RE:RE:RE:RE:RE:RE:RE:RE:Only RedSirlostalot wrote
Have been wondering about sp movement as well, any chance that maybe $8 is a fairly reasonable price for Cj at 80 wti , just a helluva good dividend stock in a cyclical industry with many moving parts .
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Exactly. At $8 per share CJ has a market cap of aprox. $1.25 billion. At $80 oil CJ has Free Cashflow after capex but before dividend of aprox. $150 million per year. Subtract $25 million or so per year to replace lost reserves and i would guee in the long run at $80 oil CJ has Free Cashflow per year of aprox. $125 million or aprox. 10% Free Cashflow at $8 per share.
While 10% is quite a good return as we all know oil prices can be very volatile and nobody really knows where oil prices are going. $10 lower oil from here and CJ is losing $30 million per year after Capex and Dividend. $10 higher oil and they are making aprox. $100 per year in Free Cashflow after Capex and Dividend. A $10 rise or drop in oil prices can happen in a day or two and reverse just as fast.
Those who sit on this board complaining about the lower shareprice, manipulation etc. are wasting their time. Oil and CJs shareprice are going to go where they are going to go nothing any of us can do about it no matter how many posts we make.
Watching oil prices bounce around everyday is also a waste of time as what matters is what the price averages over a year the daily ups and downs do not tell us anything. What an investor has to decide is where they believe oil prices will be next year and in the years to come and act accordingly. If you believe oil will average at least $80 next year CJ will be able to pay you a 9% plus dividend at the current shareprice and will have enough extra cash by the end of next year to pay off all there debt.
IF oil averaged $80 next year and CJ payed the current dividend and payed off all debt by the end of next year where would the shareprice be at the end of next year. I would think that the current $8 to $9 range would be a fair bet.
For those complaining about the low shareprice lets also remember that at the beginning of this year 11 month ago CJ was trading in the $4 range so we have a double in less than 1 year. This year CJ used most of its Free Cashflow to pay down debt. Next year that money will go to paying the dividend. So we are transitioning from a debt reduction phase for this company to a dividend paying phase.
We are now what you say at $80 oil. "Just a helluva good dividend stock in a cyclical industry with many moving parts."
If oil stays in this range and an investor is looking for large capital gains from shareprice appreciation i would say CJ is likely not the stock for you no matter how many posts you make wishing it so. Other growth stocks will give a better chance for shareprice appreciation.
Personally i have sold a nearly half of my CJ shares over the last several months at pretty good prices. My remaining shares have a relatively low cost basis that is giving me an aprox. 13% dividend. If the shareprice goes up a bit i can sell another thousand shares and bring my dividend return up to 16%.
Dividends are what i am looking for with this stock. Of course oil prices are volatile and there are no guarantees. At the same time CJ currently has under $50 million in debt less than a quarter of its previous debt. That is not much for a 22 000 barrel per day producer. They also have a low decline rate and can cut capex at lower oil prices. Even if they had to cut the dividend by 25% or so in a hopefully worst case scenario my dividend yield would still be 10% on my cost basis and i know there are many here who are doing a lot better.
Whether its 10%, 13%, or 16% yield that i have to choose from they all sound very good to me and i will take them for years to come from my favourite oil stock CJ and not spend my days worrying about every little move in the shareprice.
Good luck to all.