Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)
Atco (Symbol-ACO.X) & Canadian Utilities (Symbol-CU.X)
This stock is really starting to look expensive on no news. I hate when this happens especially in a stock that doesn't have high volume. The dividend and earnings growth is strong but at a current yield of 2%, it is at its most expensive yield. Similarily at a PE of 14, it is the most expensive that it has been in 10 years.
I buy stocks for the growing income stream and pay little attention to the unrealized gains but it's tough when they represent 19 years of dividends at the current level.
I expect that I will sell at some arbitrary price that is very close and wait for an opportunity to buy again cheaply.
Added: Well, I've got a limit order in at 77 (the bid/ask of 73.91/77 is nasty. ) I'll do my bit to provide liquidity.
Added: I just got filled. Somebody wants this stock at any price.
I buy stocks for the growing income stream and pay little attention to the unrealized gains but it's tough when they represent 19 years of dividends at the current level.
I expect that I will sell at some arbitrary price that is very close and wait for an opportunity to buy again cheaply.
Added: Well, I've got a limit order in at 77 (the bid/ask of 73.91/77 is nasty. ) I'll do my bit to provide liquidity.
Added: I just got filled. Somebody wants this stock at any price.
- Shakespeare
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Yep but I held 3x (on a cost basis) as much ACO as I did CU so I have neither the exposure nor the same unrealized gain/current income ratio. I'll probably continue to hold CU because there's less risk to the income stream although more risk to the price. I'll chew on this a bit before I sell it. I've already sold my EMA & don't own TA so I don't have much in the way of Canadian high current yield right now to pay the bills other than BCE, MBT, and AIT which is a bit concentrated in one industry and TRP.Shakespeare wrote:CU [which is most of Atco's earnings] is also pretty expensive right now.
- Shakespeare
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Advice here and in press has been to sell (or at least not buy) high dividend yield utilities and telecoms.Yielder wrote:I've already sold my EMA & don't own TA so I don't have much in the way of Canadian high current yield right now to pay the bills other than BCE, MBT, and AIT which is a bit concentrated in one industry and TRP.Shakespeare wrote:CU [which is most of Atco's earnings] is also pretty expensive right now.
But, for those of us living off income, don't we need to think a little differently. At some time in past we bought stocks like EMA/TA/TRP/BCE/MBT because of their dividend yield. We are still getting the cash flow from the yield.
It's hard to sell unless there is another investment that will produce a similar cash flow. Trusts and corporate bonds will do this.
For those of you who have sold TA, EMA, BCE etc - What did you do to maintain your cash flow?
- Shakespeare
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Just looking at the cash flow is misleading. Preservation of capital and capital growth are also goals for many of us.
At a current yield of 3.1%, with slow growth, why would you not sell CU and buy CM at 3.4% yield, unless you already had a full position in CM? CM has less risk of capital loss if interest rates rise and better growth opportunities.
Disclosure: I have reduced my CU holdings by 50% this year. I am overweight CM.
At a current yield of 3.1%, with slow growth, why would you not sell CU and buy CM at 3.4% yield, unless you already had a full position in CM? CM has less risk of capital loss if interest rates rise and better growth opportunities.
Disclosure: I have reduced my CU holdings by 50% this year. I am overweight CM.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
OOPS (I have some too , but definitely not overweight)Shakespeare wrote:Just looking at the cash flow is misleading. Preservation of capital and capital growth are also goals for many of us.
Disclosure: I have reduced my CU holdings by 50% this year. I am overweight CM.
I was going to swap some cash in RSP for my unregistered EMA holdings, but after discussions here, perhaps I should sell EMA (my cost was $16.94 in late 2003) and buy a different div growth stock in RSP?
Thinking about Thomson
- Any other suggestions?
Just bought some more Methanex (MX) - one of my favourites, currently slightly depressed.
http://www.financialwisdomforum.org/for ... =3318#3318Springbok wrote:Thinking about Thomson
Last edited by Peculiar_Investor on 07 Feb 2014 07:04, edited 1 time in total.
Reason: replace old domain name with www.financialwisdomforum.org to reflect new domain name effective 19-Jan-2014
Reason: replace old domain name with www.financialwisdomforum.org to reflect new domain name effective 19-Jan-2014
- Shakespeare
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- Joined: 15 Feb 2005 23:25
- Location: Calgary, AB
CU split effective today.
Ahhshit.I earlier wrote:At a current yield of 3.1%, with slow growth, why would you not sell CU and buy CM at 3.4% yield, unless you already had a full position in CM? CM has less risk of capital loss if interest rates rise and better growth opportunities.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
- Shakespeare
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Welcome back.gossg wrote:
There is a small discount. She wants to keep up her RRSP savings. We don't have the money for both.
Maybe discounted Atco is a better bet than your more aggressive bets????
Mike
ATCO
looks like it has been declining a fair bit the last few trading days..
any theories?
http://stockcharts.com/def/servlet/SC.web?c=ACO/NX.TO
down 0.88 last check..
any theories?
http://stockcharts.com/def/servlet/SC.web?c=ACO/NX.TO
down 0.88 last check..
- Shakespeare
- Veteran Contributor
- Posts: 23396
- Joined: 15 Feb 2005 23:25
- Location: Calgary, AB
- Shakespeare
- Veteran Contributor
- Posts: 23396
- Joined: 15 Feb 2005 23:25
- Location: Calgary, AB
Shakes wrote:
>>>CU and ACO split 2:1. Did they do the split adjustment right?<<<
Did a bit more digging, and I think the earnings per share figure of .58 per share is possibly wrong. Anyhow, looking at globeinvestor the consensus earnings estimate for 2005 is $2.05 a share. Take that against the yearly dividend of $1.10 and the payout ratio turns out to be a lot more reasonable.
>>>CU and ACO split 2:1. Did they do the split adjustment right?<<<
Did a bit more digging, and I think the earnings per share figure of .58 per share is possibly wrong. Anyhow, looking at globeinvestor the consensus earnings estimate for 2005 is $2.05 a share. Take that against the yearly dividend of $1.10 and the payout ratio turns out to be a lot more reasonable.
- Shakespeare
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- Joined: 15 Feb 2005 23:25
- Location: Calgary, AB
As mentioned by andyt here, Atco, although not "really, really cheap", is a lot less expensive than it was and now yields a not-unreasonable 2.3%.
I may nibble next week, depending on the opening price.
I may nibble next week, depending on the opening price.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
- Shakespeare
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- Location: Calgary, AB
- scomac
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- Location: The Gateway to Wine Country
Shakes and andyt,
I've been doing some work on Atco lately and I just can't seem to come up with a compelling reason to own this stock. I've looked at it from a number of different valuation models and everyone seems to indicate to me that the stock must go a lot lower before it will deliver an acceptable RoR going forward.
My work is indicating that a price of around $28 is necessary to generate returns in the neighbourhood of 10%-12% CAGR. Sales have been flat, earnings growth is declining, running about 4%/yr. for the past 5 yrs. vs. 4.6%/yr. over the last 10. Long term debt continues to climb and runs in excess of 2.5 times tangible book value. It appears that the company has been slowly converting short term liabilities into long term debt.
I haven't dug into things too deeply and I haven't yet looked into future prospects to see how that would impact things. But, I must say that I'm really curious to hear what it is that makes this company look attractive to you at the current price.
Thanks,
Scott
I've been doing some work on Atco lately and I just can't seem to come up with a compelling reason to own this stock. I've looked at it from a number of different valuation models and everyone seems to indicate to me that the stock must go a lot lower before it will deliver an acceptable RoR going forward.
My work is indicating that a price of around $28 is necessary to generate returns in the neighbourhood of 10%-12% CAGR. Sales have been flat, earnings growth is declining, running about 4%/yr. for the past 5 yrs. vs. 4.6%/yr. over the last 10. Long term debt continues to climb and runs in excess of 2.5 times tangible book value. It appears that the company has been slowly converting short term liabilities into long term debt.
I haven't dug into things too deeply and I haven't yet looked into future prospects to see how that would impact things. But, I must say that I'm really curious to hear what it is that makes this company look attractive to you at the current price.
Thanks,
Scott
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
Thomas Babington Macaulay in 1830
Yep, it looks expensive to me.scomac wrote:the stock must go a lot lower before it will deliver an acceptable RoR going forward.
Disclosure: I sold my position. This is not a recommendation to sell. People should do their own research and make their own decisions, ie, I'm not responsible for what you do.
Last edited by yielder on 08 Apr 2006 12:24, edited 1 time in total.
To yielder:
I'm looking at your spreadsheet and the 10-year growth rates for Revenue,EPS and Div/Shr are listed as 4.0%,7.4% and 11.3%. This is based on the CAGR formula with n=10. However for the time period that you have 1996 - 2005, n=9 and the results should be 4.42%,8.20% and 12.7%. You don't count the initial year. This will also affect the 5-year growth rate. The value should be n=4.
http://www.moneychimp.com/calculator/di ... ulator.htm
I'm looking at your spreadsheet and the 10-year growth rates for Revenue,EPS and Div/Shr are listed as 4.0%,7.4% and 11.3%. This is based on the CAGR formula with n=10. However for the time period that you have 1996 - 2005, n=9 and the results should be 4.42%,8.20% and 12.7%. You don't count the initial year. This will also affect the 5-year growth rate. The value should be n=4.
http://www.moneychimp.com/calculator/di ... ulator.htm