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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PEYTO EXPLORATION & DEVELOPMENT CORP. $28.80 (Toronto symbol PEY; Shares outstanding: 148.5 million; Market cap: $4.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.5%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 49,754 barrels of oil equivalent is 89% gas and 11% oil.
In the three months ended December 31, 2012, the company’s cash flow was $0.62 a share, up 3.3% from $0.60 a year earlier. A 26.3% rise in production offset lower gas prices.
The shares trade at 9.8 times Peyto’s forecast 2013 cash flow of $2.95 a share. The company’s long-term debt of $580 million is a low 13.5% of its $3.4-billion market cap.
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In the three months ended December 31, 2012, the company’s cash flow was $0.62 a share, up 3.3% from $0.60 a year earlier. A 26.3% rise in production offset lower gas prices.
The shares trade at 9.8 times Peyto’s forecast 2013 cash flow of $2.95 a share. The company’s long-term debt of $580 million is a low 13.5% of its $3.4-billion market cap.
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CANADIAN PACIFIC RAILWAY $123.16 (Toronto symbol CP; Shares outstanding: 174.6 million; Market cap: $21.9 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.cpr.ca) continues to benefit from a major restructuring plan, which includes new locomotives, better tracks and software that optimizes train loads and speeds.
In the first three months of 2013, CP’s earnings jumped 52.8%, to $217 million, or $1.24 a share. That beat the consensus estimate of $1.21. A year earlier, the company earned $142 million, or $0.82 a share.
Revenue rose 8.6%, to $1.5 billion from $1.4 billion. The company saw revenue gains from shipping consumer and industrial products (up 24.8%), fertilizers (up 20.6%), grain (up 9.0%), coal (up 8.8%) and forest products (up 6.0%). That offset declines in automotive products (down 7.6%) and intermodal (down 4.2%).
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In the first three months of 2013, CP’s earnings jumped 52.8%, to $217 million, or $1.24 a share. That beat the consensus estimate of $1.21. A year earlier, the company earned $142 million, or $0.82 a share.
Revenue rose 8.6%, to $1.5 billion from $1.4 billion. The company saw revenue gains from shipping consumer and industrial products (up 24.8%), fertilizers (up 20.6%), grain (up 9.0%), coal (up 8.8%) and forest products (up 6.0%). That offset declines in automotive products (down 7.6%) and intermodal (down 4.2%).
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RIOCAN REAL ESTATE INVESTMENT TRUST $28.93 (Toronto symbol REI.UN) has teamed up with ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $30.71 (Toronto symbol AP.UN) and privately held Diamond Corp. to buy the Globe & Mail lands in downtown Toronto. Currently the home of The Globe & Mail newspaper, the 252,617-square-foot property is on 6.47 acres of land forming part of the large city block bounded by Spadina Avenue and Front, Draper and Wellington Streets.
The partners plan to redevelop the property into a retail-office complex. RioCan and Allied will each own 40%, while Diamond will hold 20%. RioCan and Allied will each pay $14.9 million for their stakes.
RioCan is a buy....
The partners plan to redevelop the property into a retail-office complex. RioCan and Allied will each own 40%, while Diamond will hold 20%. RioCan and Allied will each pay $14.9 million for their stakes.
RioCan is a buy....
POWERSHARES QQQ ETF $70.39 (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. That index 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.
The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and Amgen.
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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.
The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and Amgen.
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SPDR DOW JONES INDUSTRIAL AVERAGE ETF $146.74 (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 IBM, ExxonMobil, Chevron, 3M, Travelers Companies, McDonald’s, Johnson & Johnson, Caterpillar, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.
SPDR Dow Jones ETF is a buy.
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The fund’s top holdings are IBM, ExxonMobil, Chevron, 3M, Travelers Companies, McDonald’s, Johnson & Johnson, Caterpillar, United Technologies and Boeing. The fund’s expenses are about 0.17% of its assets.
SPDR Dow Jones ETF is a buy.
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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $22.02 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.3%.
The fund’s top holdings are CIBC, 6.5%; Bonterra Energy, 6.4%; National Bank, 5.8%; TD Bank, 5.5%; Bank of Montreal, 5.3%; Telus Corp., 4.9%; BCE Inc., 4.4%; Royal Bank, 4.4%; Bank of Nova Scotia, 4.1%; and IGM Financial, 4.1%.
The fund holds 51.4% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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The fund’s top holdings are CIBC, 6.5%; Bonterra Energy, 6.4%; National Bank, 5.8%; TD Bank, 5.5%; Bank of Montreal, 5.3%; Telus Corp., 4.9%; BCE Inc., 4.4%; Royal Bank, 4.4%; Bank of Nova Scotia, 4.1%; and IGM Financial, 4.1%.
The fund holds 51.4% of its assets in financial stocks. The top Canadian finance stocks have sound prospects. However, if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector.
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ISHARES S&P/TSX 60 INDEX FUND $17.66 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets.
The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.
The index’s top holdings are Royal Bank, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE, 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus, 1.9%.
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The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include.
The index’s top holdings are Royal Bank, 7.8%; TD Bank, 6.7%; Bank of Nova Scotia, 6.0%; Suncor Energy, 4.6%; Bank of Montreal, 3.6%; CN Railway, 3.6%; Potash Corp., 3.3%; Enbridge, 3.1%; Trans- Canada Corp., 3.0%; BCE, 3.0%; CIBC, 2.9%; Canadian Natural Resources, 2.9%; Barrick Gold, 2.9%; Goldcorp, 2.6%; Manulife Financial, 2.3%; Cenovus Energy, 2.2%; and Telus, 1.9%.
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ENBRIDGE INC. $47.11 (Toronto symbol ENB; Shares outstanding: 806.5 million; Market cap: $38.8 billion; TSINetwork Rating: Above A v e r a g e ; D i v i d e n d y i e l d : 2 . 7 % ; www.enbridge.com) has formed a 50/50 partnership with France’s EDF Energies Nouvelles to buy the Blackspring Ridge wind farm in Alberta for $600 million.
This facility will produce 300 megawatts of power when it’s finished in mid-2014; Enbridge now generates 1,169 megawatts of wind power.
Blackspring Ridge has long-term, fixed-price deals in place for its power. That cuts the risk of this investment. Expanding its renewable energy holdings also helps Enbridge improve its relationships with regulators and environmentalists.
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This facility will produce 300 megawatts of power when it’s finished in mid-2014; Enbridge now generates 1,169 megawatts of wind power.
Blackspring Ridge has long-term, fixed-price deals in place for its power. That cuts the risk of this investment. Expanding its renewable energy holdings also helps Enbridge improve its relationships with regulators and environmentalists.
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VERESEN $13.32 (Toronto symbol VSN; Shares outstanding: 198.4 million; Market cap: $2.7 billion; TSINetwork Rating: Average; Yield: 7.5%) owns pipelines, power plants and gas processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%. Veresen also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable NGL plant.
In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.
To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. It now owns hydroelectric facilities in New York State and B.C.; natural gasfired plants in Ontario, California and Colorado; and waste-heat plants in B.C. and Saskatchewan.
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In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.
To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. It now owns hydroelectric facilities in New York State and B.C.; natural gasfired plants in Ontario, California and Colorado; and waste-heat plants in B.C. and Saskatchewan.
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PEMBINA PIPELINE $32.69 (Toronto symbol PPL; Shares outstanding: 294.9 million; Market cap: $10.2 billion; TSINetwork Rating: Average; Divd. yield: 5.0%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil production, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil output.
In the quarter ended December 31, 2012, revenue rose 170.4%, to $1.3 billion from $468.1 million a year earlier. In April 2012, it paid $3.2 billion for rival Provident Energy, which extracts, transports and stores NGLs. Provident was the main reason for the higher revenue.
Cash flow rose 161.5%, to $172.3 million from $66.0 million. Cash flow per share rose 51.3%, to $0.59 from $0.39, because Pembina issued more shares to pay for Provident.
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In the quarter ended December 31, 2012, revenue rose 170.4%, to $1.3 billion from $468.1 million a year earlier. In April 2012, it paid $3.2 billion for rival Provident Energy, which extracts, transports and stores NGLs. Provident was the main reason for the higher revenue.
Cash flow rose 161.5%, to $172.3 million from $66.0 million. Cash flow per share rose 51.3%, to $0.59 from $0.39, because Pembina issued more shares to pay for Provident.
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