Friday, June 15, 2012

With markets weak, strengthen the portfolio

There are questions that I must get around to answering but I'm retired. I do this mostly for friends and to force myself to address certain investment topics. With the market dropping, now is not the time to waste important moments blogging when one should be giving some thought to one's own investments. I'd like to get my income up by at least three and a half percent. With the market down, this seems a dream that is now within my grasp.

The world financial system is still shaky. This is not a time to put all of one's money to work. Crystal balls are simply not to be trusted. That said, I like Cathedral Energy Services Ltd. (CET-T). It is a high risk investment, according to some sources, with the potential to outperform in its sector. A report from the ScotiaBank sees a possible target price of $10.50. The same report calls the dividend a "stable 5.1% yield.

A quick search of the other investment research papers available to me through my accounts a the ScotiaBank and TD, confirms that the consensus is that CET is a buy in the top quartile of stocks being scored. Examine profitability, debt, earnings quality, and dividend and you may decide CET is a buy.

I took a look at the payout ratio published by Reuters. It shows the ratio dropping over the past three years. The number for the last full year was 32.58. This explains why the ScotiaBank sees the dividend as stable.

I own some CET. I thought I bought in at a good price. Yet today it is selling at a discount of 10.46 percent to the price I paid. I'm facing a bear market drop. Anytime something I have confidence in drops by more than ten percent, I say it is time to consider buying a little more. I stress 'a little' more. I don't want to buy a lot and then learn the market evaluation was right. I don't want to be blind sided.

So, today I bought a hundred shares of CET within  my tax free savings account. My TFSA is up more than 14 percent since I opened it less than a year ago. I can afford to take on a little more risk. I paid $5.15 a share for 100 shares of CET. Within moments I had lost .39 percent.

At times like this I like to view my other recent purchases and get an overview. My AUSE is down 5.48 percent but  my ZUT is up 7.02 percent, REM is up 10.78 percent, SLF is up 4.75 percent, RY is up almost 14 percent from the $45 range that attracted my attention. Even my PWT is up 2.7 percent from where I recently added to my position. (I was prepared for PWT to drop in the short term.)

I have a good feeling about CET. I'm not going to put a lot more money into the company. But, if it should take another big drip, I'll try and learn why and if all seems good, I'll buy another one or two hundred shares.

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