New secondary offering has taken the share price down by 10%
Current market price of $23.16 is below issue price of $23.35
Secondary issue has no effect on treasury stock – no dilution
Chairman is selling a large chunk of his stock for estate planning purposes
Company has strong projected growth in cash flow and earnings over next two years – better than average of its peers
Stock is attractively priced at current levels relative to peers at 14.25 PE on this year’s eps
Current dividend yield of 4.66% with reasonable payout
Parex’s share price has been one of the best Canadian energy stocks both year to date and in 2018.
Year to date its total return is up almost 26% vs 7.6% for the iShares XEG ETF.
Even in a bad year last year for energy stocks, Parex only fell 10% vs a 27% decline for the XEG sector benchmark
The company receives the higher Brent crude prices
Parex has a strong balance sheet with no debt and working capital at the end of last year of $215 million US
Proven and probable reserves rose 27% last year
The company has strong self funded organic production growth
The company is expected to report its quarterly earnings this week.
While the shares are not cheap relative to its peers, the company continues to deliver strong results
The long term demographic trend of an aging population remains positive for Chartwell
However the immediate supply / demand outlook is only in balance with no supply shortages anticipated
For Chartwell’s top markets – Ottawa, Durham region of GTA and Calgary, the company is actually experiencing an oversupply of product
As a result of these current headwinds, Chartwell will only be able to increase their dividend distribution modestly
Conclusion: Favour both apartment and industrial / logistic REITS more than retirement homes as they have better industry fundamentals.
Strategies for Do-It-Yourself Investors™