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CELTIC MINERALS $0.35 (Toronto symbol CME; SI Rating: Start-up) (403-261-2890; www.celticminerals.com; Shares outstanding: 60.0 million; Market cap: $20.7 million) has agreed to acquire a 75% interest in the Colliers River copper project, near Conception Bay, Newfoundland. A diamond drill has been mobilized on the property and drilling is underway. Celtic has the right to earn a 75% interest over three years by incurring expenditures of $300,000 on the property, and by making payments to its partner totaling $125,000, plus a payment of 175,000 Celtic shares.
Strong mineral showings were first discovered at Colliers River in 1858 in surface samples, at which time a small shaft was sunk. No work has been completed since then. Celtic Mineral’s main prospect is still its West Voisey’s Bay property, 12 kilometers southwest of Inco’s Voisey’s Bay nickel-copper-cobalt mine in Labrador.
It’s a long way between the initial drilling phase Celtic is now at on both properties, and the commercial production phase when it begins making money. Still, the stock has speculative appeal for its landholdings in regions with proven potential.
Celtic is still a buy, but for highly aggressive investors only.
NISSAN MOTOR CO. $23.39 (Nasdaq symbol NSANY; SI Rating: Above-average) (310-771-3111; www.nissanmotors.com; Shares outstanding: 2.3 billion; Market cap: $52.9 billion) has dropped several dollars since the start of February, on news that its earnings fell 22.6% in the latest quarter, to 104.5 billion yen from 135 billion yen a year earlier. Nissan’s unit-volume vehicle sales fell 3% to 795,000 cars and trucks, but its revenues rose 1.8% to 2.34 trillion yen.
Sales fell in Japan and Europe, and rose only 0.9% in North America, mainly due to competition from cars with better gas mileage, and weak sales of new Nissan models. Earnings also suffered from rising costs for steel and other raw materials.
We still like Nissan’s long-term outlook. The stock is a buy.
DOMINO’S PIZZA $31.76 (New York symbol DPZ; SI Rating: Average)(734-930-3030; www.dominos.com; Shares outstanding: 62.3 million; Market cap: $2.0 billion) shot up recently after it announced a recapitalization plan. This includes buying back 13.9 million shares of its common stock, or around 22% of the shares outstanding. The company may also pay a special dividend.
Domino’s will also buy back or pay down its outstanding debt. It will then negotiate an asset-backed borrowing arrangement of up to $1.85 billion. This will cut its interest costs and carry fewer restrictive rules than traditional bank or bond financing.
Domino’s is still a buy.
STANTEC INC. $27.50 (Toronto symbol STN; SI Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 45.3 million; Market cap: $1.2 billion) is now trading near all-time highs. The company offers a broad range of consulting, project delivery, design/build and technology services to clients in market segments that include urban land, industrial, environment, transportation and buildings.
Stantec has just agreed to acquire New York-based Vollmer Associates, an engineering, architecture, planning, landscape architecture, and survey services firm focused on the transportation sector. Vollmer has 650 employees and offices throughout the northeast United States. Vollmer’s major New York projects have included the Columbus Circle reconstruction, the Hearst office tower and the Times Square Station rehabilitation.
The professional consulting services industry in which Stantec competes is highly fragmented. Stantec acquires companies with a top reputation in their areas of expertise and geographic location. Stantec generates further internal growth by selling its other services to existing clients. It cuts costs through the sharing of administrative overhead, the sharing of office facilities, centralized financing at lower rates, and pooled employee benefits. However, continually integrating acquisitions adds risk.
Stantec is still a hold.
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