Talisman Energy, Inc. (USA) (NYSE:TLM)

CAPS Rating: 4 out of 5

An independent oil and gas producer in Canada. The Company's main business activities include exploration, development, production and marketing of crude oil, natural gas and natural gas liquids.

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Member Avatar AsianMatter (43.33) Submitted: 3/31/2014 11:29:36 PM : Outperform Start Price: $9.91 TLM Score: +2.49

Oil and Gas

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Member Avatar grtsgrk1 (< 20) Submitted: 12/30/2013 1:32:41 PM : Outperform Start Price: $11.48 TLM Score: -14.05

Carl Icahn's purchase of almost 8% of TLM shares is a good indication that he is preparing the company for sale, perhaps to Chinese interests.

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Member Avatar joeymedina (< 20) Submitted: 11/6/2013 12:07:00 AM : Outperform Start Price: $12.08 TLM Score: -22.55

Activist interest in Energy are swarming right now. 2 names not to bet against are Ichan or Cooperman. Company's assets are grossly undervalued. Whether company is sold or activists get restructuring of current administration to cut cost & become more efficiently profitable & shareholder friendly; it's a win win.

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Member Avatar bobg304 (48.30) Submitted: 10/8/2013 1:01:39 PM : Outperform Start Price: $12.32 TLM Score: -31.39

go with CARL...

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Member Avatar TallToner (< 20) Submitted: 8/28/2012 6:36:49 AM : Outperform Start Price: $13.70 TLM Score: -60.51

Well diversified energy company, better execution of strategies sure to come.

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Member Avatar TMFmd19 (94.50) Submitted: 3/3/2012 2:50:26 PM : Outperform Start Price: $12.85 TLM Score: -59.54

Diversified canadian oil/gas company. We need more energy and they are among they many working to provide it.

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Member Avatar BHSBarr (< 20) Submitted: 11/8/2010 1:40:53 PM : Outperform Start Price: $18.24 TLM Score: -100.55

US Shale gas rates and production decline are holding greater yield than expected and continuous drilling will improve overall performances.

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Member Avatar stan68ar (99.13) Submitted: 9/27/2010 1:17:44 PM : Outperform Start Price: $15.27 TLM Score: -100.19

Marcellus shale play I see them drilling heavily in NE PA

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Member Avatar MyLetty (33.58) Submitted: 9/13/2009 7:41:27 PM : Outperform Start Price: $15.87 TLM Score: -120.93

Good return on Equity and sales growth
Analysts Earnings expectations are rising

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Member Avatar notzia (73.20) Submitted: 6/19/2009 4:14:59 PM : Outperform Start Price: $12.96 TLM Score: -132.29

This stock came to my attention as a CAPS personalized stock idea selection. Although flawed, I decided to look more closely. The analysis presented is based on a price of $14.66.

EPS has generally been growing for the 2001-2008 period, with a compounded annual growth (CAGR) of 35%. The return on equity (ROE) has been in double digits throughout the period and exceeded 20% for the past four years. The free cash flow, though, has not been consistently positive.

Before I look at the valuations, I look at three indicators of financial safety. For this stock, two of three are quite good. The Piotroski F is 8; 2 or below indicates caution, while 8 or 9 indicates that the stock is expected to rise within the next year. The Sloan accrual is -12.63; 5 or higher is high risk, while -5 or lower is excellent. The Altman Z, however, is 2.6 which is about midway between the risky 1.8 and safe 3.

I use more than one valuation method to gauge intrinsic value; the first three all provide a good margin of safety (MOS). The first three are standards in the valuation literature. The estimate based on Graham’s formula was $100 (85% MOS). However, capital expenditures wreaked havoc on the estimates for Earnings Power Value (value of the firm) and Discounted Cash Flow. When I lowered the ratio of CapEx to Depreciation to 150%; then the estimated EPV became, on a per share bases, to be $30 (52% MOS). Similarly, if the CapEx is halved, the Discounted Cash Flow estimate rises from $23 (36% MOS) to $79 (82% MOS). Before investing in my real account, I want to look more carefully at those Capital Expenditures and see why they are so high (comparatively speaking) and how they are impacting the bottom line.

The last two were based on a spreadsheet found on the AAII website; these are designed to mimic Buffett’s valuation methodology. One is based on projecting EPS growth 10 years into the future based on past EPS growth; I discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings (including dividends when applicable) return of 15%. Based on this method the target purchase needs to be below $21, and at the current price there is a 31% MOS

The second is based on estimating EPS growth through the sustainable growth rate. The per-share projected book value is estimated by taking the previous year’s book value, adding EPS and subtracting dividends (when applicable). The projected EPS is estimated by multiplying the projected book value by the average Return on Equity, and the projected dividend is estimated by multiplying the projected EPS by the average payout ratio. I then discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings return of 15%. Based on this method the target purchase needs to be below $19, and at the current price there is a 22% MOS

To ascertain that the price is attractive to me, I take one more thing into consideration. At the current price, would I expect an immediate 15% return on my investment (ROI) based on earnings and dividends? In this, the EPS represents about 21.8% of the share price by itself, so the 1.4% dividend yield is not needed. However, if the dividend had been needed to achieve the desired 15%, I also consider the risk that the dividend may be cut. This risk is assessed by evaluating several factors (Current Price, Current Yield, Current Payout Factor, Gross Margin, Operating Margin, Financial Leverage, EPS Growth). Based on this assessment, there is a moderate (most recent fiscal year) to moderate (TTM) risk that the dividend may be cut.

Because there are many stocks that meet all of my criteria, I will not actually invest in TLM at this time. However, for CAPS purposes, I feel that it will outperform the market as a whole and make a caveat-filled recommendation.

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Member Avatar TourPhare (38.31) Submitted: 5/29/2009 4:17:54 PM : Outperform Start Price: $15.03 TLM Score: -138.74

Restructuring. Increasing equity and cash flow and net income.

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Member Avatar imajerbear (< 20) Submitted: 5/1/2009 10:07:39 AM : Outperform Start Price: $11.74 TLM Score: -134.75

Oil may be deep in to it right now, but long term as the world economy pulls itself up by it's bootstrapes, oil will make a comeback. Alt energy is wonderful, but it will take many years for it to make a significant dent in the use of oil. The days of easy extraction of oil are gone and some of the petroleum resources ie oil shale will require prices above $80 long term to exploit them economically. Oil fields around the world are showing decreases, some major, in their output. I am also convinced that OPEC is actually seriious this time about toeing the line on production reductions to try to drive the price of oil to the $70 mark or better. long oil 10 to 20 years!!

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Member Avatar wingman519 (51.67) Submitted: 4/24/2009 11:28:25 AM : Outperform Start Price: $11.28 TLM Score: -132.71

Probably the most undervalued energy player in Canada

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Member Avatar beany80 (< 20) Submitted: 3/3/2009 12:35:06 PM : Outperform Start Price: $7.55 TLM Score: -140.94

oil will be back...get it now

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Member Avatar jmt587 (99.88) Submitted: 11/19/2008 11:18:10 AM : Outperform Start Price: $7.46 TLM Score: -95.35

Low P/E and I think the canadian dollar and oil will outperform the US dollar over time from here, giving this company a pretty strong tail wind to outperform the S&P 500.

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Member Avatar Whatsgoingdown (< 20) Submitted: 10/2/2008 1:23:14 PM : Outperform Start Price: $11.18 TLM Score: -82.86

They will turn a round just like all the other cash rich producers in the oilpatch.

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Member Avatar Markuci (< 20) Submitted: 9/25/2008 10:23:40 AM : Outperform Start Price: $14.53 TLM Score: -92.20

One of best values among independent producers.

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Member Avatar josephdefeo (27.53) Submitted: 9/4/2008 1:02:43 PM : Outperform Start Price: $13.98 TLM Score: -84.69

Diversified business provides stability, refining will be a source of strength. Too undervalued to pass up.

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Member Avatar milanklig (93.54) Submitted: 7/24/2008 7:51:08 PM : Outperform Start Price: $15.97 TLM Score: -92.90

TLM(Talisman Energy, Inc.) is a great oil and gas producer throughout North America. Not only do they have good location being that the U.S. laws allow refining and a large profit due to lower liabilities but they also use a lot of alternative energy for their oil. They use ethanol which is very cheap and is made into gas from corn. They also use things like natural gas which is proven to be more fuel efficient and people need that because although gas prices seem like they are declining they are soon about to bounce back up. People need more fuel effiency and I believe alternative resources can further benefit that. Their natural energy will also help because of their lack of competitors for alternative energy refineries. I don't think that the oil in Norway and Saudi Arabia is a great asset but their mainly their U.S. and Canadian oil refineries will help in the long term. I would suggest buying this stock in the next couple of weeks before it meets support. In about a year it looks like their price range has resembled a reverse head and shoulders formation. This is a bullish sign and it is almost time to buy the stock if you are looking for good long term sucess. I give TLM a Buy rating for outstanding diversity.

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Member Avatar hartrich4 (26.04) Submitted: 7/8/2008 1:14:17 PM : Outperform Start Price: $17.01 TLM Score: -97.30

At this price I don't think you can go wrong if you hold on to it.

I am not sure why energy stocks have gotten hit so hard the last few days, but they are still going to make a lot of money.

It's not like oil is going to go back down to $75 a barrell. And at $90 plus per barrell, energy companies are going to make a bunch of money.

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