Buy Encana, hold on to Cenovus

Article Excerpt

ENCANA CORP $29.14 (Toronto symbol ECA; Shares outstanding: 735.3 million; Market cap: $21.4 billion; TSINetwork Rating: Average; Dividend yield: 2.8%; earned $98 million, or $0.13 a share, before one-time items in the three months ended September 30, 2010 (all amounts except share price in U.S. dollars). The latest earnings were down 74.1% from the company’s year-earlier earnings of $378 million, or $0.50 a share. Revenue rose 10.2%, to $1.5 billion from $1.3 billion on higher production. Cash flow per share fell 9.4%, to $1.54 from $1.70. (Note: The year-earlier figures assume that the breakup of the old EnCana Corp. into the new Encana and Cenovus Energy took place at the start of 2009 instead of December 1, 2009.) Depressed natural gas prices were the main reason for the lower earnings and cash flow. (Natural gas accounted for 96% of Encana’s average daily production in the latest quarter.) Encana’s average selling price for gas fell 29.2% during the quarter, to $5.27 per…

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