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. (Toronto symbol AQN; www.algonquinpower.com) has nearly tripled in size over the last year through a series of acquisitions....
SUN LIFE FINANCIAL (Toronto symbol SLF; www.sunlife.ca) sells savings, retirement, pension and life insurance products to individuals and corporations....
Pat McKeough responds to many requests from members of his Inner Circle for specific advice on trading 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....
MANULIFE FINANCIAL $18.66 (Toronto symbol MFC; Shares outstanding: 1.8 billion; Market cap: $33.7 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment-management services. It operates globally and has $567 billion of assets under management.
Excluding one-time items, Manulife’s earnings per share rose 3.3% in the three months ended June 30, 2013, to $0.31 from $0.30. That fell short of the consensus estimate of $0.34. Revenue rose slightly, to $6.50 billion from $6.42 billion.
Insurance sales were down 3%, mostly due to lower sales in Asia, where sales were unusually high a year earlier ahead of tax changes. That offset stronger demand for mutual funds and investment products.
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Excluding one-time items, Manulife’s earnings per share rose 3.3% in the three months ended June 30, 2013, to $0.31 from $0.30. That fell short of the consensus estimate of $0.34. Revenue rose slightly, to $6.50 billion from $6.42 billion.
Insurance sales were down 3%, mostly due to lower sales in Asia, where sales were unusually high a year earlier ahead of tax changes. That offset stronger demand for mutual funds and investment products.
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CENOVUS ENERGY $30.31 (Toronto symbol CVE; Shares outstanding: 755.8 million; Market cap: $23.3 billion; TSINetwork Rating: Average; Dividend yield: 3.2%; www.cenovus.com) operates three heavy oil projects in Alberta and one in Saskatchewan. It gets about half its output from the oil sands. Conventional oil and natural gas wells supply the other half. The company’s reserves should last 23 years.
In the three months ended June 30, 2013, Cenovus’s production rose 2.2%. The increase helped push up revenue to $4.5 billion from $4.2 billion. However, higher operating costs from new projects caused the company’s earnings to decline 8.1%, to $0.34 from $0.37. Cash flow per share fell 5.7%, to $1.15 from $1.22.
Cenovus’s outlook is positive, and it plans to spend $3.3 billion to $3.7 billion annually over the next 10 years to increase its production.
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In the three months ended June 30, 2013, Cenovus’s production rose 2.2%. The increase helped push up revenue to $4.5 billion from $4.2 billion. However, higher operating costs from new projects caused the company’s earnings to decline 8.1%, to $0.34 from $0.37. Cash flow per share fell 5.7%, to $1.15 from $1.22.
Cenovus’s outlook is positive, and it plans to spend $3.3 billion to $3.7 billion annually over the next 10 years to increase its production.
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ENERPLUS CORP. $17.05 (Toronto symbol ERF; Shares outstanding: 200.3 million; Market cap: $3.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.3%) produces an average of 90,037 barrels of oil equivalent a day (54% gas and 46% oil).
The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.
In the three months ended June 30, 2013 Enerplus’s cash flow per share rose 37.8%, to $1.02 from $0.74 a year earlier. Production increased 9.6%, oil prices gained 11.6% and gas prices jumped 79.6%.
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The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.
In the three months ended June 30, 2013 Enerplus’s cash flow per share rose 37.8%, to $1.02 from $0.74 a year earlier. Production increased 9.6%, oil prices gained 11.6% and gas prices jumped 79.6%.
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ARC RESOURCES $26.49 (Toronto symbol ARX; Shares outstanding: 312.4 million; Market cap: $8.2 billion; TSINetwork Rating: Speculative; Dividend yield: 4.5%; www.arcresources.com) produces oil and natural gas in Western Canada. The company’s average daily output of 93,436 barrels of oil equivalent (including gas) is weighted 61% to gas and 39% to oil.
In the three months ended June 30, 2013, cash flow per share rose 14.0%, to $0.65 from $0.57. Production fell slightly, but a 91.6% rise in gas prices more than offset the lower output.
ARC’s long-term debt is $755.0 million, or a low 9.2% of its market cap. It trades at 10.3 times its forecast 2012 cash flow of $2.56 a share.
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In the three months ended June 30, 2013, cash flow per share rose 14.0%, to $0.65 from $0.57. Production fell slightly, but a 91.6% rise in gas prices more than offset the lower output.
ARC’s long-term debt is $755.0 million, or a low 9.2% of its market cap. It trades at 10.3 times its forecast 2012 cash flow of $2.56 a share.
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ISHARES AUSTRALIA INDEX FUND $25.47 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 70 largest Australian stocks. Its MER is 0.50%.
The fund’s top holdings include Commonwealth Bank of Australia, 10.7%; BHP Billiton, 10.6%; Westpac Banking Corp., 9.4%; Australia and New Zealand Banking Group, 7.8%; National Australia Bank, 7.5%; Woolworths, 4.0%; Wesfarmers, 3.8%; CSL Ltd., 2.9%; Rio Tinto, 2.5%; Woodside Petroleum, 2.3%; and Westfield Group, 2.1%.
Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.
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The fund’s top holdings include Commonwealth Bank of Australia, 10.7%; BHP Billiton, 10.6%; Westpac Banking Corp., 9.4%; Australia and New Zealand Banking Group, 7.8%; National Australia Bank, 7.5%; Woolworths, 4.0%; Wesfarmers, 3.8%; CSL Ltd., 2.9%; Rio Tinto, 2.5%; Woodside Petroleum, 2.3%; and Westfield Group, 2.1%.
Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.
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MANITOBA TELECOM $32.55 (Toronto symbol MBT; Shares outstanding: 67.8 million; Market cap: $2.2 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.mts.ca) has paid an undisclosed sum for privately held EPIC Information Solutions.
Winnipeg-based EPIC provides computer and networking services to over 700 businesses in Manitoba and Saskatchewan. Its expertise will help Manitoba Telecom offer more communication services to its business clients, particularly in the fast-growing field of cloud computing.
EPIC’s existing management and staff will remain with the company, which will operate as a separate, wholly owned subsidiary of Manitoba Telecom.
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Winnipeg-based EPIC provides computer and networking services to over 700 businesses in Manitoba and Saskatchewan. Its expertise will help Manitoba Telecom offer more communication services to its business clients, particularly in the fast-growing field of cloud computing.
EPIC’s existing management and staff will remain with the company, which will operate as a separate, wholly owned subsidiary of Manitoba Telecom.
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