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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POWER CORP. $33.51 (Toronto symbol POW; Shares outstanding: 413.5 million; Market cap: $15.5 billion; TSINetwork Rating: Above Average; Div. yield: 3.4%; www.powercorporation.com) holds its financial assets through 65.7%-owned Power Financial. These holdings include 58.7% of IGM Financial, a leading Canadian mutual fund provider. As of March 31, 2015, IGM had $148.4 billion worth of assets under management, up 8.1% from $137.3 billion a year earlier. IGM’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings gain when the price of these assets rises. Power Corp. is a buy.
TRANSCANADA CORP. $56.04 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $40.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.transcanada.com) has announced a new deal with Magellan Midstream Partners (New York symbol MMP). The two firms have formed a 50/50 partnership to build a pipeline connecting their oil-storage facilities in Houston, Texas. This will give TransCanada’s oil-shipping clients access to more refineries in the Houston area. The company’s share of the $50-million cost is $25 million. To put that in context, TransCanada earned $511 million, or $0.72 a share, in the three months ended December 31, 2014. The partners expect to complete this project in mid-2016....
With one big contract lost, cuts in energy spending and older-generation rigs, Hercules Offshore faces a sharp decline in earnings.
Alimentation Couche-Tard (symbol ATD.B on Toronto; www.couche-tard.com) operates 6,314 convenience stores throughout North America. Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand.
In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia.
In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations.
However, per-share earnings jumped 64.5%, to $0.51 from $0.31. Couche-Tard saw higher profit margins on merchandise and fuel, and it continues to save on interest costs as it pays down the debt it took on to acquire Norway’s Statoil Fuel & Retail gas station chain, which it bought for $2.7 billion in June 2012.
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In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia.
In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations.
However, per-share earnings jumped 64.5%, to $0.51 from $0.31. Couche-Tard saw higher profit margins on merchandise and fuel, and it continues to save on interest costs as it pays down the debt it took on to acquire Norway’s Statoil Fuel & Retail gas station chain, which it bought for $2.7 billion in June 2012.
POWER CORP. $33.52 (Toronto symbol POW; Shares outstanding: 412.6 million; Market cap: $15.5 billion; TSINetwork Rating: Above Average; Div. yield: 3.5%; www.powercorporation.com) is a diversified holding company. It holds its financial assets through 65.7%-owned Power Financial.
These financial assets include 68.1% of Great- West Lifeco, one of Canada’s largest life insurers, and 58.7% of IGM Financial, a leading Canadian mutual fund provider.
As well, Power Financial owns 50% of holding company Parjointco, which holds a 55.5% stake in Switzerland-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European firms: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), SGS (inspection, testing and certification services) and Lafarge (cement and building materials). Power Corp. also has investments in Asia.
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These financial assets include 68.1% of Great- West Lifeco, one of Canada’s largest life insurers, and 58.7% of IGM Financial, a leading Canadian mutual fund provider.
As well, Power Financial owns 50% of holding company Parjointco, which holds a 55.5% stake in Switzerland-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European firms: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), SGS (inspection, testing and certification services) and Lafarge (cement and building materials). Power Corp. also has investments in Asia.
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ALGONQUIN POWER & UTILITIES $9.36 (Toronto symbol AQN; Shares outstanding: 238.9 million; Market cap: $2.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.algonquinpower.com) reports that its revenue rose 26.3% in the three months ended December 31, 2014, to $259.3 million from $205.3 million a year earlier. Cash flow per share jumped 22.7%, to $0.27 from $0.22.
The gains mostly came from acquisitions, including California’s Park Water for $327 million U.S. in September 2014.
Growth by acquisition adds risk. But Algonquin cuts that risk by buying profitable utilities like Park Water. It also ensures that its renewable energy projects sell their power under long-term government-guaranteed contracts.
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The gains mostly came from acquisitions, including California’s Park Water for $327 million U.S. in September 2014.
Growth by acquisition adds risk. But Algonquin cuts that risk by buying profitable utilities like Park Water. It also ensures that its renewable energy projects sell their power under long-term government-guaranteed contracts.
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MANULIFE FINANCIAL $21.51 (Toronto symbol MFC; Shares outstanding: 2.0 billion; Market cap: $42.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.9%; www.manulife.ca) sells life and other forms of insurance, as well as mutual funds and investment management services.
In the three months ended December 31, 2014, Manulife’s earnings per share gained 2.9%, to $0.36 from $0.35 a year earlier. Revenue fell slightly, to $7.15 billion from $7.18 billion.
At the end of 2014, Manulife had $691.1 billion of assets under management, up 15.4% from $598.9 billion at the end of 2013. A large part of the increase came from its late 2014 acquisition of U.K.-based Standard Life’s Canadian insurance operations for $4 billion.
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In the three months ended December 31, 2014, Manulife’s earnings per share gained 2.9%, to $0.36 from $0.35 a year earlier. Revenue fell slightly, to $7.15 billion from $7.18 billion.
At the end of 2014, Manulife had $691.1 billion of assets under management, up 15.4% from $598.9 billion at the end of 2013. A large part of the increase came from its late 2014 acquisition of U.K.-based Standard Life’s Canadian insurance operations for $4 billion.
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SUN LIFE FINANCIAL $39.03 (Toronto symbol SLF; Shares outstanding: 612.7 million; Market cap: $24.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.sunlife.ca) sells life insurance, savings, retirement and pension products to individuals and corporations.
Sun Life has $734.4 billion of assets under management. It mainly operates in Canada, the U.S. and the U.K., but it continues to expand in Asia.
In 2013, it sold its riskier, money-losing U.S. annuity business, which sells products that guarantee minimum long-term returns even if markets fall.
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Sun Life has $734.4 billion of assets under management. It mainly operates in Canada, the U.S. and the U.K., but it continues to expand in Asia.
In 2013, it sold its riskier, money-losing U.S. annuity business, which sells products that guarantee minimum long-term returns even if markets fall.
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ENCANA $14.14 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $10.3 billion; TSINetwork Rating: Average; Div. yield: 2.5%; www.encana.com) has sold 98.5 million shares for $14.60 each to raise $1.44 billion.
The company will use these funds to redeem $1.6 billion worth of notes. As of December 31, 2014, Encana’s long-term debt was $7.3 billion U.S., or a high 90% of its $10.3-billion (Canadian) market cap.
The stock sale has increased Encana’s total shares outstanding by roughly 13%. However, paying down debt will cut the company’s interest costs and help it conserve cash until oil and gas prices rebound. It could also use the savings to make acquisitions at bargain prices.
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The company will use these funds to redeem $1.6 billion worth of notes. As of December 31, 2014, Encana’s long-term debt was $7.3 billion U.S., or a high 90% of its $10.3-billion (Canadian) market cap.
The stock sale has increased Encana’s total shares outstanding by roughly 13%. However, paying down debt will cut the company’s interest costs and help it conserve cash until oil and gas prices rebound. It could also use the savings to make acquisitions at bargain prices.
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PEYTO EXPLORATION & DEVELOPMENT CORP. $33.96 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $5.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 83,251 barrels of oil equivalent is 90% gas and 10% oil.
In the quarter ended December 31, 2014, Peyto’s cash flow rose 34.5%, to $1.13 a share from $0.84 a year ago. That’s because it raised its production by 23.7%, and realized higher gas prices.
Like Crescent Point, Peyto will cut spending this year. Its outlays will now total $560 million to $600 million, down from $690 million in 2014.
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In the quarter ended December 31, 2014, Peyto’s cash flow rose 34.5%, to $1.13 a share from $0.84 a year ago. That’s because it raised its production by 23.7%, and realized higher gas prices.
Like Crescent Point, Peyto will cut spending this year. Its outlays will now total $560 million to $600 million, down from $690 million in 2014.
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