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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ALGONQUIN POWER & UTILITIES CORP. $6.79 (Toronto symbol AQN; Shares outstanding: 205.6 million; Market cap: $1.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.0%) has nearly tripled in size over the last year through a series of acquisitions.
Algonquin made four acquisitions in 2012, and it has completed another four so far in 2013. Most recently, it paid $140.7 million U.S. for a natural gas distributor in Georgia that serves 64,000 clients.
The company’s regulated utility businesses now provide water, electricity and natural gas to over 470,000 customers, up from 120,000 a year ago. In addition, Algonquin’s hydroelectric, thermal energy and wind facilities generate 1,100 megawatts of power, up from 460.
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Algonquin made four acquisitions in 2012, and it has completed another four so far in 2013. Most recently, it paid $140.7 million U.S. for a natural gas distributor in Georgia that serves 64,000 clients.
The company’s regulated utility businesses now provide water, electricity and natural gas to over 470,000 customers, up from 120,000 a year ago. In addition, Algonquin’s hydroelectric, thermal energy and wind facilities generate 1,100 megawatts of power, up from 460.
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TRANSCANADA CORP. $47.15 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $33.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has completed the purchase of two more Ontario solar power facilities from Canadian Solar (Nasdaq symbol CSIQ) for $470 million.
TransCanada now owns three of the nine solar farms it agreed to buy from Canadian Solar in December 2011. It expects to take possession of the remaining six by the end of 2014.
The company has 20-year deals to sell the power from these nine solar farms, which cuts the risk of this investment.
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TransCanada now owns three of the nine solar farms it agreed to buy from Canadian Solar in December 2011. It expects to take possession of the remaining six by the end of 2014.
The company has 20-year deals to sell the power from these nine solar farms, which cuts the risk of this investment.
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SUN LIFE FINANCIAL $35.32 (Toronto symbol SLF; Shares outstanding: 606.0 million; Market cap: $21.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations.
The company mainly operates in Canada, the U.S. and the U.K., but it has expanded into Asia, China and India. Sun Life has $590 billion of assets under management.
In the three months ended June 30, 2013, Sun Life’s earnings per share jumped 69.0%, to $0.71 from $0.42. Revenue rose 18.5%, to $3.7 billion from $3.1 billion.
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The company mainly operates in Canada, the U.S. and the U.K., but it has expanded into Asia, China and India. Sun Life has $590 billion of assets under management.
In the three months ended June 30, 2013, Sun Life’s earnings per share jumped 69.0%, to $0.71 from $0.42. Revenue rose 18.5%, to $3.7 billion from $3.1 billion.
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MANITOBA TELECOM SERVICES INC. $29.44 (Toronto symbol MBT; Shares outstanding: 67.8 million; Market cap: $2.0 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.mts.ca) is down over 9% since the federal government’s October 8, 2013, decision to block the company’s recent deal to sell its Allstream subsidiary to an Egyptian billionaire.
Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Ottawa felt that selling Allstream to a foreign investor could risk national security.
Manitoba Tel’s main telecom business continues to perform well, thanks to strong demand for wireless and high-speed Internet services. However, Allstream is still incurring big losses.
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Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Ottawa felt that selling Allstream to a foreign investor could risk national security.
Manitoba Tel’s main telecom business continues to perform well, thanks to strong demand for wireless and high-speed Internet services. However, Allstream is still incurring big losses.
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CANADIAN PACIFIC RAILWAY $151.56 (Toronto symbol CP; Shares outstanding: 175.1 million; Market cap: $26.4 billion; TSINetwork Rating: Average; Dividend yield: 0.9%; www.cpr.ca), transports freight between Montreal and Vancouver and connects with hubs in the U.S. Midwest and northeast.
In the quarter ended September 30, 2013, CP’s revenue rose 5.7%, to $1.53 billion from $1.45 billion a year earlier. Earnings jumped 144.7%, to $331 million, or $1.88 a share, from $224 million, or $1.31.
CP’s operating ratio improved to 65.9% from 74.1% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) The company shipped more goods and made better use of its assets in the latest quarter. CEO Hunter Harrison feels he can cut CP’s operating ratio even further.
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In the quarter ended September 30, 2013, CP’s revenue rose 5.7%, to $1.53 billion from $1.45 billion a year earlier. Earnings jumped 144.7%, to $331 million, or $1.88 a share, from $224 million, or $1.31.
CP’s operating ratio improved to 65.9% from 74.1% a year ago. (Operating ratio is calculated by dividing regular operating costs by revenue. The lower the ratio, the better.) The company shipped more goods and made better use of its assets in the latest quarter. CEO Hunter Harrison feels he can cut CP’s operating ratio even further.
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WAJAX CORP. (Toronto symbol WJX; www.wajax.ca) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries....
THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) gets 55% of its revenue by selling news and information to professionals in the banking industry. The remaining 45% comes from providing specialized information products to clients in the legal, accounting and scientific research fields....
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks 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....
AIMIA INC. (Toronto symbol AIM; www.aimia.com) owns and operates Aeroplan, Canada’s largest loyalty program. It also owns Nectar, the U.K.’s biggest loyalty program. In addition, Aimia has interests in Air Miles Middle East and Nectar Italia, as well as Club Premier, the leading loyalty program in Mexico....
Every Wednesday, we publish our “Investor Toolkit” series. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on investing in the stock market and other investment topics. Each Investor Toolkit update gives you a fundamental piece of our investment strategy, and shows you how you can put it into practice right away. Tip of the week: “You should start investing with a handful of good stocks and add to them steadily, being careful never to dilute your potential gains with too few, or too many, stocks.”...
