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Tactical Investor is a self-taught Student of the Markets, having widely read conventional and non-conventional texts on all aspects of technical analysis and market timing. He has been studying the markets for over 18 years. He combines mass psychology, technical analysis and a new field of... More
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  • Super Stocks Sporting Stellar Records And Splendid Yields 0 comments
    Feb 21, 2012 10:22 AM | about stocks: BKH, STO, TA, TOT, VVC

    We have posted several key ratios on each of the five stocks covered in this article. Investors should familiarize themselves with some of these ratios as they could prove to be extremely useful and helpful in the selection process. Understanding what these ratios mean could make the difference between spotting a winner or a loser.

    Enterprise value is a combination of the market cap, debt, minority interests, preferred shares less total cash and cash equivalents. This provides a better picture because it is a more accurate representation of a company's value contrary to simply looking at the Market cap.

    Free cash flow yield is obtained by dividing free cash flow per share by the current price of each share. Generally lower ratios are associated with an unattractive investment and vice versa. Free cash flow takes into account capital expenditures and other ongoing costs associated with the day to day to functions of the business. In our view free cash flow yield is a better valuation metric then earnings yield because of the above factor

    Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa.

    The payout ratio tells us what portion of the profit is being returned to investors. A pay out ratio over 100% indicates that the company is paying out more money to shareholders, then they are making; this situation cannot last forever. In general if the company has a high operating cash flow and access to capital markets, they can keep this going on for a while. As companies usually only pay the portion of the debt that is coming due and not the whole debt, this technique/trick can technically be employed to maintain the dividend for sometime. If the payout ratio continues to increase, the situation warrants close monitoring as this cannot last forever; if your tolerance for risk is a low, look for similar companies with the same or higher yields, but with lower payout ratios. Individuals searching for other ideas might find this article to be of interest 5 Super Stocks Sporting Stellar Records And Splendid yields

    Current Ratio is obtained by dividing the current assets by current liabilities. This ratio allows you to see if the company can pay its current debts without potentially jeopardizing their future earnings. Ideally the company should have a ratio of 1 or higher.

    Interest coverage is usually calculated by dividing the earnings before interest and taxes for a period of 1 year by the interest expenses for the same time period. This ratio informs you of a company's ability to make its interest payments on its outstanding debt. Lower interest coverage ratios indicate that there is a larger debt burden on the company and vice versa. For example if a company has an interest ratio of 11.8, this means that it covers interest expenses 11.8 times with operating profits.

    Inventory turnover is calculated by dividing sales by inventory. If a company generated $30 million in sales and had an average inventory of $6 million; the inventory turn over would be equal to 5. This value indicates that there are 5 inventory turnovers per year. This means that it takes roughly 2.4 months to sell the inventory. A low inventory turnover is a sign of inefficiency and vice versa.

    Asset turnover is calculated by dividing revenues by assets. It measures a firm's effectiveness at using its assets in generating revenue. Higher numbers are generally better and vice versa. In general companies with low profit margins have higher asset turnover rates then companies with high profit margins.

    Quick ratio or acid -test is obtained by adding cash and cash equivalents plus marketable securities and accounts receivable dividing them by current liabilities. It is a measure of a company's ability to use its quick assets (assets that can be sold of immediately at close to book value) to pay off its current liabilities immediately. A company with a quick ratio of less than 1 cannot pay back its current liabilities. Additional key metrics are addressed in this article 5 Interesting Communication Plays

    Statoil ASA (NYSE: STO is our play of choice for the following reasons

    It has a massive levered free cash flow of $11.6 billion

    A very strong quarterly earnings growth rate of 167%

    A very low payout ratio of 23%

    A magnificent interest coverage ratio of 65.1

    A decent quick and current ratio of 1.0 and 1.2 respectively

    A good 3 year total return of 67%

    A good ROE of 30%

    It is focusing on the unexplored areas of the Norwegian Sea and is seeking to recover 4.2 million barrels of oil or oil equivalents over the next few years. Management wants to its oil recovery rate to hit 50% by 2020.

    It has set a goal of achieving an equity production rate in excess of 2.6 million barrels of oil or oil equivalents by 2020. This growth is expected to come from new projects (2014-2016) and this should produce a CAGR of above 2% during this time period.

    100K invested in STO for 10 years would have grown into a whopping 544K

     

     

    Stock

    Dividend Yield (%)

    Market Cap

    Forward PE

    EBITDA

    Quarterly Revenue Growth

    Beta

    Revenue

    Operating Cash flow

    BKH

    4.40

    1.34B

    14.91

    321.10M

    2.80%

    1.00

    1.31B

    228.52M

    STO

    3.40

    87.54B

    9.72

    41.57B

    21.60%

    1.17

    112.52B

    19.43B

    TOT

    4.70

    122.70B

    7.74

    43.34B

    20.10%

    1.00

    218.66B

    25.65B

    TA

    0.00

    148.41M

    6.53

    56.69M

    37.90%

    1.63

    7.53B

    -9.27M

    VVC

    4.90

    2.41B

    14.86

    589.60M

    27.60%

    0.38

    2.26B

    353.90M

    Black Hills Corporation (NYSE: BKH

    Industry : Electric Utilities

    Levered Free Cash Flow: -266.87M

    Net income for the past three years

    2008 = $105.08 million

    2009 = $81.56 million

    2010 = $68.69 million

    2011= it stands at $24 million as 9/31/2012

    Total cash flow from operating activities

    2008 = $145.65 million

    2009 = $270.51 million

    2010 = $147.76 million

    2011= It stands at $207 and could come in as high as $232 million

    Key Ratios

    P/E Ratio = 27.3

    P/E High - Last 5 Yrs = 28.1

    P/E Low - Last 5 Yrs = 6.9

    Price to Sales = 1.05

    Price to Book = 1.23

    Price to Tangible Book = 1.83

    Price to Cash Flow = 6.9

    Price to Free Cash Flow = -4.4

    Quick Ratio = 0.4

    Current Ratio = 0.7

    LT Debt to Equity = 1.18

    Total Debt to Equity = 1.18

    Interest Coverage = 1.7

    Inventory Turnover = 9.1

    Asset Turnover = 0.3

    ROE = 5.32%

    Return on Assets = 3.09%

    200 day moving average = 2.35M

    Current Ratio = 0.75

    Total debt = 1.77B

    Book value = 27.57

    Qtrly Earnings Growth = N/A

    Dividend yield 5 year average = 5%

    Dividend rate = $ 1.48

    Payout ratio = 118%

    Dividend growth rate 3 year avg = 1.4%

    Dividend growth rate 5 year avg = 1.91%

    Consecutive dividend increases = 40 years

    Paying dividends since = 1942

    Total return last 3 years = 78%

    Total return last 5 years = 8.21%

    Notes

    The pay out ratio is a bit high however it is cash flow is more than enough to cover the dividend payments. It is a dividend champion as it has a stellar record of consecutively increasing dividend payments for 40 years.

    Statoil ASA

    Industry : Refining & Marketing

    Levered Free Cash Flow: 11.61B

    Net income for the past three years

    2008 = $6.16 billion

    2009 = $3.07 billion

    2010 = $6.48 billion

    Total cash flow from operating activities

    2008 = $14.59 billion

    2009 = $12.64 billion

    2010 = $13.91 billion

    Key Ratios

    P/E Ratio = 6.6

    P/E High - Last 5 Yrs = 26.4

    P/E Low - Last 5 Yrs = 4.8

    Price to Sales = 0.77

    Price to Book = 2

    Price to Tangible Book = 2.54

    Price to Cash Flow = 4.7

    Price to Free Cash Flow = -55.3

    Quick Ratio = 1

    Current Ratio = 1.2

    LT Debt to Equity = 0.4

    Total Debt to Equity = 0.47

    Interest Coverage = 61.5

    Inventory Turnover = 12.2

    Asset Turnover = 0.8

    ROE = 30.67%

    Return on Assets = 16.58%

    200 day moving average = 24.36

    Current Ratio = 1.16

    Total debt = 22.91B

    Book value = 15.28

    Qtrly Earnings Growth = 167.4%

    Dividend yield 5 year average = 3.7%

    Dividend rate = $ 1.15

    Payout ratio = 23%

    Dividend growth rate 3 year avg = -8.47%

    Dividend growth rate 5 year avg = -4.62%

    Consecutive dividend increases = 1 years

    Paying dividends since = 2002

    Total return last 3 years = 67.96%

    Total return last 5 years = 27.9%

    Total S.A. (NYSE: TOT

    Industry: Production & Extraction

    Levered Free Cash Flow: 5.16B

    Net income for the past three years

    2008 = $15.45 billion

    2009 = $261 million

    2010 = $317 million

    Total cash flow from operating activities

    2008 = $26.32 billion

    2009 = $17.74 billion

    2010 = $24.81 billion

    Key Ratios

    P/E Ratio = 7.6

    P/E High - Last 5 Yrs = 13.9

    P/E Low - Last 5 Yrs = 5.7

    Price to Sales = 0.56

    Price to Book = 1.37

    Price to Tangible Book = 1.63

    Price to Cash Flow = 4.7

    Price to Free Cash Flow = -22.7

    Quick Ratio = 0.9

    Current Ratio = 1.4

    LT Debt to Equity = 0.34

    Total Debt to Equity = 0.5

    Interest Coverage = 32.6

    Inventory Turnover = 5.6

    Asset Turnover = 0.9

    ROE = 19.26%

    Return on Assets = 10.22%

    200 day moving average = 49.53

    Current Ratio = 1.36

    Total debt = 42.32B

    Book value = 39.63

    Qtrly Earnings Growth = 12.8%

    Dividend yield 5 year average = 5.3%

    Dividend rate = $ 4.15

    Payout ratio = 37%

    Dividend growth rate 3 year avg = 0.43%

    Dividend growth rate 5 year avg = 9.03%

    Consecutive dividend increases = 0 years

    Paying dividends since = 1992

    Total return last 3 years = 18.65%

    Total return last 5 years = -2.13%

    Notes

    It has a good 5 year dividend growth rate of 9%, a very good interest coverage ratio of 36 and a decent current ratio of 1.4.

    TravelCenters of America LLC (AMEX: TA

    Industry: Retail - Automotive

    Levered Free Cash Flow: -243.85M

    Net income for the past three years

    2008 = $-40.21 million

    2009 = $-89.88 million

    2010 = $-65.58 million

    2011= It stands at $25 million and could come in as high as $46 million

    Total cash flow from operating activities

    2008 = $79.46 million

    2009 = $52.71 million

    2010 = $28.31 million

    2011= It stands at $13 million and could top $33 million

    Key Ratios

    P/E Ratio = N.A.

    P/E High - Last 5 Yrs = N.A.

    P/E Low - Last 5 Yrs = N.A.

    Price to Sales = 0.02

    Price to Book = 0.46

    Price to Tangible Book = 0.49

    Price to Cash Flow = 3.5

    Price to Free Cash Flow = -1.7

    Quick Ratio = 1

    Current Ratio = 1.7

    LT Debt to Equity = 1.1

    Total Debt to Equity = 1.1

    Interest Coverage = 0.8

    Inventory Turnover = 45.7

    Asset Turnover = 7.7

    ROE = -1.44%

    Return on Assets = 0.63%

    200 day moving average = 4.47

    Current Ratio = 1.72

    Total debt = 97.15M

    Book value = 11.81

    Qtrly Earnings Growth = 362.6%

    Dividend yield 5 year average = 0%

    Dividend rate = $ 0.00

    Payout ratio = 0%

    Dividend growth rate 3 year avg = 0%

    Dividend growth rate 5 year avg =

    Consecutive dividend increases = 0 years

    Paying dividends since = None

    Total return last 3 years = 183.68%

    Total return last 5 years = -86.54%

    Notes

    This stock does not pay dividends. It was included on this list because it sports a very strong quarterly earnings growth rate of 362% and has a total 3 year return of 183%, a strong healthy inventory turnover rate of 47, and a decent quick and current ratio.

    Vectren Corp (NYSE: VVC

    Industry : Electric Utilities

    Levered Free Cash Flow: -21.98M

    Net income for the past three years

    2008 = $129 million

    2009 = $133.1 million

    2010 = $133.7 million

    2011= It stands at $95 million and could come in as high as $135 million

    Total cash flow from operating activities

    2008 = $423.2 million

    2009 = $449.6 million

    2010 = $384.8 million

    2011= It stands at $291 million and could come in as high as $340 million

    Key Ratios

    P/E Ratio = 16.8

    P/E High - Last 5 Yrs = 20.5

    P/E Low - Last 5 Yrs = 11

    Price to Sales = 1.04

    Price to Book = 1.62

    Price to Tangible Book = 1.97

    Price to Cash Flow = 6.2

    Price to Free Cash Flow = -16.6

    Quick Ratio = 0.4

    Current Ratio = 0.9

    LT Debt to Equity = 1.09

    Total Debt to Equity = 1.33

    Interest Coverage = 3.1

    Inventory Turnover = 8.2

    Asset Turnover = 0.5

    ROE = 9.81%

    Return on Assets = 4.63%

    200 day moving average = 28.02

    Current Ratio = 0.89

    Total debt = 1.94B

    Book value = 17.75

    Qtrly Earnings Growth = 115.2%

    Dividend yield 5 year average = 5.2%

    Dividend rate = $ 1.40

    Payout ratio = 81%

    Dividend growth rate 3 year avg = 1.74%

    Dividend growth rate 5 year avg = 2.36%

    Consecutive dividend increases = 36 years

    Paying dividends since = 1946

    Total return last 3 years = 33.47%

    Total return last 5 years = 24.45%

    Notes

    It has a strong quarterly earnings growth rate of 115%, a manageable payout ratio of 81%, and stellar history of consecutively increasing its dividend. It sports an average interest ratio of 3.1.

    EPS charts were sourced from zacks.com and dividend history charts were sourced from dividata.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.

    Themes: dividend-quick-picks-lists Stocks: BKH, STO, TA, TOT, VVC
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