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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CANADIAN PACIFIC RAILWAY $75.81 (Toronto symbol CP; Shares outstanding: 171.2 million; Market cap: $13.0 billion; TSINetwork Rating: Average; Dividend yield: 1.9%; www.cpr.ca) has appointed Hunter Harrison as a director and its new chief executive officer.
Mr. Harrison is the former CEO of Canadian National Railway Co. (Toronto symbol CNR). He’s also the choice of prominent U.S.-based activist investment firm Pershing Square Capital Management, which owns 14.2% of CP.
The company believes Mr. Harrison will duplicate his success at CN, which included improving efficiency and speeding up deliveries. New trains and the recent drop in oil prices should also boost CP’s profits.
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Mr. Harrison is the former CEO of Canadian National Railway Co. (Toronto symbol CNR). He’s also the choice of prominent U.S.-based activist investment firm Pershing Square Capital Management, which owns 14.2% of CP.
The company believes Mr. Harrison will duplicate his success at CN, which included improving efficiency and speeding up deliveries. New trains and the recent drop in oil prices should also boost CP’s profits.
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ENERPLUS CORP. $13.84 (Toronto symbol ERF; Shares outstanding: 196.9 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.8%) produces an average of 79,190 barrels of oil equivalent per day (weighted 52% to natural gas and 48% 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 March 31, 2012, Enerplus’s cash flow per share fell 4.4%, to $0.86 from $0.90. That’s mainly due to lower gas prices, which offset gains from a rise in oil prices.
Enerplus has cut its monthly dividend by 50%, to $0.09 a share from $0.18. It now yields 7.8%.
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In the three months ended March 31, 2012, Enerplus’s cash flow per share fell 4.4%, to $0.86 from $0.90. That’s mainly due to lower gas prices, which offset gains from a rise in oil prices.
Enerplus has cut its monthly dividend by 50%, to $0.09 a share from $0.18. It now yields 7.8%.
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ARC RESOURCES $22.70 (Toronto symbol ARX; Shares outstanding: 290.5 million; Market cap: $6.6 billion; TSINetwork Rating: Speculative; Dividend yield: 5.3%; www.arcresources.com) produces oil and natural gas in western Canada. Its average daily production of 94,970 barrels of oil equivalent is weighted 62% to gas and 38% to oil.
In the three months ended March 31, 2012, ARC’s cash flow per share fell 8.8%, to $0.62 from $0.68. Production rose 28.5%, but that was more than offset by 34.1% lower gas prices.
The company’s long-term debt is $838.8 million, or a low 12.7% of its market cap. ARC trades at 9.2 times its forecast 2012 cash flow of $2.46 a share.
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In the three months ended March 31, 2012, ARC’s cash flow per share fell 8.8%, to $0.62 from $0.68. Production rose 28.5%, but that was more than offset by 34.1% lower gas prices.
The company’s long-term debt is $838.8 million, or a low 12.7% of its market cap. ARC trades at 9.2 times its forecast 2012 cash flow of $2.46 a share.
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ISHARES AUSTRALIA INDEX FUND $22.18 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 73 largest Australian stocks. Its MER is 0.52%.
The fund’s top holdings include BHP Billiton, 12.2%; Commonwealth Bank of Australia, 10.1%; Westpac Banking Corp., 7.8%; Australia and New Zealand Banking Group, 7.0%; National Australia Bank, 6.4%; Woolworths, 4.0%; Rio Tinto, 3.0%; Westfield Group, 2.5%; and CSL Ltd., 2.5%.
Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets, including India and China.
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The fund’s top holdings include BHP Billiton, 12.2%; Commonwealth Bank of Australia, 10.1%; Westpac Banking Corp., 7.8%; Australia and New Zealand Banking Group, 7.0%; National Australia Bank, 6.4%; Woolworths, 4.0%; Rio Tinto, 3.0%; Westfield Group, 2.5%; and CSL Ltd., 2.5%.
Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets, including India and China.
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TORSTAR CORP. $9.40 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $751.1 million; TSINetwork Rating: Above Average; Dividend yield: 5.6 %; www.torstar.com) continues to expand its online operations.
This week, it agreed to buy a 14% stake in shop.ca, a new website that sells a wide variety of products from Canadian retailers. These sellers ship their products directly to customers who buy through the site, so shop.ca does not need to invest in costly distribution centres.
Torstar plans to increase its interest to 30% over the next 30 months. In all, Torstar will pay $6 million in cash and provide $12.4 million of promotional support, mainly free ads in its newspaper and on its websites.
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This week, it agreed to buy a 14% stake in shop.ca, a new website that sells a wide variety of products from Canadian retailers. These sellers ship their products directly to customers who buy through the site, so shop.ca does not need to invest in costly distribution centres.
Torstar plans to increase its interest to 30% over the next 30 months. In all, Torstar will pay $6 million in cash and provide $12.4 million of promotional support, mainly free ads in its newspaper and on its websites.
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GREAT-WEST LIFECO $22.51 (Toronto symbol GWO; Shares outstanding: 949.8 million; Market cap: $21.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%) is Canada’s largest insurance company, with $523.0 billion in assets under administration. It also operates in the U.S. and Europe.
In the three months ended March 31, 2012, Great-West’s earnings rose 8.7%, to $451 million, or $0.48 a share. A year earlier, it earned $415 million, or $0.44 a share. Revenue rose 3.9%, to $6.5 billion from $6.3 billion.
The company’s balance sheet is strong. As well, Great-West trades at just 10.7 times the $2.11 a share that it is likely to earn in 2012. The shares yield a high 5.5%.
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In the three months ended March 31, 2012, Great-West’s earnings rose 8.7%, to $451 million, or $0.48 a share. A year earlier, it earned $415 million, or $0.44 a share. Revenue rose 3.9%, to $6.5 billion from $6.3 billion.
The company’s balance sheet is strong. As well, Great-West trades at just 10.7 times the $2.11 a share that it is likely to earn in 2012. The shares yield a high 5.5%.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $62.32 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index. This index consists of stocks that are mainly traded on the Santiago Stock Exchange.
The fund’s top holdings are LAN Airlines SA (Chilean national airline), 9.4%; Empresas Copec SA (conglomerate), 8.5%; Quimica y Minera de Chile (mining), 8.2%; Empresa Nacional de Electricidad (electric power), 6.8%; Cencosud SA (retailer), 6.5%; Banco Santander Chile (banking), 6.1%; Enersis AS (electric power), 5.9%; Empresas CMPC (pulp and paper), 4.8%; S.A.C.I. Falabella (retail), 4.7%; and CAP SA (iron mining and steel), 4.1%.
The fund’s industry breakdown is as follows: Utilities, 23.7%; Industrials, 21.6%; Financials, 16.9%; Materials, 15.6%; Consumer Staples, 11.1%; Consumer Discretionary, 11.1%; Telecommunications, 3.3%; and Information Technology, 1.5%.
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The fund’s top holdings are LAN Airlines SA (Chilean national airline), 9.4%; Empresas Copec SA (conglomerate), 8.5%; Quimica y Minera de Chile (mining), 8.2%; Empresa Nacional de Electricidad (electric power), 6.8%; Cencosud SA (retailer), 6.5%; Banco Santander Chile (banking), 6.1%; Enersis AS (electric power), 5.9%; Empresas CMPC (pulp and paper), 4.8%; S.A.C.I. Falabella (retail), 4.7%; and CAP SA (iron mining and steel), 4.1%.
The fund’s industry breakdown is as follows: Utilities, 23.7%; Industrials, 21.6%; Financials, 16.9%; Materials, 15.6%; Consumer Staples, 11.1%; Consumer Discretionary, 11.1%; Telecommunications, 3.3%; and Information Technology, 1.5%.
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ISHARES MSCI GERMANY FUND $20.18 (New York Exchange symbol EWG; buy or sell through brokers) is an ETF that aims to track 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 Siemens AG (engineering conglomerate), 9.0%; BASF (chemicals), 8.3%; Bayer (diversified chemicals), 7.5%; SAP (software), 7.1%; Allianz (insurance), 5.7%; E.ON (energy), 4.7%; Deutsche Bank AG, 4.4%; Deutsche Telekom, 4.0%; and Linde AG (industrial gases), 3.5%.
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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 Siemens AG (engineering conglomerate), 9.0%; BASF (chemicals), 8.3%; Bayer (diversified chemicals), 7.5%; SAP (software), 7.1%; Allianz (insurance), 5.7%; E.ON (energy), 4.7%; Deutsche Bank AG, 4.4%; Deutsche Telekom, 4.0%; and Linde AG (industrial gases), 3.5%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $55.36 (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, 20.9%; Hyundai Motor Co., 6.5%; Posco (steel), 4.2%; Kia Motors, 3.5%; Hyundai Mobis (auto parts), 3.4%; Shinhan Financial, 2.9%; KB Financial, 2.4%; LG Chemical, 2.3%; Hynix Semiconductor, 2.3%; and Hyundai Heavy Industries, 1.9%.
The fund’s industry breakdown is as follows: Information Technology, 30.7%; Consumer Discretionary, 18.9%; Industrials, 13.9%; Financials, 13.6%; Materials, 11.5%; Consumer Staples, 5.6%; Energy, 2.7%; Utilities, 1.4%; Health Care, 0.8%; and Telecommunication Services, 0.7%.
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The ETF’s top holdings are Samsung Electronics, 20.9%; Hyundai Motor Co., 6.5%; Posco (steel), 4.2%; Kia Motors, 3.5%; Hyundai Mobis (auto parts), 3.4%; Shinhan Financial, 2.9%; KB Financial, 2.4%; LG Chemical, 2.3%; Hynix Semiconductor, 2.3%; and Hyundai Heavy Industries, 1.9%.
The fund’s industry breakdown is as follows: Information Technology, 30.7%; Consumer Discretionary, 18.9%; Industrials, 13.9%; Financials, 13.6%; Materials, 11.5%; Consumer Staples, 5.6%; Energy, 2.7%; Utilities, 1.4%; Health Care, 0.8%; and Telecommunication Services, 0.7%.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $39.91 (New York symbol EEM; buy or sell through brokers), is an exchange traded fund that aims to track the MSCI Emerging Markets Index. Its geographic breakdown includes China, 17.4%; South Korea, 15.2%; Brazil, 13.2%; Taiwan, 11.0%; South Africa, 8.0%; India, 6.2%; Russia, 5.8%; Mexico, 4.7%; Malaysia, 3.7%; and Indonesia, 2.7%.
The fund’s top holdings are Samsung Electronics (South Korea: electronics), 3.5%; China Mobile, 1.9%; Taiwan Semiconductor (Taiwan: computer chips), 1.8%; America Movil (Brazil: wireless), 1.6%; Gazprom (Russia: gas utility), 1.5%; China Construction Bank (China: banking), 1.4%; Petrobras Petroleo (Brazil: energy), 1.2%; Vale SA (Brazil: mining), 1.1%; and Industrial & Commercial Bank of China, 1.2%.
The fund’s industry breakdown is as follows: Financials, 24.1%; Information Technology, 13.7%; Energy, 12.7%; Materials, 12.1%; Consumer Staples, 8.5%; Consumer Discretionary, 8.1%; Telecommunication Services, 8.1%; Industrials, 6.9%; Utilities, 3.8%; and Health Care, 1.1%.
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The fund’s top holdings are Samsung Electronics (South Korea: electronics), 3.5%; China Mobile, 1.9%; Taiwan Semiconductor (Taiwan: computer chips), 1.8%; America Movil (Brazil: wireless), 1.6%; Gazprom (Russia: gas utility), 1.5%; China Construction Bank (China: banking), 1.4%; Petrobras Petroleo (Brazil: energy), 1.2%; Vale SA (Brazil: mining), 1.1%; and Industrial & Commercial Bank of China, 1.2%.
The fund’s industry breakdown is as follows: Financials, 24.1%; Information Technology, 13.7%; Energy, 12.7%; Materials, 12.1%; Consumer Staples, 8.5%; Consumer Discretionary, 8.1%; Telecommunication Services, 8.1%; Industrials, 6.9%; Utilities, 3.8%; and Health Care, 1.1%.
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