Wednesday, August 31, 2011

Brookfield Office Properties 2

I do not own this stock (TSX-BPO, NYSE:BPO). In my first section, the question to be answered is, do I want to own this stock? It does not matter exactly how old this section is, you should be still able to decide if the stock is one you would want to own.

In this second section, the question to be answered is, is this stock currently trading at a reasonable price. The age of the second section matters. Stocks prices are always changing. From this section you should be able to get the ratios that will show if a price is good.

First I look at the Price/Earnings Ratio. For this stock I get a 5 year low median P/E Ratio of 7.63. The 5 year high median P/E ratio is 17.86. The median P/E ratio is 12.74. There are some problems with the P/E ratios as they were very high between 2004 and 2007 and then they really dropped. The P/E ratios before 2004 were somewhere between the recent P/E Ratios and the ones between 2004 and 2007.

However, the current P/E ratios in CDN$ terms is just 9.49 and this is towards the low end of the above P/E Ratios and would suggest a current good stock price. My current P/E ratio is sometimes called Forward P/E as I am using the one for estimated earnings in 2011.

I get a Graham Price for 2011 of $26.10. The current stock price of $16.25 is some 61% lower. This suggests a good stock price. Also, the 10 year median difference between the Graham Price and the low annual stock price is a stock price 11% lower than the Graham Price. Testing the Stock price against the Graham Price again shows a good stock price.

I get a 10 year median Price/Book Value Ratio of 1.90. The current P/B Ratio is 0.94. This means that the stock is selling below the book value and this in itself shows a good stock price. Also, the current P/B Ratio is only 49% of the 10 year median P/B Ratio and any time the current P/B ratio is 80% or lower than the 10 year median P/B Ratio shows a good current stock price.

The only site that I know of that gives a current P/B Ratio is Reuters. For this stock, go to Reuter and on the Financials tab, look for Price to Book. On this site MRQ is most recent quarter and TTM means Trailing Twelve Months. All TSX stocks have TO after the symbol, so this stock would be, for this site, “BPO.TO”.

The last thing to look at is the dividend yield. The 5 year median dividend yield is 3.57%. The current dividend yield is 3.44%. What would show a good stock price is a current higher dividend yield. This is the only measure that shows a rather high stock price. I would like to point out a couple of things. First, the dividend yield on this stock has been unusually high lately. The 10 year median high dividend yield is lower at 2.61. The other thing is that this stock has not raised dividends since 2008.

As you can see, trying to get a fix on where the current stock price is relatively is not necessarily straight forward. However, it would seem that the current price is reasonable.

One thing I look at is the Insider Trading report. For this stock, over the past year there is insider selling of $10.7M. This looks like a lot, but it is way less than 1% of the $8B market cap of this company. Insiders seem to be selling off options. There is minimal amount of insider buying. Except for the directors, insiders have way more stock options than shares.

Another interesting thing about this stock is that some 97% of the shares are held by 314 institutions. Over the past 3 months, they have marginally increased their ownership.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Hold. One buy recommendation came with a 12 month stock price of $20.00. One analyst like the fact that they have been investing in Australian properties. One thought that they had good quality assets in North America.

This stock would be comparable to REITs and I have enough REITs at present to consider investing in this company. I would also like to see this company grow their revenues and not just their earnings. One problems is the dividends are payable in US$ and therefore can fluctuate for Canadians. Since our currency has already moved up big time against the US$, I do not expect high currency loses on this stock going forward.

Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office. See my spreadsheet at bpo.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, August 30, 2011

Brookfield Office Properties

I do not own this stock (TSX-BPO, NYSE:BPO). One of the problems with this stock for Canadians is that dividends are declared in US$. This means that dividends from this stock can fluctuate with the difference between US and CDN currency.

This company has not changed its dividend since 2008. However for Canadians, the dividends would have decreased between 2009 and 2010 by just over 5%. Over the past 5 and 10 years, dividends, in CDN$, has increased at the rate of 2% and 13% per year, respectively. The 10 year increase is good; the 5 year is probably about the inflation rate.

Because our currency has been increasing against the US currency, this stock has done better in US$ terms than in CDN$ terms. However, even in US$ terms, this stock has not performed well in a lot of areas, especially over the past 5 years. For example, Revenues and Revenues per Share have gone down over the past 5 and 10 year no matter what currency you are looking at.

Although a number of analyst expect revenue to go up this year and next, revenue over the past 5 and 10 years has gone down by 3% and 5% over the past 5 and 10 years. Revenue per Share has gone down at the rate of 10% and 8% over the past 5 and 10 years. This is in US$ terms. Both these measures have done worse in CDN$ terms.

As far as total return goes, both in US$ and CDN$ this stock has had positive 10 years returns at around 7% for CDN$ and 11% for US$. However, there is no positive returns in CDN$ or US$ over the past 5 years. Canadians would have lost around 3% per year, and the Americans would have about broken even.

This stock does have some good points. In both US$ and CDN$ terms, earnings have been increasing. In CDN$, the EPS increases over the past 5 and 10 years is at the rate of 38% and 16%. Both are very good. I still worry about revenue, because you cannot indefinitely increase earnings without increasing revenues.

In terms of cash flow, the 5 year increase initially looks good as it shows that in CDN$ it has increased at the rate of 17% per year. However, the Cash Flow per share was unusually low 5 years ago, so this is not as good as it looks. The 10 year Cash flow is lower by almost 8% per year.

Book value has increase in CDN$ terms over the past 5 and 10 years by 20% and 8%. However, when they switched to the new accounting rules the Book Value increased by 65%. So, most of this great gain is because of the new accounting rules.

The other thing that improved with the new accounts rules was the debt ratios. They have gone from just ok to very good. The current Asset/Liability Ratio is at 2.14 compared to a 5 year median of 1.26. The Leverage Ratio is currently at 2.37 compared to a 5 year median of 4.53. The current Asset/Debt Ratio is 1.11 compared to a 5 year median of 3.29. It is hard to determine whether or not this is a good thing. This may be the reason that this company switched to the new rules before they had to.

The Return on Equity is also better under the new accountings rules. The ROE for 2009 was 7% with a 5 year median ROE of 10%. The current ROE, which is the one covering the last 12 months, is 26% with a 5 year median of 18.9%.

This is a property management company, and as I already have enough in REITs, I would not be investing in this company. In any event, I am not sure I like the characteristics of this company. Tomorrow, I will look at what the analysts say and use my spreadsheet to review the current stock price.

Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office. See my spreadsheet at bpo.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, August 29, 2011

Stantec Inc 2

I own this stock (TSX-STN, NYSE-STN). I have very few non-dividend paying stocks and this is one of them. It is classed as an industrial stock and as with lots of industrial stocks; this one has been losing money for me, especially with this latest market downturn. I bought this stock in April 2008 and so far have lost at the rate of 7% per year.

I notice that Stantec is buying back shares, but this seems to have had minimal effect on number of shares outstanding. The Insider Trading report shows some $1.3M in insider selling, a minimal amount. The insider selling is mostly by directors. There is no insider buying, but the CEO seems to be retaining his share options. Institutional Holders hold some 88% of the shares of this company. Over the past 3 months they have increased their shares by 2.8%.

I get 5 year low median Price/Earnings Ratio of 15.52 and a 5 year high median P/E Ratio of 25.29. The current P/E Ratios of 10.54 would point to a rather low current stock price. Even the Trailing P/E of 11.68 points to a rather low stock price. I get a Graham Price of $26.91. The current stock price of $23.83 is some 11% lower. The stock price on this stock is not often below the Graham Price. However, the median low difference between Graham Price and stock price is the stock price lower by 2.3%.

I get a 10 year median Price/Book Value Ratio of 2.53 and a current one of 1.67. The current one is only 66% of the 10 year median ratio. This also point to a rather low current stock price. Since these stock’s high for this year at $30.00, this stock has fallen some 20% during the recent volatility in the stock market.

When I look at the analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Buy (but it is close to a Strong Buy). Buy recommendations come with 12 month stock prices between $32 and $35. A number of analysts remark that this company mainly works in North America. It is a diversified engineering group that takes on very little in the way of construction. This company is considered to be of medium risk.

I plan to hold on to this stock for now. However, at some point I will sell as it does not pay dividends.

Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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, August 26, 2011

Stantec Inc


I own this stock (TSX-STN, NYSE-STN). I have very few non-dividend paying stocks and this is one of them. It is classed as an industrial stock and as with lots of industrial stocks; this one has been losing money for me, especially with this latest market downturn. I bought this stock in April 2008 and so far have lost at the rate of 7% per year or the stock is down by 22%.

The growth figures for the financial year ending in December 2010 are good. Recently, analysts seemed to have lowered a bit the revenue expectations, but not earnings or cash flow expectations. The only growth rate that is not good is the 5 year total yearly return rate. The stock is only up about 7% per year over the past 5 years.

For example, revenue per share has grown over the past 5 and 10 year at the rate of 19% and 15% per year, respectively. Analysts expect lower total revenue for 2011, but then expect these revenues to go back up in 2012. At this point, I would not hold too much faith in 2012 estimates because we really do not know where the US and world economy is going.

In 2010 the Earnings per Share (EPS) increased by some 67%. EPS had grown over the past 5 and 10 years at the rate of 15.5% and 18% per year, respectively. Earnings are expected to grow around 10 to 11% in 2011 and grow around 12% in 2012. So far this year this company has earnings within analysts’ estimate range and earnings has been at consensus level.

Cash flow has grown over the last 5 and 10 years at 14.5% and 8% per year respectively and adjusted Cash Flow has grown at 18% and 10% per year, respectively. Adjusted cash flow excludes changes in current assets and liabilities (or working capital) in the calculation Cash Flow from operations. Many analysts look at the adjusted operational cash flow rather than just the operational cash flow.

Growth in Book Value and Return on Equity has also been good on this stock. The 5 and 10 year growth in Book Value is 10% and 17% per year, respectively. The ROE at the end of 2010 is 15%. For the 12 months ending June 2011 it is a bit higher at 15.8%. The 5 year median ROE is 15%.

Now, I shall go on to talk about the Debt Ratios. The Liquidity Ratio has generally been good. Currently it is at 1.73 and this is higher than the 5 year average of 1.52. The Asset/Liability Ratio is also good and has always been good. It is currently at 1.95 and the 5 year median is 1.95. The current Leverage Ratio at 2.05 is fine and is a bit higher than the 5 year median of 1.99. The Debt/Equity Ratio is also fine at 2.05 and it is also a bit higher than the 5 year median of 0.99.

I plan to hold on to my shares for a while longer. I did not investment much in this stock and I will eventually sell as this stock as it is not a dividend paying stock.

Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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, August 25, 2011

Alimentation Couche-Tard Inc 2

I own this stock (TSX-ATD.B). I first bought this stock in 2004 and then bought some more in 2006 and 2007. I have made a return 12% per year on this stock. This is a fast growing stock, so the part of my return attributable to dividends is just .6%, with 11.4% attributable to capital gain.

This is a stock with two classes, Class A multiple voting shares, and Class B subordinate Voting Shares. Class A shares have 10 votes each and Class B have 1 vote each. Since there are some 54M Class A shares, they outvote for Class B shares totally 130M. This is a method used to keep control of a company when money is raised on the stock market and more than 50% of the company is sold via the stock market.

When I look at Insider Trading, I find that there is $19.6M of insider selling. Most of this is by officers of the company, with a minimal amount by Directors. There is also a minimal amount insider buying. Although it sounds like a lot of money, this insider selling is way less than 1% of the market cap of this company. With few exceptions, officers of this company have more stock options than stocks.

I get a 5 year low median Price/Earnings Ratio of 9.48 and a 5 year median high P/E Ratio of 14.52. So, the current P/E ratio of 13.56 is towards the high side. I get a Graham Price of $21.96 and this is some 32% lower than the stock price of $28.90. The median difference between the Graham Price and Stock price is 55%, so this shows a relatively good stock price.

I get a 10 year median Price/Book Value Ratio of 2.71. The current P/B Ratio at 2.87 is some 6% higher. What you want to show a good current stock price is a current P/B Ratio lower than the 10 year median. Lastly, the current dividend yield is .87%. The 5 year median dividend yield is .75%. By this measure, the stock price is good.

The results of all this is rather mixed, but the price is probably reasonable. There will be no problems with this company maintaining their dividends. The 5 year median Dividend Payout Ratios for EPS is 9% and for cash flow is 5%. You will earn little in dividends from this stock as a total percentage of your total return.

However, most dividend paying stock, over the long term tend to increases at the dividend increase rate, which over the past 5 years for this company is 11.2% to April 2011. However, if you include the last increase, the 5 year growth in dividends is 17.8%. The other point to make is that this is a retail company and as such there will be volatility in its price movements.

When I look for analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The Buy recommendations come with a 12 month stock price of $34.28 which is almost 19% higher than today’s price. One analyst expects that this stock will, in the near future, move back to a higher P/E Ratio (as it had in the past).

As I said yesterday, all the growth in all items (like revenue, earnings etc.) has grown over the past 5 years, but the stock price has not. The result of this is the P/E ratio has been treading lower. If it moves up to past level, these would mean a nice move up in stock price. As for me, I intend to hold on to the shares I have.

In North America, Couche-Tard is the largest independent convenience store operator (whether integrated with a petroleum company or not) in terms of number of company-operated stores. Its stores offer a broad mix of food products, beverages, other merchandise and services and motor fuel. Grouped under three main brands: Couche-Tard, Mac’s and Circle K. Stores are located across 10 Provinces of Canada in three geographic markets (East, Centre and West), and across 43 American states and the District of Columbia in eight major markets (Great Lakes, Midwest, Southeast, Florida, Gulf, Arizona, West Coast and Southwest). In addition, a network of about 3,700 licensees extends in seven other regions worldwide (China, Guam, Hong Kong, Indonesia, Japan, Macau and Mexico). Its web site is here Couche-Tard . 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.

Wednesday, August 24, 2011

Alimentation Couche-Tard Inc.

I own this stock (TSX-ATD.B). I first bought this stock in 2004 and then bought some more in 2006 and 2007. I have made a return 12% per year on this stock. This is a fast growing stock, so the part of my return attributable to dividends is just .6%, with 11.4% attributable to capital gain. I also notice that some sites are calling this stock Magasins Couche-Tard, but I do not know why.

Dividends have only been paid since 2006 and this is one reason my dividend portion is small. However, it will not get much larger and the 5 year median dividend is just .75%. Also, the dividend portion of the total return over the past 5 years is between .6% and .7%. I did as well as I did in capital gain because I bought this stock in 2004. This stock hit highs in 2006/7 that it is just now getting back to.

If you look at the total return over the past 5 years, this stock has basically just broken even. The reason is that the P/E ratio was a lot higher prior to 2008. The 5 year median P/E ratio to 2008 was over 20. The 5 year median P/E ratio to 2011 is 12. Investor’s idea on what they should be paying for each $1 of earnings changed in 2009.

The stock has very good growth in Revenues, Earnings, Cash Flow and Book Value. For example, the 5 and 10 year growth in Revenue has been 12% and 24% per year, respectively. The 5 and 10 year growth in cash flow has been 11% and 26% per year, respectively. Yes, growth has slowed down over the past 5 years, but the 5 year growth rates are still good. Also, analysts expect that growth will pick up this year.

The return on equity (ROE) has generally been quite good for this stock. For the financial year ending in April 2011, the ROE was 19%. The 5 year median ROE is 18.8%. Since companies will be going to IFRS accounting rules, it is felt that we should also look at ROE based on Comprehensive Income. For this company, that ROE was better at 21% with a 4 year median of 18.8%.

As far a debt ratios goes, this company is fine. The current Liquidity Ratio is bit low at 1.26 and with an even lower 5 year median which is 1.10. The Asset/Liability Ratios have always been quite good, with the current one at 1.94 and a 5 year median one of 1.69. The current Leverage Ratio at 2.07 is better than the 5 year median one of 2.45. The current Debt/Equity Ratio at 1.07 is also better than the 5 year median one of 1.45.

I do not have a particularly large investment in this company compared to my investment portfolio. However, I will keep the shares I have. One good thing to mention about this stock is that it has raised their dividends by 25% this year. I have stocks with difference tradeoffs between dividend increases and dividend yield. This stock has a low dividend yield (currently around .87%) , but a very good record of dividend increase.

In North America, Couche-Tard is the largest independent convenience store operator (whether integrated with a petroleum company or not) in terms of number of company-operated stores. Its stores offer a broad mix of food products, beverages, other merchandise and services and motor fuel. Grouped under three main brands: Couche-Tard, Mac’s and Circle K. Stores are located across 10 Provinces of Canada in three geographic markets (East, Centre and West), and across 43 American states and the District of Columbia in eight major markets (Great Lakes, Midwest, Southeast, Florida, Gulf, Arizona, West Coast and Southwest). In addition, a network of about 3,700 licensees extends in seven other regions worldwide (China, Guam, Hong Kong, Indonesia, Japan, Macau and Mexico). Its web site is here Couche-Tard . 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.

Tuesday, August 23, 2011

Keyera Corp 2

I should probably start off with what I am doing during the current stock market volatility. The short answer is nothing. I do not have extra money to spend so I am not buying. I am certainly not selling. The stocks I have invested in are healthy dividend paying companies.

I have been though such markets before and this to will pass. The problem, I guess is that no one knows what all this volatility means. Some think we are heading into another recessions, others think that investor are just worried and nothing much will come of this. I do not know who is right, but I do not panic sell good companies because investors are worried about something.

The last point to make is that my dividend income is up 8.6% as of the end of July 2011. We have just past the half way mark, so this is a good increase. Now, back to the stock I want to review. That stock is Keyera Corp (TSX-KEY).

When I look at Insider Trading, I find only insider selling for $1M, which is a small amount for the size of this company. There is no insider buying. Although this company does not give out stock options, they do give out share rights. That is insiders, with these rights, can participate in the increase in share price without actually owning stock. The CEO, CFO and officers of this company have more share rights than actual stock. There are also 72 institutions that hold 33.6% of this company’s shares. In the last 3 months these institutions have increased their shares in this company by 7.2%.

I get a 5 year median low Price/Earnings Ratio of 13.14 and a 5 year median high P/E Ratio of 19.90. So the current stock price of 16.94 is reasonable as it about the same as the median P/E Ratio. I get a Graham Price of $23.71. The current stock price of $42.35 is some 78% higher. Although the median high difference between the Graham Price and Stock price is lower at 38%, the stock price and Graham Price differences have varied greatly over the years for this stock and therefore, you have to wonder if this is a good measurement of the stock price.

I get a 10 year median Price/Book Value Ratio of 1.91. The current one is more than twice this at 4.24. Part of this problem is that the Book Value has gone nowhere since this company’s stock was issued. On the other hand a Price/Book Value Ratio of 4.24 is rather high.

The current dividend yield is 4.53% and the 5 year median dividend yield is 8.33%. This would normally show a higher than normal stock price. However, it has been expected that the dividend yields would come down on Income Trust companies once they convert to corporations.

From all this, it would appear that only the P/E Ratio shows a reasonable stock price. However, the earnings on this company is expected to be lower in 2012 that in 2011. The forward P/E Ratio is higher at 19.61. This P/E is at the high range for this company and this would indicator a rather high current stock price.

So what do the analysts say? Well, their recommendations are all over the place. I see Strong Buy, Buy, Hold, Underperform and Sell recommendations. Most recommendations are in the Strong Buy, Buy and Hold portions and the consensus recommendations would be a Buy.

The Underperform and Sell recommendations come with a 12 month stock price lower than it is today. Analysts with Hold recommendations point to the fact that the stock price has gone up a lot recently and they do not expect much in the way of stock appreciation for a while. They feel the stock is fully valued.

Even the Buy recommendations do not show much in a stock price increase over the next 12 months, with a 12 month stock price around $44. However, they do like the 4.5% dividend yield. The management of this company is well thought of. The company has good assets and lots of free cash flow.

I have not in the market to buy anything at the moment, so I will not be buying this stock. However, if I held it, I would not be selling either. I think that price is rather high, but all my stocks have been overpriced at some point and I do not sell stocks just because they are currently overpriced.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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, August 22, 2011

Keyera Corp

I do not own this stock (TSX-KEY). The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-JKEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY). This was one of the stocks recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Special Dividends paid. See Dividends and Special Dividends.

However, this stock has had only one special dividend which was paid in 2009. This special dividend was 25% of the normal annual dividend. The interesting thing about this stock is that not only did it keep the pre-corporation dividend rate, but it has managed to increase dividends in 2011 by 6.7%.

The Dividend Payout Ratios were a little high over the past 5 years with the one for earnings at 99% and for cash flow at 79%. Both these DPRs are expected to be better in 2011 and 2012. This is indeed good news for the shareholders of this company. The 5 and 7 year dividend growth was 6.3% and 16% per year, respectively. They did not increase the dividends in 2010, but has done well to increase them in 2011.

The current dividend yield is 4.5%, which is a good one. It is lower than the 5 year median dividend yield of 8.3%. However, this is typical as yields for corporations tend to be lower than those for Income Trust companies. It was expected that Income Trust company’s dividends would go to the 4% to 5% range when they became corporations. This has occurred on this stock because of the strong rise in its stock price.

Over the past 5 years the total return on this stock has been around 16.5% with around 7% of this coming from dividends and 9.5% from capital gain. Going forward this should slow down with a lower dividend around 4.5%. The capital will trend towards the increase in dividend rates.

Revenues, Earnings and Cash Flow growth have been good on this stock. For example, the EPS has grown over the past 5 and 7 years at 13.5% and 20% per year, respectively. Since this company only became public in 2003, I only have data going back 7 years.

The place where growth has not been good is for the Book Value. The growth over the past 5 and 7 years has been at 1.5% and 3% per year, respectively. Unfortunately, this typical for Income Trust companies as they tend to pay a lot out in distributions and have low or non-existing Book Value growth.

The Book Value is not improving this year as the 2nd Quarterly report shows a further 11% decrease in Book Value. However, the company has changed the account rules for the 2nd quarter to conform to IFRS rules. If the Book Value had been calculated with these rules for the financial year of 2010, there would be an increase in Book Value, not a decrease in Book Value for the 2nd Quarter.

The current debt ratios on this company are fine. The current Liquidity Ratio is 1.27 which is a little low but ok. However, the 5 year median Liquidity Ratio is very low at 0.85. Hopefully, the change to a corporation will have a good effect on this ratio. The Asset/Liability has been good with a current ratio of 1.57 and a 5 year median ratio of 1.71.

The current Leverage Ratio and Debt/Equity Ratios are also fine. The current Leverage Ratio is 2.77 and the current Debt Equity Ratio is 1.77. These are both higher than the 5 year median ratios of 2.18 and 1.17 respectively.

Tomorrow, I will look at what the analysts are saying about this stock and what my spreadsheet shows about the current stock price.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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, August 19, 2011

Brookfield Asset Management 2

I do not own this stock (TSX-BAM.A). One thing pops out on the financials for this company for 2010 and that is that values look much better under the new accounting rules of IFRS. This is probably why this company switched to the new accounting rules before they needed too.

When I look at insider trading, I find $31.8M of insider selling by CEO, CFO and officers. They seem to be selling off stock options. There is minor $2M of insider buying by directors. Selling may seem high, but it is way less than 1% (at .2%) of the market cap of the company. One good thing to see is that insiders do have more shares than stock options.

I get a 5 year median low Price/Earnings Ratio of 12.54 and a 5 year median high P/E of 27.89. The Current one of 14.33 is better than the 5 year median P/E Ratio and therefore shows a better than median stock price.

I get a Graham price of $34.94 and the current stock price of $28.58 is some 22% lower. The 10 year low median difference between the Graham price and stock price is with the stock price 10% lower. By this measure, the current stock price is good. Both these measure use earnings estimates. The estimates are probably ok for 2011, but if we hit a recession, the 2012 estimates are probably much too high.

I get a 10 year median Price/Book Value Ratios of 1.89 and a current P/B Ratio of 1.05. The current ratio is only 55% of the 10 year median P/B Ratio and points to a good stock price. So by the measure of P/E, Graham Price and P/B Ratio, the stock price looks good. A P/B Ratio of 1.05 is a good one in absolute terms.

However, you get something different looking at the dividend yield. I get a current Dividend Yield of 1.81% and a 5 year median yield of 1.89%. By this measure the stock price is on the high side. And, a lot of people feel that the only measure of stock price for dividend paying stock is the dividend yield. The dividend yield has been lower in the past as the 10 year median low dividend yield is 1.66. The probably reason for the bad showing on dividend yield is lack of dividend increases since 2009.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy recommendation. Buy recommendations come with a 12 month stock price between $33 and $36. This stock would be considered to be at an average risk level.

One analyst thought the company had good long term prospects and was a lower-risk way to gain exposure to emerging markets. Another analyst feels that there Brookfield has a number of investment opportunities in the future. A number of analysts think the company has good management. I can see nothing pointing to a dividend increase in the future. At least there been no name changes since 2004.

At the moment, I am not interesting in buying this company, but will continue to follow it.

This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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, August 18, 2011

Brookfield Asset Management

I do not own this stock (TSX-BAM.A). One thing pops out on the financials for this company for 2010 and that is that values look much better under the new accounting rules of IFRS. This is probably why this company switched to the new accounting rules before they needed too. The other thing is that under these new rules, the financial statements for 2009 shows an earning loss, $1.54 rather than positive earnings of $0.72 that they originally reported in 2009.

I did not change my spreadsheet for 2009. I have to have a compelling reason to do so. I know that lots of sites revise their financial statements when companies do so, but I tend not to. I know that this might help compare the last two years, but I look at the last 10 years, and no one revises their statements on the new basis for the last 10 years.

I find an interesting thing for this company is that it has changed its name a number of times. In the 1980’s it was Hees International, in 1990’s it was Edperbrascan and in the 2000’s it was Brascan. These are the ones I know about. However, the Wikipedia entry does not give this history.

First of all, dividends are paid in US dollars. For a Canadian, that means that dividend payments can fluctuate. In Canadian dollar terms, the 5 and 10 year growth in dividends is 11.2% and 5.75% per year, respectively. However, dividends have not changed since 2008 in US$, but they have been decreasing in CDN$ as our currency has been strengthen against the US$. For Canadians, dividend decreased by 12.5% in 2009 and by 5% in 2010. They are up over the past 5 years as they increased 34% in 2008.

Total returns over the past 5 and 10 years have been about 6% and 20% per year, respectively. The dividend portion of this total return has been at about 1.8% and 3% per year, respectively. Dividend yields have been higher in the past than they are today. Today, they are relatively low at around 1.81%.

Growth in revenue, cash flow and book values over the past 5 and 10 years have been good in both US$ and CDN$ terms. For example, revenues have grown around 15% and 22% in CDN$ over the past 5 and 10 years. Over the same period, cash flow has grown around 20% per year over both these time periods.

The growth in earnings has not been as good. The 5 and 10 year growth in earnings per share (EPS) is -6% and 8.7% per year, respectively. The main problem with EPS is that they have fluctuated in both CDN$ and US$.

As far as Debt Ratios go, the Liquidity Ratio has always been good and it is currently at 1.95. The Asset/Liability Ratios is currently good at 1.64, but the 5 year median is 1.32 and the 10 year median is 1.29, both much lower and not so hot. Both the Leverage Ratio at 5.47 and the Debt/Equity Ratio at 3.34 are high, but this is rather typical for this sort of company. Both these last ratios are lower than the 10 year averages of 6.11 and 4.80.

For this company, the Return on Equity for 2010 at 50% is much higher than it has been in the past. The 5 year median ROE is 22.2%. This company seems to have increased their net income also for the first 6 months of this year and this has increased the ROE to 56% for the 12 months ending 30 June 2011.

I bought this company as Hees International in 1987, 1988, 1989 and 1990. I sold it has Edperbrascan in 1999. I made a return of 3.69% per year. I felt it was going nowhere, so I sold. I am not currently interested in owning it again, but I am still tracking it.

This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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, August 17, 2011

TECSYS Inc 2

It is summer and I spend the day on a boat in the Kawarthas.

I own this stock (TSX-TCS). They have an annual reporting date of 30 April each year, and I have just received their annual statement. This is a small cap dividend paying stock that I have used to soak up small bits of money left over after investing in other stocks.

I think that the first thing to note is that the company is buying back shares for cancellation and they have been doing this over the last few years at the rate of 3 to 4% per year. Since 2007, the number of outstanding shares has fallen by almost 15%. There has been some minor buying of shares by directors over the past year. Reuters says that slightly less than 25% of company is owned by institutions and that they have not bought or sold any over the past 3 months. See Reuters.

I get a 5 year median low Price/Earnings Ratio of 9.47 and a 5 year median high P/E Ratio of 15.83. Using the earnings estimate, that gives this stock a really low P/E of 8.80. However, estimates have been notorious for being wrong. The Trailing P/E is at a rather high level of 18.35.

I get a Graham Price of $2.84 and this is some 22% higher than the current stock price of $2.20. However, Graham Price also uses the earnings estimates. Using last year’s Graham Price of $1.97, the current stock price is 11.8% higher than last year Graham Price.

The current dividend yield of 2.73% is lower than the 3 year median dividend yield of 2.81%, and this shows a higher than median stock price. However, the current dividend yield is better than the 3 year median low dividend yield of 2.29%. I get a 10 year median Price/Book Value Ratio of 1.52 and a current one of 1.53. This would show the current stock price to be reasonable.

There seems to be only one analyst following this stock. His recommendation is a buy with a 12 month stock price of $3.00. I will at present hold on to the shares I have and perhaps add a bit more to them over time. I am also hoping that this company will be around for a while and not bought out.

Here are a couple of fairly recent articles on this company. The first article is from Panorama Consulting Solutions. The second article is from Warehouse Management.

TECSYS Inc. is a supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include about 600 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, third-party logistics, and general wholesale high- volume distribution industries. Its web site is here TECSYS. See my spreadsheet at tcs.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, August 16, 2011

TECSYS Inc

I own this stock (TSX-TCS). They have an annual reporting date of 30 April each year, and I have just received their annual statement. This is a small cap dividend paying stock that I have used to soak up small bits of money left over after investing in other stocks.

The dividends on this stock are about average for dividend paying stock. The 5 year median dividend yield is 2.81% and the current dividend yield is 2.73%. This stock is a bit unusual as it only has dividend payments twice a year, in March and September. They did not raise the dividend in financial year ending in April 2011. However, they did raise it recently by 20%. The 3 year growth in dividends is a healthy 11.2%. They seem to increase the dividends every second year.

This stock was heavily affected by the tech bubble, and probably hit stock prices it may never or at least not soon see again. Considering that this company did not make a profit until 2008, it is not doing badly. Revenue growth could be better as the 5 year growth in revenue per share is just over 4% and just over 1% for revenues. (Number of outstanding shares is going down.) This stock has not yet made their shareowner’s much money, but there is at least one analyst following this stock and he expects that both Revenues and Earnings will be up nicely in 2012. Cash flow has been growing nicely at just over 7% per year.

Probably the best thing about this stock is their debt ratios. The current Liquidity Ratios is 1.46 and the current Asset/Liability Ratio is excellent at 2.11. The other ratios are also good as the company has little debt. The Leverage Ratio is 1.61 and the Debt/Equity Ratio is 0.85. All their debt is short term or current liabilities. (See my site for further information on Debt Ratios. )

The Brereton Family owns just under 50% of the shares of this company and about another 16% is owned by a subsidiary of the National Bank. This firm has its headquarters in Montreal.

The problem with small cap tech stocks is that if they do well they tend to get bought out. This is what happened to my last two small cap tech stocks. Sometimes it is good to having a family owned firm as they seem to be less inclined to sell out. However, every family owned firm is different. Still this stock is up by about 14% since I bought it. Looking at the bit and ask prices today, they are wide apart. The Bid is $2.08 and the Asking is $2.31 with a last transaction at $2.20. This is a very wide spread.

TECSYS Inc. is a supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include about 600 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, third-party logistics, and general wholesale high- volume distribution industries. Its web site is here TECSYS. See my spreadsheet at tcs.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, August 15, 2011

Gluskin Sheff + Associates Inc 2

I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends. I sort of gave up after reviewing this stock. I started to review this stock yesterday and today I would talk about if it at a good price and what analysts say.

When I look at the insider trading report, I find lots of insider selling and little insider buying. The insider selling is of $12.8M, which is about 2.5% of the current market of this stock. Most insiders, except for the directors, have substantial shares in this company, but mostly of the multiple voting kind. It is only the directors that have more options than shares. There are 28 institutions that own just under 28% of this company’s outstanding shares. They have increased their holdings by 15% over the past 3 months.

I get a 5 year low median Price/Earnings Ratio of 11.35. The current P/E of 11.21 therefore shows a relatively good stock price. I get a Graham Price of $9.77 and the stock price of $17.37 is some 78% higher. The median difference between the Graham Price and stock price is 112%, so this shows a better than median stock price.

The current dividend yield is 3.2% and the 5 year median dividend yield is 2.2%. I get a 10 year median Price/Book Value Ratio of 9.96 and a current P/B ratio of 6.35. The current P/B ratio is some 63% below the 10 year median Ratio. Both these items also show a relatively good current stock price.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold recommendation. There are lots of Hold recommendations. (See my site for information on analyst ratings.) Some analysts seem to be negative because this is an investment firm and with the current market turmoil, they wonder where will money come from for investing purposes.

This is a small company and the risk rating would be high. There is also some concern about the fact that both the CEO (Gerald Sheff) and CFO (Valerie Barker) have recently stepped down these positions. The other co-founder, Ira Gluskin seems to have step away from his position as Chief Investment Officer before the end of 2010.

I am not currently interested in having this firm in my investment portfolio. As I said yesterday, they seem to have hit a high in 2006/7 that they have not yet come back too. They are also not growing their revenue. They do give dividends and special dividends that do account for 4% of the return on this company. The problem is that you may not have made any money or very little money over all if you had invested in the company over the past 5 years.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.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, August 12, 2011

Gluskin Sheff + Associates Inc

I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends.

I sort of gave up after reviewing the first stock she talked about which was this stock. I decided to again review this stock to see if I thought better of it. In giving up after just reviewing one stock, I did miss a good one that I later found and bought. That was Computer Modelling Group (TSX-CMG). I haven’t yet reviewed all the stocks she talked about.

What I did not like about this stock last year is the same I do not like about it this year. It seemed to hit a peak in 2006 and then go downhill. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007. In the most recent annual report, dated June 2009 they were recovering and analysts do expect that recovery to continue in 2011.

Because this stock only went public in 2006, I have limited data on how well it has done and only data going back 4 years. For anyone that invested in this company in 2006, they would not have made any money. There are also two levels of shares, but it is only the subordinate shares that are sold on the stock market.

In regards to dividends, they have been very good. The stock has a 5 year median yield of 2.2% on basic dividends. However, if you include the special dividends, the 5 year median yield is 4%. The increases in the regular dividend have also been very good at 17% per year. (Dividends have only been paid since 2006.)

As far as Dividend Payout Ratios goes, they look fine if you look at the 4 year median rates, which are 75% for earnings and 51% for cash flow. However, in both 2007 and 2008, the company paid out in regular and special dividends more than 100% of their earnings and I do not care for this.

One good thing about this stock is the debt ratios. The current Liquidity Ratio is 5.38 and the current Asset/Liability Ratio is 4.08. These are both quite high. The current leverage Ratio and Debt Equity Ratios are also very good and are currently at 1.32 and 0.32. This company basically has no debt.

On Monday, I will look to see what analysts are saying about this stock and what my spreadsheet says about the current stock price.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.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, August 11, 2011

My Utility Stocks 2

The stocks I want to talk about today are Enbridge (TSX-TNB), Pembina (TSX-PPL), TransCanada (TSX-TRP) and Veresen (TSX-VSN) that are my Pipeline Stocks. By and large, pipelines utility stocks tend to provide a better return than power generation utility stocks

First of all, I would like to mention that the Globe and Mail today had a video called Like dividends but hate market volatility?. I cover all the stocks mentioned on this video in my entries of yesterday and today.

I have had Enbridge Inc. (TSX-ENB) since 2005 and I have made a total return on this stock of 17% per year. Enbridge recently split their shares are a 2 for 1 basis. At first, as what usually happens, this had the effect of increasing the share price. However, since then, the stock price has come down as has the whole market.

The Dividend Payout Ratio (DPR) for this stock is good. The 5 year median DPR for earnings is 63% and for cash flow is 33%. This is always an important measure for dividend paying stock. The dividend growth rates for this stock are around 10%. The current dividend yield is a healthy 3.2%. The 5 year median dividend yield is 3.3%. See my spreadsheet at enb.htm.

The only one of the lot that I am concerned about is Pembina Pipelines Corp (TSX-PPL). That is because The Dividend Payout Ratios are high. The 5 year median DPR for earnings is 138% and the 5 year median DPR for Cash Flow is 97%. The ratios for 2010 were 138% for earnings and 102% for cash flow. The DRPs for 2011 are expected to be 162% for earnings and 95% for cash flow. (See my site for information on Dividend Payout Ratios).

However, there are a couple of things to mention in this regard. First of all this company used to be an income trust and payouts were then based on Distributable Cash. However, even using Distributable Cash, The 5 year median DPR was still high at 97%. The other thing is that the corporation has a tax pool and they will not have to actually pay taxes until 2014 or 2015. They have until that time to get their DPRs down to a more reasonable level.

The company did not decrease its dividend on the switch to a corporation. Before they had to switch to a corporation they had a good record of dividend increases. However, since 2009 there has been no dividend increases and it would appear that there cannot be for some time. However, their current yield of 6.1% is good.

I have had this stock since 2001 and have made a total return of 18% per year. Probably just over 10% of that return would be attributable to dividends. I still feel that this was a good investment for me, but I will keep an eye on stock for possible future problems. See my spreadsheet at ppl.htm.

The next stock to talk about is TransCanada Corp (TSX-TRP). This has a higher dividend yield than Enbridge, but a lower dividend growth rate. The current dividend yield is 4.1% and the dividend has grown over the past 5 and 10 years at 5.3% and 7% per year. The most recent increase was at 5%.

Trans Canada Corp also has good Dividend Payout Ratios. The 5 year median DPR on earnings is 59% and the on cash flow is 31%. This stock has been hit by the recent bear market, but is recovering nicely. It is up around 6% so far this year, so this is good. I have bought this stock in 2000 and 2006 and have made a total return of 11.7% per year. See my spreadsheet at trp.htm.

Also Dividend Girl is talking about this stock today. See her blog.

The last stock to talk about is Veresen Inc. (TSX-VSN). This is my most recent pipeline stock purchase and I bought it, as Fort Chicago Energy Partners in 2008. Because I got it for a good price, I have a total return on this stock of 45% per year. The dividend portion of this return is probably over 10% per year.

This company also did not lower their distributions on the change to a corporation. Because of this they do have very high Dividend Payout Ratios based on earnings. The 5 year median DPR on earnings is 181% and on cash flow is 60%. The expected DPR for 2011 is 179% for earnings and 72% for cash Flow. Their DPR for cash flow is ok, but it is too high for earnings.

No one expects their DPR from earnings to come into line anytime soon. They have not raised their dividends since 2008 and although the dividend yield is very good at 7.5%, they are unlikely to raise their distributions anytime soon. The company has stated that they prefer to grow cash flow rather than raise distributions in the near term. See my spreadsheet at vsn.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, August 10, 2011

My Utility Stocks

I have recently been talking about a lot of power generating stocks that I do not own. Most of the ones I reviewed, I did not care to own. So today, I thought I would talk about the power generating stocks that I do own. Emera (TSX-EMA), Fortis (TSX-FTS), and TransAlta (TSX-TA) are my power generating stocks.

I have had investments in both Fortis and TransAlta for a long time, dating back to 1987. My investment in Emera started much later, in 2005. I felt in 2005 that I had sufficient investments in both Fortis and TransAlta and that it would be wise to start investing in another power generation company.

I had been looking to buy some Emera (TSX-EMA) stock recently because I want to sell some of my CMG stock, but I felt that the price in the $32 range was too high, both by P/E Ratio and by dividend yield. This stock, in the end, was hit by the recent market turmoil and I finally bought some at $28.85. At this price, the Dividend yield was at 4.5% (higher than the 5 year median of 4.4%) and the expected P/E for 2011 was 16.12 (which was about the 5 year median P/E Ratio).

I have been planning selling CMG and buying Emera for a while. I waited until the Bid for CMG and the Ask for Emera was to my liking. I put in the Bid price for CMG and the Ask price of Emera, and limited the buy and sell to one day. I was usually checking on these prices in the morning so I would have a good part of the day to deal with a sell and a buy.

This is a rather unremarkable stock. It has decent payout ratios of 70% for earnings and 32% for cash flow as median payout ratios over the past 5 years. Dividend growth over the past couple of years has been very good with the most recent increase at 15%. These are much higher rates than is typical of this stock. Over the past 6 years, I have had a total return on this stock of 12% per year. See my spreadsheet at ema.htm.

My next power generation stock is Fortis (TSX-FTS), which I have had since 1987. Since I have bought this stock, I have made a total return per year of 13.4%. Personally, I like Fortis better than the other two stocks I have, but I am unwilling, even for a great stock, to be too much of my portfolio. Its payout ratios are very good at 65% for earnings and 27% for Cash Flow as median payout ratios over the past 5 years.

The recent dividend increases have been lower recently, with the most recent increase at only 3.6%. However, the 5 year growth in dividends is 14% per year. Over the years, this stock has had good and consistent growth in revenues, earnings, dividends, total return and book value. See my spreadsheet at fts.htm.

The last stock to talk about today is TransAlta (TSX-TA). My earnings on this stock has been much lower than the above two stocks, coming in at 7.9% per year since I bought it. Their last dividend increase was in 2009 and past dividend increases has been around the background inflation. Since they have stopped increasing the dividends, this stock has not grown in capital gains.

The dividend increases stopped when it could not earn enough to cover the dividend payments. The 5 year median Payout Ratio for earnings is currently at 117%. The 5 year median Payout Ratios for Cash Flow is good at 31%. The best that can be said of this stock lately is that all the analysts seem to have raised the earnings estimates for this stock for 2011 and 2012.

Analysts look at this stock as a good dividend payer and this is indeed the case. It has a current dividend yield of 5.7%. It is a stable company and it is a low risk investment. What you can probably expect from this company is a long term total return of 8% per year, with 5% from dividends and 3% from capital gain. It is not an exciting stock, but it is a good dividend payer and it can provide stability to your portfolio. See my spreadsheet at ta.htm.

Tomorrow, I will talk about my pipeline stocks.

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, August 9, 2011

Innergex Renewable Energy 2

I do not own this stock (TSX-INE). When looking at this spreadsheet, please realize I am coming from the Innergex Power Income Fund (TSX-IEF.UN) to the Innergex Renewable Energy stock (TSX-INE). This can make a big difference in past performance for a stock.

When I look at the insider trading report, I find that there has been a minimal amount of insider buying during the past year. There was no insider selling. The entire insider buying was by directors of the company. There are 26 institutional investors in this company and they own some 35% of this company. They have increased their stake in this company by 6.6% over the past 3 months.

The real problem I find with this company is that no one seems to expect it to earning much in the way of income over the next couple of years. At the current 2011 estimates, the P/E is at 105.33, a ridiculously high figure. I get a Graham Price of only $3.46, so the current stock price of $9.48 is some 173% higher.

The 10 year median Price/Book Value Ratio is 1.50 and the current one is 1.60. The current one is some 7% above the 10 year median P/B Ratio. For a good stock price, you would want to see the current P/B Ratio lower than the 10 year Median P/B Ratio. However, a P/B Ratio of 1.60 is a reasonable one.

The current dividend yield is 6.12%. This is lower than the 5 year median dividend yield of 8.14%. What you would want is the current dividend yield to be higher than the 5 year median dividend yield. The lowering of the dividend accounts for part of this discrepancy.

When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus recommendations would be a Buy recommendation. This is rather a common recommendation on a lot of stocks. I can find only very little in comments on this stock. One analyst with a Hold recommendation thinks that the 12 month stock price will be the same as the stock price today.

Personally, I do not like the fact of low or non-existent earnings. Also, analysts do not seem to think that even the Distributable Cash for 2011 and 2012 will cover the dividends. I tried to find out where in 2011 the company thinks the Distributable Cash is. All I could find was that they said they did better than expected. However, there was no indication what that was. Another point to make is that earnings estimates have a notorious reputation for being wrong.

One bright point is that analysts expect the revenues to grow. Personally, I would like to see a few years of solid growth in earnings and cash flow to even consider this company. However, as with other utility companies, this stock has not fallen as much as the market in the recent market drop. This is probably a good sign.

I had mentioned before that I plan to sell of some Computer Modelling Group (TSX-CMG) equal to what I paid for the stock and keep the remaining shares. This is so, on this fast growing Tech company, I can at least ensure I do not lose money. I was waiting for a time when I would get a reasonable price for CMG and also buy Emera (TSX-EMA) for a reasonable price. My Emera purchase was to replace the CMG shares sold. Emera has a slightly better dividend and, being a utility, was a more stable and long term stock purchase.

I sold CMG today and bought Emera today because I could both sell CMG at a reasonable price and buy Emera at a reasonable price. Because the market was quite volatile, I did put in a market price limited to today. I noticed that the utility stocks were finally moving down. In the initial market drop, there was not much change in utility stock prices.

Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.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, August 8, 2011

Innergex Renewable Energy

I do not own this stock (TSX-INE). The Innergex Power Income Fund has amalgamated with Innergex Renewable Energy Inc. to form Innergex Renewable Energy. When looking at this spreadsheet, please realize I am coming from the Innergex Power Income Fund (TSX-IEF.UN) to the Innergex Renewable Energy stock (TSX-INE). This can make a big difference in past performance for a stock. For a stock that amalgamates, you have to come from one of the stocks to show long term performance. The other thing to note is that the unit holders from Innergex Power Income Fund received 1.46 shares for each of their shares. I have adjusted my spreadsheet accordingly.

Currently, shareholders are getting a good dividend yield of 6.1%. This is lower than the 5 year average of 8.1%, but the distributions have probably now stabilized after the change of this company to a corporation. The dividends on this company had never increased much. They now have decreased almost 15% as the income trust is changed into a corporation. A lot of Income Trust companies had to decrease distributions when changing to corporations.

Over the last 5 and 7 years, the total return on this company was probably around 9%, with all but 2% of this return in distributions. Although the 5 year median distribution from Adjusted Cash Flow is 91%, the one for 2010 was a much more sustainable 65%. A problem I see that that no one seems to expect much in the way of earnings over the next two years and that puts the Payout Ratio for Earnings way out of any acceptable value. (See my site for information on Dividend Payout Ratios).

A couple of points in the favor of this stock is that revenues are growing nicely, with revenues per share growing at the rate of 12.4% and 9.1% per year over the past 5 and 7 years, respectively. Revenue growth is important if you are going to have future earnings and cash flow growth. The Adjust Cash Flow is also growing nicely at around 8% per year over the past 5 and 7 years. The Book Value hasn’t been growing but this is a common problem with income trust companies.

The Liquidity Ratio is a bit low at a current 1.08, but the Asset/Liability Ratio is much better at 1.61. Both the Leverage Ratio and the Debt/Equity Ratio are fine at a current level of 2.66 and 1.65, respectively.

I have reviewed a number of utility stocks involved in the renewable energy industry lately and I do not see any that I would currently like to buy, including this stock.

Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.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, August 5, 2011

Canadian Utilities Ltd 2

I do not own this stock (TSX-CU). You would not want to own this company and ATCO because of their close relationship. This is another utility company and it is considered to be well-managed. The Dividend Yield is at 3%. The Dividend Payout Ratios (DPRs) are good on this stock at 41% of earnings and 23% of cash flow.

When I look at insider trading, I find some $4.6M of insider selling with a net insider selling of $4.3M. All insider selling occurred last year. The bit of insider buying occurred this year. Insider selling was by CEO, Officers and Directors. CU is also in the process of buying non-voting shares for cancellation.

Both the CEO and CFO have more options than shares. Also, The ATCO holdings in this company are half in voting shares and half in non-voting shares. The own just over 50% of this company. There are only 5 institutions owners in shares of this company and they own around 4.5% of the company. Over the past 3 months, they are marginally increased their shares.

I went to check the share price today because of this big drop in the markets of yesterday and today. I did not update my spreadsheet as the price marginally increased. Sometimes utility stocks hold up well in downturns and they are thought of as safe and stable.

I get a 5 year median Price/Earnings Ratios of 12.25 for the low and 15.79 for this high. The current P/E Ratio of 15.45 is close to the high. I get a Graham Price of $44.04 and a current stock price of $55.63. The current stock price is some 26% above the Graham Price. The average high difference between the Graham Price and the Stock price is 21%, so by this measure, the stock price is high.

The current dividend yield is 2.89 and the 5 year median dividend yield is 3.12 and this also points to a relatively high price. The last thing to look at is the Price/Book Value Ratio. The 10 year median P/B Ratio is 1.90 and the current one is 2.32, some 22% high. I note that the Book Value under the new account rules decrease by 8%. If we use the Book Value from the end of 2010, under the old accounting rules, the P/B ratio would still be higher at 2.14 by 12%. This also shows a relatively high current stock price.

When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold. The consensus recommendation would be a Buy recommendation. (See my site for information on analyst ratings.) I note that Buy recommendations come with a 12 month stock price of $60.25 and the Strong Buy comes with one of $66.00.

One analyst sees strong growth ahead for this stock. One analyst points out this is a safe and steady stock. Another analyst likes that this company is in Alberta and it should revive as Alberta does. This is considered to be a Blue Chip stock. The 2nd Quarterly results are in, but not the full accounting records. The 2nd Quarterly earnings were higher than analyst’s estimates.

As you can see from the results today, that this stock holds up quite well in bear markets. One analyst remarked that it should be the corner stone of a value portfolio and I agree. This is a good utility stock. I will not be buying it as I already have enough utility stocks. Over the years, I have made most of my money from utility stocks and bank stocks.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO (ACO.X) owns just over 50% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.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, August 4, 2011

Canadian Utilities Ltd

I do not own this stock (TSX-CU). You would not want to own this company and ATCO because of their close relationship. This is another utility company and it is considered to be well-managed. The Dividends, at 3% on this stock is higher than on ATCO that has a current dividend at 1.8%. The Dividend Payout Ratios (DPR) is higher on this stock at 41% of earnings and 23% of cash flow. However, these are still good DPRs.

Dividend increases have been good. The 5 and 10 year growth in dividends runs at 6.5% and 5.3% per year respectively. The most recent dividend was a bit higher at 6.6%. Total return over the past 5 and 10 years was at 8% and 11.5% per year, respectively. Of this total return, dividends account for just over 3% of return.

From past performance you can probably expect a 3% dividend and a 6.5% capital gain, for a total average annual return of 9.5%. What you generally look for in a utility stock is 4% dividends and 4% capital gain. For this stock you get a bit less in dividends and a bit more in capital gain. On dividend growth stock, you expect that, over the long term, dividend increases will drive the stock price.

The Earnings per Share are not bad for this utility running at 10.7% and 6.8% per year, over the past 5 and 10 years. Earnings have been growing over the past few years. What hasn’t been growing is Revenue and Cash Flow. The worst of these is revenues per share and over the past 5 and 10 years this has grown at 1.3% and 0% per year. A good thing to point out is that the 1st Quarterly revenue for 2011 is up some 6.6% from the 1st Quarter of 2010.

Cash Flow per share has been a bit better, growing over the past 5 and 10 years at 2.4% and 4.2% per year respectively. Analysts seem to expect better growth for 2011 and 2012 with growth at 11.8% for 2011 and 8.9% for 2012. Book Value is growing nicely at 8% per year over the past 5 and 10 years. Return on Equity has always been good and this stock has a 5 year median ROE of 14.6%.

When looking at debt ratios involving assets and liabilities, these ratios have always been quite good. The Liquidity Ratio is current at 1.90 and has a 5 year median rate of 2.83. The Asset/Liability Ratio is currently at 1.68 and has a 5 year median of 1.75.

The other debt ratios of Leverage and Asset/Equity are high, but better than for ATCO. The current ones are 3.16 for the Leverage Ratio and 1.88 for the Asset/Equity Ratio. Utility companies tend to have a lot of debt compared with equity. See my site for further information on Debt Ratios. )

When buying dividend growth stock there is a trade off in between dividend yield and dividend increases. Generally speaking, the higher the yield the lower the dividend increases. This can show up in what is called “yield on cost”. That is if you bought the stock today, what would your yield be on today’s stock price in 10 or 15 years’ time? For this stock, the YOC would be 5% and 6.5% in 10 and 15 years’ time if dividend increases were 5.5% per year.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.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, August 3, 2011

ATCO Ltd 2

I do not own this stock (TSX-ACO.X). This would be the sort of stock to buy for dividend income and capital gain. You should also be interested in the dividend growth, as this is what will push up the long term capital gain. The 5 and 10 year dividend growth rate is 6.8% and 8.7%. The 5 and 10 year growth in the stock price is 8.2% and 9.8% per year, respectively. Your total return would be stock price growth, plus dividends. For this stock, dividends would add about 2% per year.

Since the growth in stock price over the past 5 and 10 years is higher than the growth in dividends, this would suggest that the current stock price is currently a bit high and this is shown by a rather high P/E ratios and low dividend yield. In theory, the market prices a stock based on future expectations, and not what has happened in the past.

The 5 year medina Price/Earnings Ratios has a low of 8.94 and a high of 12.05. The current P/E Ratio of 11.62 would be towards the high side. I get a Graham Price of 65.42 and the current stock price of $62.30 is 5% lower. However, for this stock, the stock price is usually lower than the Graham Price. Over the past 10 years this stock’s high price, usually been below the Graham Price by 5.79%. Both these items would suggest that the stock price is towards a high price.

The 10 year median Price/Book Value Ratio is 1.47 and the current P/B Ratio is 1.76. That would mean that the current ratio is some 20% higher than the 10 year median ratio and this also suggests a high current stock price. The last thing to look at is dividend yield. The current yield is 1.83 and the 5 year median yield is 2.01. This too suggests a rather high current stock price.

When I look at insider trading, what I find is insider selling at $1.2M and no insider buying. The insider selling is all by officers of the company and this was all done last year. The other thing to note is that the company is buying back non-voting shares (TSX-ACO.X). Also, 57 institutions own some 25% of this company. There has been both buying and selling over the past 3 months. There has been a net decreased in institutional holdings of 3.4% over this period.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. However, there are very few analysts following this stock. The Buy recommendation comes with a 12 month stock price of $69.50 which is an 11.6% increase and with dividend would be a total return of 13.4% over the next year. The Strong Buy comes with a 12 months stock price of $75. This would be a 20.4% increase and with dividends would work out to a total return of 22.2% over the next year.

The consensus recommendation on this stock is a Buy. One analyst said that the company should have strong earnings over the next few years in a low-risk regulated environment. Another said it is a diversified performer with a compatible set of businesses. This company has a very good record of increasing its dividends each year. An analyst remarked that the company gets most of its earnings from Canadian Utilities (TSX-CU).

There is an Wikipedia entry for this company. There is an article about this company in the Calgary Herald. The blogger GypsyTown had an entry on his blog about this company. Another blogger talks about the recent Australian purchase of Western Australia Gas Networks by ATCO.

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 just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, August 2, 2011

ATCO Ltd

I do not own this stock (TSX-ACO.X). However, it is a well-respected utility company. This company would be considered to be a dividend growth company. They are on one of the dividend lists that I follow of Dividend Aristocrats (see indices).

The dividend yield is rather low with a 5 year median dividend yield of just 2% and a current dividend yield even lower at 1.8%. Although the latest dividend increase was 7.5%, the dividend has grown over the past 5 years at around 6.8%. If bought today at the same rate of increase your dividends on cost would be around 3.5% in 10 years’ time.

This stock has rather low Dividend Payout Ratios. The 5 year median DPR on earning is just 21% and the 5 year DPR on Cash Flow is just 6.5%. The current DPR is currently around these same values. (See my site for information Dividend Payout Ratios). The Earnings per share (EPS) has been growing quite nicely lately with the 5 and 10 year growth in EPS at 15% and 10% per year, respectively.

Unfortunately, the cash flow has been growing slower with the 5 and 10 year growth rate at 5.5% and 6.3% per year respectively. The Revenue per Share has also been growing rather slowly lately with the 5 and 10 year growth rate at 4.5% and just 1.4% per year, respectively. Because they pay out a rather low percentage of the cash flow, there will be no trouble paying the dividend, nor increasing it over the next few years.

However, over the long term I would like to see better revenue growth. I might add there was a turnaround in revenue in 2010 with revenue growing a healthy 11%. Unfortunately, cash flow per share did not grow last year.

There are other good things to mentions, and one is the Book Value has increased over the past 5 and 10 years at 11.5% and 10.7% per year, respectively. The other thing is the Return on Equity. This has always been quite good. The 5 year median ROE is 14.5% and the one for the end of 2010 is 13.2%.

One good thing about this company is their assets cover their liabilities quite well. The Liquidity Ratio is currently at 1.96 and the Asset/Liability Ratio is at 1.72. Both these ratios are very good. Most utility companies have lots of debt and this company is no exception. The other two debt ratios that I follow of Leverage and Debt/Equity are a bit high, even for a utility company. At the end of the last quarterly report they were 5.00 and 2.90. They heavily finance their assets through debt rather than equity.

This is a well-managed company and its latest press release shows that it has a very good 2nd quarter. Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say 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 just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.