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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DUN & BRADSTREET CORP. (New York symbol DNB; www.dnb.com) began operating in 1841 and is now the world’s largest provider of credit reports on individual companies. Its database contains information on 220 million businesses in over 200 countries. Companies use these reports to make lending and purchasing decisions and to cut their credit losses....
LOBLAW COMPANIES $40.37 (Toronto symbol L; Shares outstanding: 281.7 million; Market cap: $11.4 billion; TSINetwork Rating: Above Average; Dividend yield: 2.2%; www.loblaw.ca) has risen 20% since it announced its plan to hold the bulk of its properties in a real estate investment trust in December 2012.
Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.
As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.
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Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.
As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.
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ENCANA CORPORATION $18.67 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $13.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 3 % ; www.encana.com) had cash flow per share of $4.80 in 2012, down 16.1%, from $5.72 in 2011. Revenue declined 39.1%, to $5.2 billion from $8.5 billion. That’s partly because the company sold $4.0 billion of assets in 2012, including major stakes in its shale gas properties in B.C. and Alberta.
Encana continues to benefit from its hedging program, which has shielded it from falling natural gas prices. In 2012, the company sold its natural gas at an average price of $4.82 per thousand cubic feet, compared to today’s price of $3.16. For 2013, Encana has hedged 52% of its forecast production at $4.39 per thousand cubic feet.
Even with low natural gas prices, Encana’s balance sheet remains sound. It ended 2012 with cash of $3.2 billion, or $4.32 a share. Its long-term debt of $7.2 billion is a manageable 53% of its market cap.
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Encana continues to benefit from its hedging program, which has shielded it from falling natural gas prices. In 2012, the company sold its natural gas at an average price of $4.82 per thousand cubic feet, compared to today’s price of $3.16. For 2013, Encana has hedged 52% of its forecast production at $4.39 per thousand cubic feet.
Even with low natural gas prices, Encana’s balance sheet remains sound. It ended 2012 with cash of $3.2 billion, or $4.32 a share. Its long-term debt of $7.2 billion is a manageable 53% of its market cap.
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ENERPLUS CORP. $13.64 (Toronto symbol ERF; Shares outstanding: 198.2 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.9%) produces an average of 85,490 barrels of oil equivalent per day (weighted 51% to gas and 49% to oil). Its 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 December 31, 2012, Enerplus’s cash flow per share rose 16.1%, to $1.01 from $0.87 a year earlier. Gas prices fell 11.7%, but that was offset by a 10.7% production increase and lower operating costs.
The company’s shares now yield a very high 7.9%. Enerplus plans to cut its 2013 exploration and development budget by 19.7%, to $685 million from $853 million in 2012. The reduction will slow the company’s production growth, but it will help it maintain its high dividend.
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In the three months ended December 31, 2012, Enerplus’s cash flow per share rose 16.1%, to $1.01 from $0.87 a year earlier. Gas prices fell 11.7%, but that was offset by a 10.7% production increase and lower operating costs.
The company’s shares now yield a very high 7.9%. Enerplus plans to cut its 2013 exploration and development budget by 19.7%, to $685 million from $853 million in 2012. The reduction will slow the company’s production growth, but it will help it maintain its high dividend.
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ARC RESOURCES $25.67 (Toronto symbol ARX; Shares outstanding: 308.9 million; Market cap: $7.9 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and gas in western Canada. Its average daily production of 95,725 barrels of oil equivalent is weighted 61% to gas and 39% to oil.
In the three months ended December 31, 2012, ARC’s cash flow per share fell 13.9%, to $0.68 from $0.79. Production rose 4.0%, but that was offset by a 3.2% decline in gas prices.
The company’s long-term debt is $747.7 million, or a low 9.5% of its market cap. ARC trades at 11.1 times its forecast 2012 cash flow of $2.32 a share.
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In the three months ended December 31, 2012, ARC’s cash flow per share fell 13.9%, to $0.68 from $0.79. Production rose 4.0%, but that was offset by a 3.2% decline in gas prices.
The company’s long-term debt is $747.7 million, or a low 9.5% of its market cap. ARC trades at 11.1 times its forecast 2012 cash flow of $2.32 a share.
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ISHARES AUSTRALIA INDEX FUND $26.91 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks. Its MER is 0.51%.
The fund’s top holdings include BHP Billiton, 11.6%; Commonwealth Bank of Australia, 10.2%; Westpac Banking Corp., 9.0%; Australia and New Zealand Banking Group, 7.5%; National Australia Bank, 6.6%; Woolworths, 4.1%; Wesfarmers, 3.9%; CSL Ltd., 2.9%; Rio Tinto, 2.8%; and Woodside Petroleum, 2.4%.
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 BHP Billiton, 11.6%; Commonwealth Bank of Australia, 10.2%; Westpac Banking Corp., 9.0%; Australia and New Zealand Banking Group, 7.5%; National Australia Bank, 6.6%; Woolworths, 4.1%; Wesfarmers, 3.9%; CSL Ltd., 2.9%; Rio Tinto, 2.8%; and Woodside Petroleum, 2.4%.
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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LOBLAW COMPANIES $40.37 (Toronto symbol L; Shares outstanding: 281.7 million; Market cap: $11.4 billion; TSINetwork Rating: Above Average; Dividend yield: 2.2%; www.loblaw.ca) has risen 20% since it announced its plan to hold the bulk of its properties in a real estate investment trust in December 2012.
Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.
As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.
...
Even so, the stock still trades at a reasonable 16.3 times the $2.47 a share that Loblaw earned in 2012. The company’s earnings could rise to $2.65 a share in 2013. The stock trades at 15.2 times that forecast.
As well, the company recently raised its quarterly dividend by 4.8%, to $0.22 a share from $0.21. The stock now yields 2.2%.
...
ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $65.88 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange.
The fund’s top holdings are Empresas Copec SA (conglomerate), 8.0%; LATAM Airlines SA, 7.2%; Cencosud SA (retailer), 6.4%; Empresa Nacional de Electricidad (electricity), 6.2%; S.A.C.I. Falabella (retail), 5.7%; Quimica y Minera de Chile (mining), 5.4%; Banco Santander Chile (banking), 5.4%; Enersis AS (electricity), 4.8%; and Empresas CMPC (pulp and paper), 4.5%.
The fund’s industry breakdown is: Utilities, 21.6%; Financials, 17.7%; Materials, 13.7%; Consumer Staples, 12.4%; Industrials, 10.7%; Energy, 8.0%; Consumer Discretionary, 7.2%; Telecommunications, 3.1%; and Information Technology, 2.0%.
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The fund’s top holdings are Empresas Copec SA (conglomerate), 8.0%; LATAM Airlines SA, 7.2%; Cencosud SA (retailer), 6.4%; Empresa Nacional de Electricidad (electricity), 6.2%; S.A.C.I. Falabella (retail), 5.7%; Quimica y Minera de Chile (mining), 5.4%; Banco Santander Chile (banking), 5.4%; Enersis AS (electricity), 4.8%; and Empresas CMPC (pulp and paper), 4.5%.
The fund’s industry breakdown is: Utilities, 21.6%; Financials, 17.7%; Materials, 13.7%; Consumer Staples, 12.4%; Industrials, 10.7%; Energy, 8.0%; Consumer Discretionary, 7.2%; Telecommunications, 3.1%; and Information Technology, 2.0%.
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ISHARES MSCI GERMANY FUND $24.74 (New York Exchange symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.
This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are BASF (chemicals), 9.2%; Siemens (engineering conglomerate), 8.8%; Bayer (diversified chemicals), 8.2%; SAP (software), 7.5%; Allianz (insurance), 6.5%; Daimler (autos), 5.5%; Deutsche Bank, 4.5%; Linde AG (industrial gases), 3.4%; and Volkswagen AG (autos), 3.2%.
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This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are BASF (chemicals), 9.2%; Siemens (engineering conglomerate), 8.8%; Bayer (diversified chemicals), 8.2%; SAP (software), 7.5%; Allianz (insurance), 6.5%; Daimler (autos), 5.5%; Deutsche Bank, 4.5%; Linde AG (industrial gases), 3.4%; and Volkswagen AG (autos), 3.2%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $62.18 (New York Exchange symbol EWY; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Korea Index.
The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 5.3%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.4%; SK Hynix Semiconductor, 2.7%; Shinhan Financial, 2.5%; Kia Motors, 2.4%; KB Financial, 2.3%; LG Chemical, 2.2%; and NHN (Internet content), 1.8%.
The fund’s industry breakdown is as follows: Information Technology, 32.1%; Consumer Discretionary, 17.4%; Financials, 13.6%; Industrials, 13.2%; Materials, 10.5%; Consumer Staples, 5.6%; Energy, 3.2%; Utilities, 1.6%; Telecommunication Services, 1.2%; and Health Care, 0.9%.
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The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 5.3%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.4%; SK Hynix Semiconductor, 2.7%; Shinhan Financial, 2.5%; Kia Motors, 2.4%; KB Financial, 2.3%; LG Chemical, 2.2%; and NHN (Internet content), 1.8%.
The fund’s industry breakdown is as follows: Information Technology, 32.1%; Consumer Discretionary, 17.4%; Financials, 13.6%; Industrials, 13.2%; Materials, 10.5%; Consumer Staples, 5.6%; Energy, 3.2%; Utilities, 1.6%; Telecommunication Services, 1.2%; and Health Care, 0.9%.
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