Location: INDIA (sometimes Canada)
Posted on: 07-09-10 12:07:38
Can someone clarify me why thers is big difference between Share price Vs Income Trust Units prices on TSX??
It is seen that mostly, income trust are paying huge dividends. Still there units are trading below Book Value. Also, P/E ratio of Units is generaly lower than Equity Shares. Examples are JAZ.UN , YLO.UN , COS.UN etc..
If any CD is able to send me his phone number and best time to call that will be highly appreciated.
Thanks.
-----------------------------------------------------------------
Enjoy Happiness -- Happy from India
Quote:For similar reasons that there are differences between share prices of different stocks.
Originally posted by Happy
Can someone clarify me why thers is big difference between Share price Vs Income Trust Units prices on TSX??
There are stocks that trade over $100 or even over $1,000 a pop and there are stocks that trade for pennies.
It's a question of valuations.
Also, income trusts often dilute equity by issuing new units all the time.
Corporations do not usually issue shares at the same rate.
When comparing different stocks (or income trusts), do not go by the value of a unit/share.
Quote:
It is seen that mostly, income trust are paying huge dividends.
They pay distributions - there is a significant difference.
While it is true that income trusts and REITs are high yield, there is a reason for it because of their business model (pass-through income).
As you probably know, starting Jan 2011, all income trusts (except true REITs) will have to convert to corporations.
Most income trusts will cut distributions to approx. the same % as the additional tax imposed on them.
However, the payouts will then be classified as dividends.
Therefore, net effect to the investor may be the same (I say may, because that depends on several other factors).
Quote:True, but don't just look at P/E ratios.
Still there units are trading below Book Value. Also, P/E ratio of Units is generaly lower than Equity Shares. Examples are JAZ.UN , YLO.UN , COS.UN etc..
P/E ratios often depends on the type of business.
In case of mostly income or revenue driven businesses like the income trusts are, it is common to have low P/E ratios.
Even banks and utility companies have low P/E ratios, when compared to growth businesses like tech companies.
You should consider other ratios and overall business health as well.
In case of income trusts and REITs, it is particularly important to evaluate the payout ratio and the overall debt ratio.
For REITs, the average loan-to-value ration is also important.
Don't just go by unit price, nominal distribution, and P/E ratio.
-----------------------------------------------------------------
"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: INDIA (sometimes Canada)
Posted on: 07-09-10 15:51:39
At the present market prices of YLO.UN, JAZ.UN, COS.UN would you reccomend buying then or you will rather prefer recommending Candian Banks, Resources or Energy companies equity Shares.
Also, What do u think, When in 2011 these Income trusts YLO.UN, JAZ.UN, COS.UN convert into corporations, Will investors make a lots of money. Or will the investors loose money during this conversion process (Assume general market prices and other things remain constant as of today level till 2011 - The conversion time-line)
A quick reply will be appreciated. Thanks in advance.
-----------------------------------------------------------------
Enjoy Happiness -- Happy from India
Quote:The conversions have already been factored into the trading prices.
Originally posted by Happy
Also, What do u think, When in 2011 these Income trusts YLO.UN, JAZ.UN, COS.UN convert into corporations, Will investors make a lots of money. Or will the investors loose money during this conversion process (Assume general market prices and other things remain constant as of today level till 2011 - The conversion time-line)
Most income trusts have already converted or in the process of converting.
Most of the larger one have already declared what they are doing with the distributions (cutting or keeping).
Therefore, all of that has already been priced in.
Back in 2006, when the Finance Minister first announced the changes, there was a huge sell-off of the income trusts.
That was a great time to buy income trusts.
But now, I'd suspect most of them are trading at fair market values with all information priced in.
I personally like YLO but am not a great fan on ZAZ.
COS is ok, but you can probably get a better bang for your buck with CPG, which has already converted some time ago.
If you are purely chasing yields, REITs have higher yields and don't have to convert to corporations in 2011.
However, in either case, research the company and ensure that the payouts are solid and secure before you buy.
-----------------------------------------------------------------
"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: INDIA (sometimes Canada)
Posted on: 08-09-10 13:11:27
Thanks for all the Valuable info. Will go for YLO for now.
What is your opinion about Athabasca Oil (ATH) the IPO was $18.00 (about 6-7 months ago) today it is trading at $10.25?
-----------------------------------------------------------------
Enjoy Happiness -- Happy from India
Quote:I'd say the IPO was very optimistic
Originally posted by Happy
What is your opinion about Athabasca Oil (ATH) the IPO was $18.00 (about 6-7 months ago) today it is trading at $10.25?
It appears to be a rather new company and therefore not a solid history of distributions.
Also, its IPO seems to have done singularly bad and even Morgan (who led the IPO) downgraded their rating earlier this year.
There are many ho-hum oil drilling companies in Alberta.
Many do not offer attractive investment returns over long runs and end up trading within ranges.
Distributions are often acceptable, but not strong increases.
I'm not saying it's bad, but just do your research on the company.
Read all its securities filing, analyze the financial statements, etc.
Keeping in mind that this is a fairly new company and carries the risks and benefits normally associated with startups.
-----------------------------------------------------------------
"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: INDIA (sometimes Canada)
Posted on: 10-09-10 14:54:27
Are the prices of HNU and HOU directly linked to double price variation of gas and oil prices, OR the prices of HNU and HOU depend of stock market (tsx) demand and supply?
Will u consider buying HNU now, as it is near the lifetime low?
-----------------------------------------------------------------
Enjoy Happiness -- Happy from India
