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BookingAlpha Option Trading Advisory

Saturday, September 6, 2014

Position Initiated in Crescent Point Energy (CPG)

On Thursday, I purchased 35 shares of Crescent Point Energy (CPG) at a price of $43.23 after a huge gap down.

(Click on image to enlarge)

Man I love entering positions when every body else is shitting on their pants. I also set an alert at 42.00 to purchase 35 more shares if prices keep falling.

This is an 18 billion dollar Canadian company focused on oil and gas production and exploration. It is not a typical dividend grower, in fact the last time it increased its dividend was back in June 2008. However, the current yield is around 6.4% and that makes it really attractive as a dividend payer even thought like I said, they are not increasing it.

This baby has historically traded at very high valuations. The P/E ratio has oscillated form a low of 62 to a high of 207 in the last five years. Current P/E ratio is 84, closer to the lower end. I didn't time my entry very well, if it falls to 42 - 41 I will add 35 more shares.

Crescent Point was listed in the Toronto Stock Exchange in 2002. Here's how a $10 000 investment would have fared in these 12 years, assuming dividends were always reinvested:

Yeap, you read that right. Now, I don't expect such exponential growth to continue forever. But I'll be a happy investor with a solid 10% yearly return over the next decade.

With this purchase my yearly passive income from dividends is 1046 CAD plus 382 USD. I'm now invested in 12 Canadian companies and 7 American ones. Next in my list are:

Coca Cola (KO) - Where I already have a position,  just want to increase it
Chevron (CVX) - Where I already have a position,  just want to increase it
Telus (T.TO) - Position increase
Bank of Nova Scotia (BNS.TO) - Position increase
Wsp Global (WSP) - New Position
Potash Corp of Saskatchewan (POT) - Position increase
Enbridge (ENB) - New position

I'm waiting for more attractive valuations and that's why I've been a little cautious in the last couple of months.

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  1. Saw BTE with 6% div and tought you might be interested. Good support at $35 and pays $0.22/mo div
    Canadien O&G producer

  2. Pretty interesting indeed my friend. Thanks for pointing that one out. I am not too familiar with BTE, I'll have to do my homework, but it certainly looks interesting.

  3. Decided to put my money where my mouth is and bot 100shs of BTE @ 36.00. Effective Yield=7.2%. If it goes to 33 will buy another 100shs and at 30 another.

  4. Good!
    I feel very tempted as well but want to avoid more exposure to energy for now.
    Good luck!


  5. After making this trade I rethought it. Given the severe bear mkt in oil, falling knife chart pattern, chase for yield and not following my methodology I got out of BTE with a $12 profit (after commish). Will keep it on my watch list but I think the oil glut may last months or years.