When should you sell Terra Nitrogen (TNH)?

When should you sell Terra Nitrogen (TNH) if you own it or are considering shorting it?  Terra Nitrogen’s stock price has increased 43.6% in the past year while the S&P 500 has only risen 0.9%.  I don’t know why the stock’s price has rocketed since April 2011.

Image001

http://stockcharts.com/h-sc/ui?s=TNH&p=W&b=5&g=0&id=p33864843115

The stock is currently yielding 8.1% at today’s price of $183.38 per share.  It is now paying a $3.75 quarterly dividend on $3.95 in earnings per quarter.  This brings the dividend payout ratio up to a worrying 95%.  I like dedicated dividend payouts of between 50% and 80% (dedicated, but not too high).

TNH has an average adjusted earning power of $9.97 over the past five years.  Consider buying at or below $119.64 (12 times average adjusted earnings).  Consider sell at or above $  $199.40 (20 times average adjusted earnings).  It is almost sell time.

Their balance sheet is strong.  To read the other articles I’ve written on Terra Nitrogen click here: http://www.myhighdividendstocks.com/category/high-dividend-stocks/terra-nitrogen

Disclosure: I don’t own Terra Nitrogen (TNH).

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Published in: on August 31, 2011 at 3:21 pm  Leave a Comment  

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