An Attractive Speculation: Pengrowth Energy Trust (PGH)

The Canadian Royalty Income Trusts have been devastated by the triple whammy of the government’s proposal to levy a harsh tax against the income of those trusts, the falling price of oil and gas, and the Canadian dollar’s decline against the U.S. dollar. But there are signs that the Canadian government may soften the blow by grandfathering existing royalty trusts, or by extending the waiting period before implementation to ten years; and there are signs that the collapse of energy prices may be in a bottoming process. If energy prices stabilize, the Canadian dollar should as well.

After studying charts of several of these trusts which trade on the U.S. exchanges, I rather like Pengrowth Energy Trust (PGH). PGH has declined from a high of 25 last May to a low of 14.77 in November. But unlike most of its fellow Canadian Royalty Trusts, PGH made a higher bottom during the January plunge than it did last November. The chart exhibits a bullish short-term configuration and on-balance volume is constructive. Distributions over the last 12 months have been $3.00 Canadian, or $2.56 U.S at current exchange rates, so this security has a gross current yield of 15.13% for U.S. investors, as well as significant capital appreciation potential.

Advertisements

4 Responses to “An Attractive Speculation: Pengrowth Energy Trust (PGH)”

  1. giladog Says:

    I agreed PGH is making a better looking bottom than some. Kurt Wulff, on his free web site, gives a small edge over PGH to Penn West (PWE) and Canadian OIl Sands (COSWF) on a fundamental basis. This is an excellent energy site in case you do not know it: http://www.mcdep.com

  2. Alligator Investor Says:

    Thanks for the link. I had it buried somewhere in my bookmarks and hadn’t visited the site for a while. Wulff does good work.

  3. umagumm Says:

    A lower McDep ratio is better, so Kurt was actually giving the nod to COSWF (0.82) over PGH (0.9) on 1/2. One should keep in mind that all McDep modeling is done at $60/barrel oil.

  4. Alligator Investor Says:

    This kind of fundamental information can be a lot more helpful if it is up-to-the -minute and people pay Wulff big money to have access to it. All I know is that as of the Friday close, the PGH chart looks pretty darned good compared to most of its peers.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: