PENGROWTH ENERGY TRUST $9.33 - Toronto symbol PGF.UN

PENGROWTH ENERGY TRUST $9.33 (Toronto symbol PGF.UN; Units outstanding: 257.8 million; Market cap: $2.4 billion; SI Rating: Average) produces oil and gas in western Canada and off the Nova Scotia coast. Its average daily production of 80,284 barrels of oil equivalent is weighted 51% to oil and 49% to natural gas. Pengrowth’s revenue fell 29.4% in the three months ended March 31, 2009, to $323 million from $457.6 million. Cash flow per unit fell 57.5%, to $0.37 from $0.87. Low oil and gas prices also prompted Pengrowth to cut production. Pengrowth’s $1.7-billion long-term debt is a somewhat high 71% of its market cap. But it’s just over three years’ cash flow. The trust distributed 82% of its cash flow as distributions in the latest quarter, but it should average about 62% this year. The units trade at 4.2 times Pengrowth’s estimated 2009 cash flow of $2.20 per unit. The trust yields 12.9%. Pengrowth is still a buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Value Stocks

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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Energy Stocks

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