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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TRANSCANADA CORP. $45.95 (Toronto symbol TRP; Shares outstanding: 704.4 million; Market cap: $32.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.transcanada.com) operates 68,500 kilometres of pipelines that pump natural gas in Canada and the U.S.
The company also owns or has interests in over 10,800 megawatts of power generation. That includes Bruce Power LP, a nuclear power plant in Ontario.
In the three months ended June 30, 2012, TransCanada’s revenue rose slightly, to $1.81 billion from $1.80 billion a year earlier. Earnings per share fell 9.8%, to $0.46 from $0.51, mostly due to the negative impact of lower natural gas and power demand on its operations.
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The company also owns or has interests in over 10,800 megawatts of power generation. That includes Bruce Power LP, a nuclear power plant in Ontario.
In the three months ended June 30, 2012, TransCanada’s revenue rose slightly, to $1.81 billion from $1.80 billion a year earlier. Earnings per share fell 9.8%, to $0.46 from $0.51, mostly due to the negative impact of lower natural gas and power demand on its operations.
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ENBRIDGE INC. $40.50 (Toronto symbol ENB; Shares outstanding: 794.9 million; Market cap: $33.3 billion; TSINetwork Rating: Above Average; Dividend yield: 2.8%; www.enbridge.com) gets 80% of its revenue by operating pipelines that pump crude oil and natural gas from western Canada to eastern Canada and the U.S. The remaining 20% mainly comes from distributing gas to consumers in Ontario, Quebec, New Brunswick and New York State.
Enbridge has spent over $12 billion on new growth projects in the past three years. This includes new pipelines to handle rising oil sands and shale gas production. Meanwhile, the company expects to complete another $13 billion in projects by the end of 2015. Additional projects are likely to follow.
In the three months ended June 30, 2012, revenue fell 17.5%, to $5.7 billion from $6.9 billion on lower gas prices. However, earnings per share before one-time items rose 5.9%, to $0.36 from $0.34.
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Enbridge has spent over $12 billion on new growth projects in the past three years. This includes new pipelines to handle rising oil sands and shale gas production. Meanwhile, the company expects to complete another $13 billion in projects by the end of 2015. Additional projects are likely to follow.
In the three months ended June 30, 2012, revenue fell 17.5%, to $5.7 billion from $6.9 billion on lower gas prices. However, earnings per share before one-time items rose 5.9%, to $0.36 from $0.34.
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Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice that will help you develop a successful approach to investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Financial ratios will tell you a lot about a stock—but look closer and you may get an even clearer picture.”...
The more you know about investing, the more successful you will be. That has been Pat McKeough’s approach through four decades as an investor and investment counsellor. He regularly presents his views on specific investment topics on video in order to share the insights he has gathered over the years. In today’s video, Pat points out that while the knowledge you acquire is certain to enhance your success an investor, it is also true that a little knowledge can be a dangerous thing. That applies to one of the mainstays of stock research, the price/earnings ratio (the current share price divided by earnings per share). As a staple of stock quotes, the p/e ratio is widely used as a guide to the future profitability of a stock. But when it’s used on its own without taking other factors into account, Pat observes, it can lead to very costly mistakes. ...
Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. 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 the Inner Circle. This week, one Inner Circle member asked Pat how he thinks one growing U.S. consumer chain measures up as a stock market investment. Tapping into the increasing demand for a healthier diet, this stock has already made its presence felt in Canada and aims to continue its ambitious expansion program....
Pat McKeough responds to many personal questions on buying stocks and other investment topics from the members of his Inner Circle. 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. Recently, an Inner Circle member asked about a Canadian stock that is going through a transition period. This printing firm, which has specialized in cheques for many years, is using two acquisitions to help it diversify as electronic transactions become the norm. ...
We developed our TSINetwork ratings to help investors quickly and easily identify stocks with the asset size and investment quality to weather market downturns and changing industry conditions. Stocks of this quality are the best investments for long-term profits. You will find our TSINetwork ratings (Highest Quality, Above Average, Average and Extra Risk) next to each stock we recommend in our newsletters. Obviously, we take a number of factors into account before we assign these ratings. Many involve a company’s financial profile....
Every Wednesday, we publish our “Investor Toolkit” investing advice series. Whether you’re a new or experienced investor, these weekly updates are designed to give you our specific advice on successful investing. Each Investor Toolkit update gives you a fundamental piece of investing advice and shows you how you can put it into practice right away. Tip of the week: “Short selling stocks may seem like a potential money-making opportunity, but there are pitfalls that don’t exist when you’re buying stocks.”...
While a high p/e ratio can be a sign that a stock is overvalued, it can also be a signal that investors recognize the company’s future earnings potential. One example of a well-established stock with a high p/e ratio is the world’s most recognizable fast-food chain. MCDONALD’S CORP. (New York symbol MCD; www.mcdonalds.com) is the world’s largest fast-food company by sales. Its 33,735 restaurants in 119 countries serve a wide variety of foods, but they are best known for their hamburgers and french fries....
ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010.
The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.)
Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove.
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The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.)
Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove.
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