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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GUGGENHEIM CHINA SMALL CAP ETF $22.80 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.
The $266.7-millon fund’s top holdings are Youku Tudou, 1.3%; Sino Biopharmaceutical, 1.2%; China Resources Gas Group, 1.2%, Air China, 1.1%; Tsingtao Brewery Co., 1.1%; Guangzhou R&F Properties, 1.0%; BYD Co., 1.0%; Nine Dragons Paper Holdings, 1.0%; China Everbright International, 1.0%; and China Communications Services Corp., 1.0%.
As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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The $266.7-millon fund’s top holdings are Youku Tudou, 1.3%; Sino Biopharmaceutical, 1.2%; China Resources Gas Group, 1.2%, Air China, 1.1%; Tsingtao Brewery Co., 1.1%; Guangzhou R&F Properties, 1.0%; BYD Co., 1.0%; Nine Dragons Paper Holdings, 1.0%; China Everbright International, 1.0%; and China Communications Services Corp., 1.0%.
As China’s economy matures and wages rise, domestic spending should continue to increase. As well, China’s leaders will likely need to spend more on programs to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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SPDR S&P CHINA ETF $68.23 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) is an ETF that aims to track the S&P China BMI Index, which is made up of all publicly traded Chinese stocks that are available to foreign investors. Right now, SPDR S&P China ETF holds 184 stocks.
The $1.1-billion fund’s top holdings are China Construction Bank, 7.9%; China Mobile, 6.7%; Industrial & Commercial Bank, 6.2%; Tencent Holdings, 4.1%; Bank of China, 4.0%; CNOOC Ltd., 3.9%; PetroChina, 3.5%; Baidu, 2.9%; China Petroleum & Chemical, 2.5%; and China Life, 2.5%;
The fund’s breakdown by industry is as follows: Financials, 34.9%; Oil and Gas, 14.0%; Information Technology, 11.4%; Industrials, 9.2%; Telecommunication Services, 8.6%; Consumer Discretionary, 6.2%; Consumer Staples, 5.6%; Basic Materials, 4.8%; Utilities, 3.2%; and Health Care, 2.1%.
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The $1.1-billion fund’s top holdings are China Construction Bank, 7.9%; China Mobile, 6.7%; Industrial & Commercial Bank, 6.2%; Tencent Holdings, 4.1%; Bank of China, 4.0%; CNOOC Ltd., 3.9%; PetroChina, 3.5%; Baidu, 2.9%; China Petroleum & Chemical, 2.5%; and China Life, 2.5%;
The fund’s breakdown by industry is as follows: Financials, 34.9%; Oil and Gas, 14.0%; Information Technology, 11.4%; Industrials, 9.2%; Telecommunication Services, 8.6%; Consumer Discretionary, 6.2%; Consumer Staples, 5.6%; Basic Materials, 4.8%; Utilities, 3.2%; and Health Care, 2.1%.
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TORSTAR $7.26 (Toronto symbol TS.B; Shares outstanding: 79.7 million; Market cap: $578.6 million; TSINetwork Rating: Above Average; Dividend yield: 7.2%; www.torstar.com) reports that its revenue fell 4.1% in 2012, to $1.49 billion from $1.55 billion in 2011. Before onetime items, earnings per share fell 25.0%, to $1.35 from $1.80.
Torstar continues to struggle with falling newspaper ad sales. Strong competition and unfavourable foreign exchange rates are also hurting profits at Harlequin Enterprises, the world’s leading romance novel publisher.
To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. The company also plans to start charging users to access its websites.
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Torstar continues to struggle with falling newspaper ad sales. Strong competition and unfavourable foreign exchange rates are also hurting profits at Harlequin Enterprises, the world’s leading romance novel publisher.
To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. The company also plans to start charging users to access its websites.
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ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $24.07 (New York symbol ESR; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 75.4%; Poland, 18.4%; Czech Republic, 3.2%; and Hungary, 2.6%.
The fund’s top holdings are Gazprom (Russia: gas utility), 15.4%; Sberbank (Russia: bank), 11.5%; Lukoil (Russia: oil), 11.1%; Magnit OJSC (Russia: retailing), 4.0%; Mobile TeleSystems (Russia: wireless), 3.6%; Novatek (Russia: natural gas), 3.3%; Uralkali (Russia: potash), 3.3%; Rosneft Oil Company (Russia: oil and gas), 3.3%; Tafneft (Russia: oil and gas), 3.2%; and PKO Bank Polski SA (Poland: banking), 3.1%.
iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.69%.
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The fund’s top holdings are Gazprom (Russia: gas utility), 15.4%; Sberbank (Russia: bank), 11.5%; Lukoil (Russia: oil), 11.1%; Magnit OJSC (Russia: retailing), 4.0%; Mobile TeleSystems (Russia: wireless), 3.6%; Novatek (Russia: natural gas), 3.3%; Uralkali (Russia: potash), 3.3%; Rosneft Oil Company (Russia: oil and gas), 3.3%; Tafneft (Russia: oil and gas), 3.2%; and PKO Bank Polski SA (Poland: banking), 3.1%.
iShares MSCI Emerging Markets Eastern Europe Index Fund’s expense ratio is 0.69%.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $23.61 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.
The fund’s top holdings are ITC Ltd. (conglomerate), 9.3%; Infosys Technologies (software), 7.6%; Housing Development Finance, 7.1%; Reliance Industries Ltd. (conglomerate), 7.0%; ICICI Bank, 6.7%; HDFC Bank, 6.4%; Tata Consultancy Services (information technology), 4.4%; Larsen & Toubro Ltd. (conglomerate), 4.1%; Oil & Natural Gas Corp., 3.0%; and State Bank of India, 3.0%.
The fund’s industry breakdown includes Banks, 20.4%; Computers, 14.5%; Cigarettes, 9.3%; Refineries, 7.5%; Housing, 7.1%; Pharmaceuticals, 5.3%; Engineering, 4.1%; Oil Exploration and Production, 3.9%; Automobiles, 3.1%; and Utilities, 2.8%; The ETF has a 0.92% expense ratio.
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The fund’s top holdings are ITC Ltd. (conglomerate), 9.3%; Infosys Technologies (software), 7.6%; Housing Development Finance, 7.1%; Reliance Industries Ltd. (conglomerate), 7.0%; ICICI Bank, 6.7%; HDFC Bank, 6.4%; Tata Consultancy Services (information technology), 4.4%; Larsen & Toubro Ltd. (conglomerate), 4.1%; Oil & Natural Gas Corp., 3.0%; and State Bank of India, 3.0%.
The fund’s industry breakdown includes Banks, 20.4%; Computers, 14.5%; Cigarettes, 9.3%; Refineries, 7.5%; Housing, 7.1%; Pharmaceuticals, 5.3%; Engineering, 4.1%; Oil Exploration and Production, 3.9%; Automobiles, 3.1%; and Utilities, 2.8%; The ETF has a 0.92% expense ratio.
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PENGROWTH ENERGY $4.98 (Toronto symbol PGF; Shares outstanding: 512.6 million; Market cap: $2.6 billion; TSINetwork Rating: Average; Dividend yield: 9.6%; www.pengrowth.com) produced 85,748 barrels of oil equivalent a day (60% natural gas and 40% oil) in 2012. That’s up 15.9% from 73,973 barrels in 2011.
The stock is down 47% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 69% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.6% annualized yield.
However, Pengrowth’s rising oil production will cut its risk. This includes its Lindbergh oil sands project, which is now under construction. Moreover, the company has $4.5 billion of tax pools that it can use to cut its tax bill until 2017.
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The stock is down 47% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 69% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.6% annualized yield.
However, Pengrowth’s rising oil production will cut its risk. This includes its Lindbergh oil sands project, which is now under construction. Moreover, the company has $4.5 billion of tax pools that it can use to cut its tax bill until 2017.
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ENBRIDGE INC. $46.66 (Toronto symbol ENB; Shares outstanding: 806.5 million; Market cap: $37.6 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and gas from western Canada to eastern Canada and the U.S.
The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State.
Enbridge is spending $27 billion on expansion projects between 2012 and 2016. This excludes the controversial $5.5-billion Northern Gateway pipeline—but it includes a $6.2-billion plan to build pipelines and rail links to move oil from the Bakken region of North Dakota and Saskatchewan, as well as $5.8 billion of new lines to pump more oil from western Canada to the Gulf Coast.
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The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State.
Enbridge is spending $27 billion on expansion projects between 2012 and 2016. This excludes the controversial $5.5-billion Northern Gateway pipeline—but it includes a $6.2-billion plan to build pipelines and rail links to move oil from the Bakken region of North Dakota and Saskatchewan, as well as $5.8 billion of new lines to pump more oil from western Canada to the Gulf Coast.
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MCKESSON CORP. (New York symbol MCK; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also owns 49% of Mexico’s largest drug distributor. McKesson’s clients include 40,000 pharmacies, as well as doctor’s offices, hospitals and clinics. It also sells surgical tools and health and beauty products....
CANADIAN PACIFIC RAILWAY $122.51 (Toronto symbol CP; Shares outstanding: 174.2 million; Market cap: $21.3 billion; TSINetwork Rating: Above Average; Dividend yield: 1.1%; www.cpr.ca), transports freight between Montreal and Vancouver and connects with hubs in the U.S. midwest and northeast.
In the quarter ended December 31, 2012, CP’s revenue rose 6.7%, to $1.50 billion from $1.41 billion a year earlier. Earnings rose 17.9%, to $224 million, or $1.28 a share, from $190 million, or $1.11.
CP’s operating ratio improved to 74.3% in the latest quarter from 78.5% 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 to as low as 65% by 2016.
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In the quarter ended December 31, 2012, CP’s revenue rose 6.7%, to $1.50 billion from $1.41 billion a year earlier. Earnings rose 17.9%, to $224 million, or $1.28 a share, from $190 million, or $1.11.
CP’s operating ratio improved to 74.3% in the latest quarter from 78.5% 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 to as low as 65% by 2016.
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ENCANA CORP. $18.66 (Toronto symbol ECA; Shares outstanding: 736.3 million; Market cap: $13.7 billion; TSINetwork Rating: Average; Dividend yield: 4.4%; www.encana.com) is one of North America’s largest natural gas producers. Its proven reserves should last over 11 years.
In the three months ended December 31, 2012, Encana’s cash flow per share fell 17.3%, to $1.10 from $1.33 a year earlier (all amounts except share price and market cap in U.S. dollars).
Natural gas accounts for 95% of Encana’s production. In response to lower gas prices, the company cut its output by 14.8% during the quarter, to 2.9 billion cubic feet per day from 3.5 billion; this was the main reason for the lower cash flow.
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In the three months ended December 31, 2012, Encana’s cash flow per share fell 17.3%, to $1.10 from $1.33 a year earlier (all amounts except share price and market cap in U.S. dollars).
Natural gas accounts for 95% of Encana’s production. In response to lower gas prices, the company cut its output by 14.8% during the quarter, to 2.9 billion cubic feet per day from 3.5 billion; this was the main reason for the lower cash flow.
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