Friday, August 17, 2012

I still like Cathedral Energy

I've been following Cathedral Energy (CET) for some time. I bought some at $5.77 and a lot more around $5.12. This morning it is at $5.75 and I've already enjoyed one dividend payment. I'm happy.

The ScotiaBank report I access from my trading account has a one year target for CET of $9.75. This is a high risk investment but the analyst believes CET will outperform others in its sector. And don't forget the dividend: "a solid balance sheet, strengthens our conviction of a strong and sustainable dividend (5.2% yield)."

As a retiree, the dividend is very important. I demand to be paid while patiently waiting for the market to deliver a financial pop.

When I started buying CET ValuEngine was calling Cathedral Energy a hold. The other day it moved CET into the buy column. If it climbs into the Most Favourable buy category, I'll let you know. ValuEngine only calls for a one year target price of $6.10. Still, for me, that would be about a 6% return on top of the 5.2% yield. I can live with that.

It seems odd but based on available data as of Aug 17, 2012, ValuEngine believes CET is actually 3.51% overvalued at the moment according to its true fair value. This is the price at which the stock should be trading if the stock market were perfectly efficient and everything traded at its true worth. So ValuEngine has a target price of $6.10 but sees a fair trading value of $5.55. Like I said, odd.

Another report that is available to me is one from Research Team. RT now rates CET a buy. RT sees CET as "one of the better performers in the Oil Equipment & Services industry."

Lastly, StockReports+ rates CET "currently among an exclusive group of 71 stocks awarded our highest average score of 10."

StockReports+ has what they call their Fundamental Indicator. "This displays stocks on a scale of 1-10 with ten being awarded to the strongest stocks based on a combination of four fundamental component factors: profitability, debt, earnings quality, and dividend. Each component is equally weighted." CET rates ten.

SR+ also has a risk section to their report. CET rates nine on this scale, with ten indicating the least risk. SR+ derives the risk number "by looking at a series of long (60-month) and short (90-day) term stock performance measures including volatility (standard deviation), magnitude of returns (best and worst day and month), beta (movement versus broader market), and correlation to the relevant index."

There are other reasons that I like Cathedral Energy but the stuff I've posted today simply helps to reinforce my faith in CET. I'll hold CET for at least a year and I can see holding the stock for a number of years if all goes as envisioned.

Clearly, I am not the only one who likes Cathedral Energy.
Some readers have questioned why I want to hold a stock that does not promise a bigger bang for the buck. I like to hold lots of different stocks. I only buy the one's I have confidence in, no surprise here, and even then I sometimes lose money.

I don't want to put too much money in investment. One never knows what misfortunes can await even a fine investment. Think RIM, or Nortel, or one that I presently hold, Suncor. I find if I make a little here and little more there and get a nice pop now and then, the gains are better than the losses and my portfolio is successful.

Update:

The shares of CET I hold in my TFSA (tax free savings account) are up 26.67 percent as of market close on Sept. 5/2012. (My REM, and earlier investment) is up 13.07 percent and ZUT is up 6.95 percent. And my Sun Life Financial has climbed 7.63 percent. Note: all of these investments pay dividends that easily meet the demands of retirement.)

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