on earnings and book value. This company has a negative book value so; this calculation cannot be done. I cannot get a fix on the Price/Book Value for the same reason. In connection with the dividend yield, I get a current one of 9.7%. The 5 year average yield is 8.2%. However, the 5 year average high is 11%.

When I look at analysts recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus would be a Buy recommendation. (See my site for information on analyst ratings.) A number of analysts talk about the great dividend. An analysts with a Hold rating thought the dividend was great, but that the company would not have any growth for a few years.

There is an interest website talking about Just Energy. It concerns problems its customers had in the US. Here is another blog talking investing in this company Passive Income Earner.

As I have said before, I have no intentions of buying shares in this company.

Just Energy’s business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The Fund also offers “green” products through its Just Green program. National Home Services, the Fund sells and rents high efficiency; and tankless water heaters; rental of air conditioners; and furnaces to Ontario residents. Through its subsidiary Terra Grain Fuels, the Fund produces and sells wheat-based ethanol. Its web site is here JE. See my spreadsheet at je.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, July 5, 2010

Just Energy Income Fund

I would not invest in this company (TSX-JE.UN). There are two things I have against it. For one, it has a negative book Value. The other is far more serious. This company makes its money as an electricity and gas reseller. You have probably met one of the representatives of these sorts of companies. They come to your door and ask if you want protection from future electrical rate increases. They do not really make clear what it is they are selling.

I think the main problem is that they do not explain well the process. What the resellers do is charge you a higher fixed price that what you now pay. The theory is that since the cost of your electricity will rise in the future, over the 5 years of the contract, you will pay an overall lower right. Most complains seems to be centered on the fact that people do not realize that their current cost for electricity will rise above what they now pay and they want to get out of the contract they have signed.

The reason the company took a hit was because of changes in fair value of derivative instruments. When I invest in utility companies, I want companies that are solid and boring and, well, conservative. I want no surprises and I want the utility companies I invest in, on a long term basis, give me a return of about 8% a year, basically half in dividends and half in increase in the value of my shares. I want a very low risk company. I do not think this is a typical utility company in regards to investment risk. I do understand that this company has been getting a lot of attention lately, and many analysts are recommending it.

So, I will go on to talk about its growth figures. The worse, besides book value, is the total return over the last 5 years and that has been at 5.6% per year. The 10 year growth in total return is great at 37.5% per year. (Please note that while past growth can be a guide to how the company is doing, it is no guarantee for future returns.) The growth in Revenue is good and the 5 and 10 year rates for revenue per share are 14.5% and 29.6% per year respectively.

Both growth in earnings and cash flow has been similarly good. My favorite growth is in dividend yield and the 5 and 10 year growth in this area is 8% and 19% per year, respectively. The Book Value is the problem and it has been declining since the company went public in 2002. In March 2009 it was $-6.21 per share and for March 2010 it was $-3.75 per share. The problem is the big hit this company took in the year ending March 2009. (This company has financial statements dates at the end of March each year.)

The problems of 2009 also leaks into the Liquidity Ratio and the Asset/Liability Ratio. Both these ratios are both below 1.00 (with ratios at 0.15 and 0.73 respectively). The company is also paying out their whole cash flow in dividends. I know that for unit trust companies, we are to look at the distributable cash and they are paying out about 80% of this. The problem with distributable cash is that the way it is calculated is always changing. The other point is this company is going to be a corporation soon. They have said that as a corporation will are not changing the distribution rate.

Just Energy’s business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The Fund also offers “green” products through its Just Green program. National Home Services, the Fund sells and rents high efficiency; and tankless water heaters; rental of air conditioners; and furnaces to Ontario residents. Through its subsidiary Terra Grain Fuels, the Fund produces and sells wheat-based ethanol. Its web site is here JE. See my spreadsheet at je.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, July 2, 2010

Toromont Industries Ltd 2

I originally bought this stock (TSX-TIH) in 2007 and then bought more in 2008. My total return on my investment in this stock is -1% per year. The reason I invested in this stock was to diversify away from a portfolio of Banks and Utility stock. I am only earning some 2% in dividends on my original investment. This is a stock with a low dividend yield, but a fast growing dividend.

I first looked at an Insider Trading Report. I found that there has been more Insider Selling than Insider Buying. Selling is just under $1M and buying is at $.28M, leaving net selling at $.7M. It would be nice to look at a company with lots of Insider Buying, but they seem few lately.

The one good thing that I found out is that a company called Leith Wheeler Investment Counsel Ltd owns almost 10% of the shares of this company. Leith Wheeler Investment Counsel Ltd. is an employee owned firm providing portfolio management services for individuals, pensions and foundations.

The next thing to look at is how good the current stock price for buying this stock is. The 5 year average low P/E ratio is 12 and the 5 year high P/E ratio is 17. I get a current P/E ratio based on earnings estimates for 2010 of 18.7 and a P/E ratio for 2011, based on earnings estimates of 12.5. The earnings estimate for 2010 has recently been lowed quite a bit because of low earnings for the 1st quarter of 2010.

When I look at the Graham Price, I get a current one of $20.56. Note that the Graham price for 2009 was $23.47. The reason it has been lowed is because earnings estimates for 2010 have come in at $1.25 compared to 2009 earnings of $1.86. The current stock price of $23.32 is some 13% higher than the Graham Price. (However, the current price is close to 2009’s Graham Price.)

Looking at the Price/Book Value (which does not depend on estimates), I get a current ratio of 1.55. The 10 year average P/B is 2.53. The current ratio is some 63% of the 10 year average and any current ratio at 80% or less than the current ratio points to a good current stock price. The thing to look at is the dividend yield. The current one is 2.6%. The 5 year average is 1.9%. The 10 year average high is 2.2%. This current dividend yield would also point to a good current stock price.

When I look at analysts’ recommendations, I get lots of Strong Buy, few Buy and lots of Hold recommendations. The consensus recommendation is a Hold. (See my site for information on analyst ratings.) Analysts talk about the great management team of this company. The purchase of Enerflex is considered to be a good move as it will give this company exposure to Asia.

Do not forget that analyst give recommendations based on how they look on investing. Some consider investments based on how well a stock will do over the next little while and other analysts consider investments based on the long term. Their particular investment time horizon will affect their investment advice. Since I invest for the long term, and if I see a stock I would like to own at a really good price, I will go for it. I invest in dividend paying stocks, so I can ride out any short term problems and collect dividends while a stock (and the stock market) revives in regards to market value.

I am happy with my investment in this company. Although I have not made any money on it, this is not unexpected when a recession happens after a stock purchase. However, I expect this to be a great long term investment for me.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. The Compression Group designs, engineers, fabricates and installs compression systems for natural gas, fuel gas and carbon dioxide. This last group also has industrial and recreational refrigeration systems. Its web site is here Toromont. See my spreadsheet at tih.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.