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Astonishing 12 Month Target Prices for CU Reported on BMO InvestorLine: Should I Buy?!

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Earlier this year, CU split its shares in a get 1 for every 1 you already own offer. Ever since I’ve been keeping a closer eye on this very conservative stock trying to decide whether to sell part of my position. (It’s up 49% over what I bought it for.) When I looked at the 12 month target prices today, however, I was astonished.

What is Canadian Utilities Trading At?

Today, CU is trading at about $37.95 per share. It’s been in a range of about $34-38 per share since the split.

What are the 12 Month Target Prices from the Analysts for CU?

That’s why I got a shock when I took a peek at the 12 month target prices for Canadian Utilities on InvestorLine.

How to Look Up 12 Month Target Prices on InvestorLine

To see these values,

  1. From the Quotes & Tools tab, select Quotes +.
  2. In the Symbol field, type CU.
  3. Click on the Go button.
  4. Scroll down to the box on the right side of the screen with Recommendations and 12 mo. Target Price.
  5. Select the 12 mo. Target Price tab.

Be amazed!

The target prices listed are $74-$88! Wow! I guess I should hold on for the ride.

Or so I thought until I looked at the Issue Date for each of these pieces of advice. They all pre-date the split. Yep, that’s all it is. BMO InvestorLine didn’t ask the Sources to update their information in light of the split, so the old pre-split numbers are still reported.

Please Use Your Brain (and Common Sense) When Researching Stocks

To me it was obvious what was going on. But another investor might not be so lucky. If you hadn’t already held CU through the split, you might not know that it had happened. After all, the graph of the trading prices for the last year has been split-adjusted so there’s no obvious clue there. The 52-week highs and lows are also reported split adjusted.

All I can suggest is if you see a wild mismatch between price and target price, dig a bit deeper. If you go back through the annual news for CU you’ll find the split. If you look at the Charts you can find the split.

How to Look Up Stock Split History on InvestorLine

  1. From the Quotes & Tools tab, select Quotes +.
  2. In the Symbol field, type CU.
  3. Click on the Go button.
  4. Click on the Charts tab.
  5. Click on the blue Events button with the small down-facing arrowhead.
  6. Select Splits with a click.
  7. On the chart will be an inconspicuous S with a circle around it. If you hover the cursor over it, you will see a comment.
    For example, this one says
    “Stock split
    June 17, 2013
    Executed a 0.5 Split”

(That means that they issued 1 additional share for every existing share.)

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What to Watch for When Transferring a Stock to the US Dollar Side of an InvestorLine Account

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First I set up a US dollar ledger or journal for my InvestorLine RRSP account. Then I transferred some shares of TD that I already owned from the Canadian dollar side of the account to the US dollar side. I forgot to watch out for one detail before I did this transfer though.

Receiving Dividend Payments in US Dollars within a BMO InvestorLine RRSP US Dollar Sub Account

I asked a BMO InvestorLine agent to move 100 TD shares from my Canadian dollar RRSP account to my US dollar sub-account. They journaled the shares over, as requested, on July 11.

I felt rather smug about that because they pay a dividend on July 31 and I wanted to see how that would work. For instance, what exchange rate and fee would I have to pay to receive the dividend in US dollars?

Watch Your Dividend Dates Before Requesting a CAD to USD Transfer

Unfortunately, I forgot the dividend PAYMENT date is not the important one. It’s the dividend RECORD date I should have tried to beat.

TD declared the July 31 dividend to be payable to shareholders on record on July 9. On July 9, I still held the shares in the Canadian dollar side of my account.

What Happens to a Dividend Payment In This Situation?

I don’t actually know how this will play out. I guess on July 31 I will find out. Actually it will be August 1, as InvestorLine does not pay dividends till one day later, then backdates the transaction. So I will report my findings in August.

I still have TD shares in my Canadian dollar account. I also now have TD shares in my US dollar account. The dividend could

  • Be paid for all of the TD shares in CAD to the cash account in the Canadian ledger; or
  • Be paid for the Canadian-held TD shares in CAD to the cash account in the Canadian ledger, and be paid for the US-held TD shares in CAD to the cash account in the US ledger but be converted to USD after applying an exchange rate and a foreign currency exchange fee.

I already had been puzzled about exactly what they would do for the dividend payable on the shares held in the US ledger:

  • would they pay the dividend in CAD and only apply the exchange rate; or
  • would they pay the dividend in CAD and apply both the exchange rate and a foreign currency exchange fee; or
  • would they pay the dividend is USD at an exchange rate set by TD.

That puzzle will not be solved until Hallowe’en!

Why Transfer TD Anyway?

Some of you may be wondering why I moved TD in the first place. It’s just that I bought it during the recent dip and I’ll be selling it soon to crystallize the capital gain. Then I’ll want to re-invest the money, preferably in a US stock. This was an easy way to move the value to the US side to have it ready to sell when I find something I want to buy.

The Moral of the Story

Be smarter than me. (I know that’s not much of a challenge!)

If you are transferring shares from your Canadian Dollar account to your US Dollar account, try to do it before the date of record. And I guess if you’re transferring them the other way, also keep an eye on the Record date.

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