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Investor Toolkit: How to manage risk when investing in the stock market
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on the fundamentals of successfully investing in the stock market. Each Investor Toolkit update gives you a fundamental tip and shows you …read more »
BP oil spill could turn oil sands stocks into blue chip stocks
In response to the BP oil spill in the Gulf of Mexico, regulators will probably require offshore drillers to install more equipment aimed at preventing future spills. These extra costs would hurt the profits of companies that are active in the Gulf.
That should spur more development of less-risky onshore oil …read more »
3 risks of investing in drug stocks
Investors often comment that we sometimes differ with the mainstream view on which stocks make good investments. That’s especially true with drug stocks.
The general view on these stocks seems to be that they are can’t-miss investments because the baby boomers are reaching an age when they will need drugs …read more »
New Free Report - Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks
Discover how you can make higher profits in gold investing — and minimize your risks
Click here to immediately download our new free report, Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks.
When the economy is weak, gold’s popularity rises. As an informed Canadian investor, you’ve likely noticed that …read more »
3 ways to spot the best stocks for long-term gains
We’ve long relied on these three tips to find the best stocks to recommend in our investment services and newsletters, including our flagship advisory, The Successful Investor. We think they can help you pick winners, too.
1. Some of the best stocks have hidden assets: By hidden assets, we mean assets …read more »
Investor Toolkit: Beware of name-dropping promoters when you buy penny stocks
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on the fundamentals of successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put …read more »
This well-established stock could produce strong gains for the conservative investor
We continue to think investors will profit most — and with the least risk — by buying shares of well-established companies with strong business prospects and strong positions in healthy industries.
(In the current issue of Canadian Wealth Advisor, our newsletter for the conservative investor, we update our buy/sell/hold advice …read more »
Two oil and gas trusts with 2011 pluses
ARC ENERGY TRUST $19.84 (Toronto symbol AET.UN; Units outstanding: 235.9 million; Market cap: $4.7 billion; SI Rating: Speculative) produces oil and gas in western Canada. Its average daily production of 62,824 barrels of oil equivalent (this measurement includes natural gas) is weighted 49% to oil and 51% to natural gas.
In the three months ended September 30, 2009, ARC’s revenue fell 50.8%, to $239.2 million from $485.7 million. Cash flow per unit fell 54.3%, to $0.53 from $1.16. Lower oil and natural-gas prices were the main reasons for the declines.
ARC pays a monthly distribution of $0.10. The units yield 6.1%. The trust plans to convert to a conventional corporation on January 1, 2011. That’s when Ottawa will start taxing income trusts. However, ARC has over $2.2 billion in tax losses that it can use to delay paying taxes. As well, it paid out only 56% of its cash flow to its unitholders as distributions in the latest quarter. That low payout ratio will help it maintain its current distributions.
The trust’s debt remains low, at 13.6% of its market cap. The units trade at 6.7 times ARC’s forecast 2010 cash flow of $2.95 per unit.
ARC Energy Trust is still a buy.
PENN WEST ENERGY TRUST $18.66 (Toronto symbol PWT.UN; Units outstanding: 420.2 million; Market cap: $7.8 billion; SI Rating: Extra Risk) is the largest oil and gas trust in North America.
Penn West has average daily production of 178,124 barrels of oil equivalent (weighted 59% to oil and 41% to natural gas).
In the three months ended September 30, 2009, lower oil and gas prices pushed down Penn West’s revenue by 49.1%, to $732 million from $1.4 billion. Cash flow per unit fell 51.4%, to $0.84 from $1.73.
Penn West pays a $0.15 monthly distribution, for an annualized yield of 9.7%. The trust plans to convert to a conventional corporation before the end of 2011. Penn West has over $6.1 billion in tax losses that it can use to delay paying taxes until well past 2011. As well, its payout ratio will likely average about 50% next year.
The trust’s $3.8-billion long-term debt is 49% of its market cap, but just 2.8 times its annual cash flow. Penn West trades at 5.2 times its forecast 2010 cash flow of $3.60 per unit.
Penn West is still a buy.
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Tags: Canada, canadian income trusts, Convertible, income, OIL, Royalty Trusts, start
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