Q: Greetings,
1. Am I correct in noticing that TOU has been range bound between $56 - $69 for about 4 years?
2. Based on cash payout ratio - Are dividend payments sustainable?
3. Regardless of my concerns, Michael Rose (CEO) has been a solid insider buyer over the last two months.
4. Is TOU more of an income stock or is something very positive about to happen to the growth aspect?
5. What price would be a fair entry price?
6. What price would be a fair exit price?
Cheers!
A
1. Am I correct in noticing that TOU has been range bound between $56 - $69 for about 4 years?
2. Based on cash payout ratio - Are dividend payments sustainable?
3. Regardless of my concerns, Michael Rose (CEO) has been a solid insider buyer over the last two months.
4. Is TOU more of an income stock or is something very positive about to happen to the growth aspect?
5. What price would be a fair entry price?
6. What price would be a fair exit price?
Cheers!
A
5i Research Answer:
TOU has ranged from $46 to $84 in the past four years. When looking at performance, it is important to consider its special dividends. In that period it paid more than $12/share in special dividends. We see dividends as sustainable. If cash flow declines it will just pay fewer special dividends. Mr. Rose has built and sold many prior companies. He knows his stuff and has a huge monetary committment to TOU (more than $1 billion). It is cyclical, and gas focused. We would see it as a mix of income and growth, but gas prices need to co-operate on the growth angle. Entry $61, exit $80. We do not like setting exit prices as we would prefer to look at fundamentals before selling. Often a higher price simply reflects better things.