How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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BAXTER INTERNATIONAL INC. (New York symbol BAX; www.baxter.com) continues to expand overseas, which helps cut its exposure to the 2.3% excise tax it must pay on sales of medical devices as part of the Affordable Care Act (or Obamacare). In 2012, overseas markets supplied 58% of Baxter’s revenue....
Pat McKeough responds to many requests from members of his Inner Circle for specific stock picks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. Last week we had a question from an Inner Circle members about one of the rare pharmaceutical stocks in Canada. Valeant Pharmaceuticals was purchased in 2010 by Biovail, then Canada’s largest pharmaceutical firm, and the new company adopted the Valeant name. The company has an aggressive policy of growing by acquisition—it made over a dozen in 2012 alone—and Pat examines several of its recent acquisitions and assesses the overall risks and rewards of this growth strategy. ...
PEYTO EXPLORATION & DEVELOPMENT CORP. $31.51 (Toronto symbol PEY; Shares outstanding: 148.5 million; Market cap: $4.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.1%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 56,343 barrels of oil equivalent is 89% gas and 11% oil.
In the quarter ended September 30, 2013, Peyto’s cash flow rose 24.1%, to $0.67 a share from $0.54 a year earlier. That’s because Peyto raised its production by 22.4%. Gas prices also gained 16.0%, to an average of $2.97 per thousand cubic feet from $2.56, while oil prices rose 17.8%, to $89.46 a barrel from $75.88.
The company has started up three gas plants since the quarter ended. That has let it activate 25 new wells, pushing up its production from 60,000 barrels a day to 70,000.
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In the quarter ended September 30, 2013, Peyto’s cash flow rose 24.1%, to $0.67 a share from $0.54 a year earlier. That’s because Peyto raised its production by 22.4%. Gas prices also gained 16.0%, to an average of $2.97 per thousand cubic feet from $2.56, while oil prices rose 17.8%, to $89.46 a barrel from $75.88.
The company has started up three gas plants since the quarter ended. That has let it activate 25 new wells, pushing up its production from 60,000 barrels a day to 70,000.
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PENN WEST PETROLEUM $9.14 (Toronto symbol PWT; Shares outstanding: 488.1 million; Market cap: $4.4 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 6 . 1 % ; www.pennwest.com) is one of Canada’s largest oil and gas producers.
Penn West continues to shore up its finances and take steps to boost its value since appointing Rick George as chairman and Allan Markin as vice-chairman. These moves include cutting staff, selling assets and lowering its dividend.
The company now plans to sell a further $1.5 billion to $2 billion of assets by the end of 2014. It expects to close about $485 million of these deals by the end of this year. The company will use the proceeds to further pay down its debt.
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Penn West continues to shore up its finances and take steps to boost its value since appointing Rick George as chairman and Allan Markin as vice-chairman. These moves include cutting staff, selling assets and lowering its dividend.
The company now plans to sell a further $1.5 billion to $2 billion of assets by the end of 2014. It expects to close about $485 million of these deals by the end of this year. The company will use the proceeds to further pay down its debt.
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BCE INC. $46.67 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $36.2 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%; www.bce.ca) is selling four of its specialty TV channels: Family Channel, Disney XD and the English and French Disney Junior stations. The buyer is DHX Media (Toronto symbol DHX).
The company acquired these channels as part of its $3.3-billion purchase of Astral Media in July 2013. Selling them will help BCE comply with conditions that regulators imposed as part of that deal.
If regulators approve, BCE will receive $170 million for these four channels. The company aims to complete the sale in 2014.
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The company acquired these channels as part of its $3.3-billion purchase of Astral Media in July 2013. Selling them will help BCE comply with conditions that regulators imposed as part of that deal.
If regulators approve, BCE will receive $170 million for these four channels. The company aims to complete the sale in 2014.
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ISHARES MSCI CANADA INDEX FUND $28.59 (New York symbol EWC; buy or sell through brokers; ca.ishares.com) holds the stocks in the Morgan Stanley Capital International Canada Index. The fund has a 0.49% MER.
The index’s top holdings are Royal Bank, 7.4%; TD Bank, 6.5%; Bank of Nova Scotia, 5.7%; Suncor Energy, 4.0%; CN Railway, 3.7%; Bank of Montreal, 3.5%; Manulife Financial, 2.7%; Canadian Natural Resources, 2.7%; CIBC, 2.7%; Valeant Pharmaceuticals, 2.7%; and Enbridge, 2.5%.
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POWERSHARES QQQ ETF $85.49 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares- .com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index, which consists of the 100 largest shares on the Nasdaq exchange, based on market cap.
The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.
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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $158.76 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.
The fund’s top holdings are Visa, IBM, The Goldman Sachs Group, ExxonMobil, Chevron, 3M, McDonald’s, Johnson & Johnson, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.
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