(B)(N) S Sherritt International Corporation

Sherritt International Global Assets
Courtesy: Sherritt International Corporation

Deal Book. Sherritt International is a serious company with international interests in nickel, cobalt, and thermal coal production and mining; oil and gas exploration, development and production; and electricity generation.

But they don’t make “smart phones” or sell “tweets” which might partially explain why the company has total assets of $6.6 billion, shareholders equity of $3.7 billion and a dividend yield of 5.5% ($51 million) but a “market value” of only $1 billion which is down minus (37%) this year.

Earnings have also been spotty in the last year and might end up with a nominal $0.01 per share or $3 million for all that effort (The Canadian Press, December 24, 2013, Sherritt selling coal business for $946 million).

It’s also been a difficult stock to own (please see Exhibit 1 below) and the downside in the stock price due to the demonstrated volatility is minus ($0.80) per share in the next quarter so that it could be trading from the current $3.60 and between $3 and $4 without surprise.

Our estimate of the “price of risk” Risk Price (SF) is $4.40 per share and it’s at that price or above it that the stock has a “fair value” – that is, we can expect that our money invested in the stock will tend to retain its value and that we might obtain a hopeful total return (including dividends) above the rate of inflation which, in Canada, is a mere 1% at the present time (Reuters, December 20, 2013, Canada inflation picks up but still in danger zone).

Exhibit 1: (B)(N) S Sherritt International Corporation – Risk Price Chart

(B)(N) S Sherritt International Corporation

Sherritt International Corporation is a Canadian natural resource company that operates mainly in Canada and Cuba and has a significant mining project in Madagascar.

(Please Click on the Chart to make it larger if required.)

From the Company: Sherritt International Corporation, a diversified natural resource company, produces nickel, cobalt, thermal coal, oil and gas, and electricity. The company’s Metals segment engages in mining, processing, and marketing commodity nickel and cobalt; and producing and selling agricultural fertilizers. This segment also owns and operates fertilizer, sulphuric acid, utilities, and storage facilities in Fort Saskatchewan. Its Coal segment mines and sells thermal coal primarily for use as fuel to generate electricity, as well as holds a portfolio of royalty assets; and leases equipment and operates a contract mine. This segment operates approximately nine surface mines in Alberta and Saskatchewan, Canada. The company’s Oil and Gas segment is involved in the exploration and development of oil and gas properties in Cuba, Spain, Pakistan, and the United Kingdom. Its Power segment constructs and operates electricity generating plants that provide electricity in Cuba; and owns an electricity generating plant in Madagascar. As of December 31, 2012, this segment’s power generation facilities located in Cuba had a total capacity of 356 megawatts. The company’s Corporate and Other segment engages in the development and commercial application of hydrometallurgical technologies for the treatment of a range of ores, concentrates, mattes, and other feed materials for the recovery of non-ferrous and precious metals; and clean coal technologies. It operates primarily in Canada, Cuba, Madagascar, Europe, and Asia. Sherritt International Corporation was founded in 1995, has 8,200 employees and is headquartered in Toronto, Canada.

For more information on the chart elements and additional references to the theory, please see our recent Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class action, La Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in America, Big Oil, Shopping in America or Banking in America, to name just a few.

Postscript

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Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.