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Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.


February 4, 2011 -  Be the first to comment
Posted by: Pat McKeough Filed in: Conservative Investing
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CANADIAN PACIFIC RAILWAY LTD. $66.56 (Toronto symbol CP; Shares outstanding: 169.1 million; Market cap: $11.3 billion; TSINetwork Rating: Average; Dividend yield: 1.6%; www.cpr.ca) reports that its earnings rose 18.3% in 2010, to $650.7 million from $550.0 million in 2009. Earnings per share rose 16.7%, to $3.85 from $3.30, on more shares outstanding.

If you exclude unusual items, such as foreign-exchange losses on CP’s U.S.-dollar-denominated loans and gains on real-estate sales, earnings per share would have risen 54.2%, to $3.87 from $2.51. The latest earnings beat the consensus earnings estimate of $3.80 a share.

CP’s revenue rose 13.2%, to $5.0 billion from $4.4 billion in 2009. The company saw revenue gains from fertilizer (up 53.5%), automotive (up 38.0%), consumer and industrial products (up 14.8%), intermodal (up 12.5%), coal (up 10.6%) and forest products (up 5.0%). Revenue from grain shipments fell 0.1%.

The company’s mechanics’ union may go on strike next month. Canadian National Railway (Toronto symbol CNR) recently reached a new deal with the same union. In the event of a strike, CP’s management plans to keep operating the railway.

CP Rail is a buy.

GEORGE WESTON LTD. $70.96 (Toronto symbol WN; Shares outstanding: 129.7 million; Market cap: $9.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%) has paid out a special, one-time dividend of $7.74751 a share, for a total of about $1 billion.

Weston still holds cash of $4 billion. The company could use its high cash balance to raise its 62% stake in Loblaw. It could also buy smaller bakery companies, or grocery-store chains in western Canada or the U.K. The company may also raise its dividend, or pay another special dividend.

George Weston is still a buy.

BANK OF NOVA SCOTIA $57.67 (Toronto symbol BNS: Shares outstanding: 1.0 billion; Market cap: $59.9 billion; TSINetwork Rating: Above Average; Dividend yield: 3.4%; www.scotiabank.com) has completed the purchase of the 82% of DundeeWealth that it didn’t already own.

The $2.3-billion, cash-and-stock deal doubles the size of Bank of Nova Scotia’s mutual-fund business. It also gives the bank a number of new growth opportunities, including access to DundeeWealth’s high-quality clientele. As well, the bank may sell Dundee’s family of Dynamic mutual funds through its branches in Asia and Latin America.

Bank of Nova Scotia is a buy.


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